Wesfarmers saw profits slip during a challenging twelve month period where both the Kmart Group and Officeworks took big earnings hits.

Wesfarmers reported profits of $2.35 billion for the year ended June 30, a decline of 2.9 per cent for the year.

Wesfarmers Managing Director Rob Scott noted the significant disruptions caused by COVID-19, while being pleased to have delivered “solid financial results.”

“The Group’s financial results for the year reflect the material impact of COVID-19 on trading conditions during the first half, which included weeks where almost half of the Group’s retail stores were either subject to trading restrictions or closed,” Scott said.

Trading between July and October in 2021 saw the Group lose 34,000 store trading days, representing almost 10 per cent of total store trading days for the year. There were also $80 million in COVID-related costs during this period.

Wesfarmers had a far more successful second half, with net profit growth of 13.1 per cent.

Wesfarmers will pay a final fully-franked dividend of $1.00 per share, bringing total fully-franked ordinary dividends for the year to $1.80 per share, an increase of 1.1 per cent on the prior year.

Scott says this dividend is “a result of the strong second-half result.”

Bunnings remained Wesfarmers most resilient performer, with revenue increasing 5.2 per cent to $17.75 billion.

Earnings hit a record $2.2 billion, increasing by 0.9 per cent. Total store sales grew by 4.2 per cent, leaping to 7.8 per cent during the second half, as pandemic restrictions eased.

Bunnings has experienced incredible growth over the past three years, with revenue increasing 34.8 per cent between the 2019 and 2022 financial years.

COVID-19 “continued to present operational complexity”, according to Wesfarmers, with roughly $71 million of costs incurred associated with cleaning, security and protective equipment, as well as additional paid leave for vaccinations and team members impacted by COVID-19.

The acquisition of Beaumont Tiles completed in November 2021, with 115 Beaumont Tiles stores rolled into the portfolio.

During the year, Bunnings added seven stores: there are now 282 warehouses, 67 smaller format stores and 32 trade centres in the Bunnings network, plus 11 Tool Kit Depot stores and 115 Beaumont Tiles stores.

“The pleasing sales and earnings results delivered by Bunnings continue to demonstrate the resilience of its operating model and the execution of its strategic agenda,” Scott said.

“Sales growth was supported by continued strong demand from commercial customers and consumer sales remained robust, despite cycling elevated demand in prior periods.

“Bunnings continued to accelerate investment in long-term growth initiatives while managing the ongoing operational disruptions associated with COVID-19.

“During the year, Bunnings delivered enhancements to the shopping experience for customers both instore and online, and continued to expand its range, store network and fulfilment capabilities.”

Wesfarmers shares have slipped 0.1 per cent this morning.