Home > Industry > Wesfarmers Report 13.2% Profit Growth, Plan To Sell Off Officeworks As Coles Loses Ground

Wesfarmers Report 13.2% Profit Growth, Plan To Sell Off Officeworks As Coles Loses Ground

As previously indicated by outgoing Wesfarmers Managing Director Richard Goyder, Coles has lost ground to rival Woolworths, reporting lower sales growth in its latest earnings report.

However, to the surprise of many, the price of that underperformance may be counterbalanced by the off-selling of Officeworks by the conglomerate.

Goyder says that “Officeworks is well positions for future growth with a strong competitive position and ongoing initiatives to grow its addressable market.”

“In light of its performance, options to monetise the value created for shareholders, including via an initial public offering, are being evaluated,” he says.

The AFR reports that Macquarie Capital and Gresham Partners have been brought in to help Wesfarmers understand its options.

It is understood that Wesfarmers would look to hold onto Officeworks if the sale options available did not match its valuation of the business.

Overall, Wesfarmers total half-year profit rose 13.2% to $1.58 billion.

Accounting for the lion’s share of that but slipping 2.6%, Coles earnings for the half year reached $920 million.

This “decline in earnings was driven by lower margins following increased investments in value, which were weighted towards the second quarter, including through the absorption of cost price increases in meat,” Mr Goyder said in a statement to the ASX on Wednesday.

Though Coles’ same store sales grew 1.3% lower prices resulted in earnings dropping to 6.8%.

The rest of Wesfarmers’ portfolio, aside from Target, performed well.

Their home improvement division improved earnings 3% to $722 million.

Discount department store Kmart’s earnings increased 16.3% to $371 million.

Even Officeworks’ earnings received healthy growth of 5.1% to $62 million,

Target continued to struggle, with earnings from the faded apparel retailer slipping 78.4% to $16 million.

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