Officeworks, Kmart And Bunnings Help Wesfarmers Hit Profit In Latest Quarterly

Wesfarmers have managed to eke out moderate – albeit slowing – sales growth in the third financial quarter of 2017, despite the continued sale decline of department store Target.

The company’s latest earnings report notes that supermarket giant Coles’ food and liquor division saw sales increase 1.2% to $7.6 billion. While a respectable result, analysts are already skeptical that it’ll trump rival Woolworth’s own results – due out next week.

Coles Managing Director John Durkan said the sales growth achieved reflected Coles’ strategy to continue to invest in the customer offer in a period of lower growth.

“On an Easter adjusted basis, our sales growth in food was broadly in line with the second quarter trend while investment in the customer offer increased during the period,” Mr Durkan said.

Meanwhile, when it came to department stores, things continued in line with previous earnings. Kmart saw sales increase 2.5% to $1.1 billion.

Kmart Managing Director Ian Bailey says “sales were in line with expectations given the later timing of Easter and higher levels of clearance in the prior corresponding period, with more products sold at full price during the quarter.”

“Kmart continues to offer the lowest prices for Australian and New Zealand families on everyday items with further investments in price made during the quarter. Inventory quality has remained strong and positions the business well for the remainder of the financial year,” Mr Bailey said.

In sharp contrast, Target saw quarterly sales slipped 18.1% to $555 million. Wesfarmers’ Department Stores CEO Guy Russo defended the results saying that “during the quarter, the reset of merchandise disciplines was further progressed and the transition to everyday low prices continued, with higher levels of full price sales and lower levels of clearance activity achieved relative to the prior corresponding period.”

Bunnings also proved one of the bright spots on Wesfarmers’ latest report card. The home improvement chain brought in quarterly sales of $2.8 billion, a 7.7% increase on the previous quarter.

BANZ Managing Director Michael Schneider said the sales growth achieved was pleasing, given the varying market conditions for the quarter.

He says “an ongoing focus on delivering our strategic agenda continued to provide positive outcomes” and that the company would look to “continue to invest strongly to deliver a winning offer to customers”.

Finally, Officeworks also went from strength to strength.

Officeworks Managing Director Mark Ward attributed the result to the chains strong execution during the critical back-to-school trading period.

The retailer brought in quarterly sales of $558 million, an improvement of 9% over the previous quarter.

“Officeworks remains focused on driving its ‘every channel’ strategy, and providing customers with a compelling offer by delivering great customer service, best value and being a one-stop shop,” Mr Ward said.

While a report out of The Australian earlier this week revealed that Wesfarmers has brought in Morgans to guide Officeworks towards an IPO, the company’s latest earnings report gave no update on the progress of Wesfarmer’s plans to sell-off to the stationary retailer.