Bunnings, and Kmart have contributed to strong earnings growth with Kmart growing 7.2% and Bunnings 3.1%, Officeworks only managed 1.2%.
Overall Wesfarmers delivered strong earnings with a 2.9% lift in interim profits to $1.47bn, the Comp[any claims that there is still a lot of pressure on retailers.
Revenue for the December half up 3.6 per cent to $23.49bn.
Wesfarmers chief executive Rob Scott said the increase in profit in a challenging environment highlighted strong execution across the group, with divisions improving their customer propositions and delivering productivity initiatives which drove growth and efficiency.
“During the half, cost of living and cost of doing business pressures continued to significantly impact many households and businesses,” Mr Scott said.
Bunnings Revenue grew of 3.2% to $10,280 while total store sales increased 3.5% and store-on-store sales growth of 3.4%.
The big hardware retailer also delivered earnings growth of 3.2% to $1,323m excluding net property contribution.
Among their retail operations Kmart was a star performer with the discount retailer delivering revenue increased by 2.0% to $6,108m.
Kmart Group comparable sales grew by 1.9%.
Management claim that a minor reduction in items per basket and average sell price reflect customers’ focus on value.
The retailer delivered earnings of $644m, up 7.2%.
Contributing to the earnings growth was continued strong growth in apparel and the introduction of Anko products into Target.
Productivity benefits were delivered through the integration of Kmart and Target’s systems and processes, and the digitisation of operations.
At Officeworks who have recently moved to expand into categories that are successful at arch rival JB Hi Fi the retail delivered revenue growth of 4.7% to $1,760m, with management claiming that technology was a key contributor to growth.
Recently the business has been negotiating with PC and accessory Companies in an effort to expand their line items in what was described as an effort to strip customers away from Harvey Norman and JB Hi Fi.
The retailer reported softer sales growth to B2B customers, reflecting challenging economic conditions for small to medium sized businesses.
Earnings growth which was impacted by discounting only managed to climb 1.2% to $87m – Sales growth, productivity initiatives and disciplined cost management mitigated the impacts of significant cost headwinds the retailer claimed.
Return on Capital (R12) of 18.3% was significantly lower than both Bunnings and Kmart.
Officeworks management claimed that Back to School performance had been solid, with customers seeking value and strong growth in computers and tablets.
The business has moved to expand the education offer, via the recent acquisition of Box of Books.
Group sales rose to $23.5 billion, up 3.6 per cent, in line with market expectations. Earnings before interest and tax rose 4.7 per cent to $2.3 billion.
Net profit climbed 2.9 per cent to $1.47 billion, topping analysts’ forecasts for a 1.5 per cent rise.
As profit rose, the board paid a higher interim dividend at 95¢ per share up from 91¢ a year ago and also slightly higher than the market expected at 94.3¢. The dividend will be paid on April 1.
