Bunnings & Officeworks Earnings Up 13%, Kmart Group Slumps
Wesfarmers-owned hardware giant, Bunnings, has reported a 13.9% jump in full-year earnings, contrast by a 23.5% decline in department store earnings for Kmart and Target.
For the year, earnings at Bunnings hit $1.826 billion, with Kmart Group (Kmart, Target and Catch) notching $410 million.
Office supplier, Officeworks, fared a 13.8% increase in full-year earnings to $197 million.
The news comes as parent company Wesfarmers announces a notable 69.2% drop in full-year profit to $1.697 billion, hit with $435 million in impairments from embattled Target and its industrial safety business.
It follows the demerger of Coles’ supermarket business, which has been a robust historic profit generator.
Net profit from continuing operations climbed 8.2% to $2.099 billion, with Bunnings and Officeworks retaining strong performance prompt by a lift in renovation and home office demand during the pandemic.
For the year, Bunnings reported total store sales growth of 14.7% and store-on-store growth of 14.7%. The retailer admits outlook “remains highly uncertain” amidst COVID19.
The Kmart Group (Kmart, Target and Catch) fared a 7.2% increase in revenue. Kmart notched total sales growth of 5.4%, whilst Target slipped 2.6%.
As Kmart focuses on future growth investments, Wesfarmers admits it does not expect Target to be profitable in FY21. Target Australia has dwindled its store network, which is expected to reduce the impact on Kmart Group.
Wesfarmers has continued its conversion of many Target sites into Kmart or smaller K Hub stores.
Officeworks notched full-year revenue growth of 20.4%, however, outlook remains uncertain with changing customer behaviour from COVID19.
The conglomerate has announced strong growth in online sales of 60% to $1.5 billion, or $2.1 billion including e-tailer Catch.
Wesfarmers has declared a flat final dividend of 77 cents per share, and a special dividend of 18 cents per share relating to the Coles demerger.
Concerning future outlook, the conglomerate states July retail sales were strong as restrictions loosened, but warns sales may be hit as government stimulus measures gradually withdraw.