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Wesfarmers Retail Well-Positioned To Thrive: CEO

Despite growing concerns about inflation, Wesfarmers boss Rob Scott says customers at Kmart and Bunnings have not changed their shopping behaviour.

But despite this “quite healthy” demand, Scott notes labour shortages, rising interest rates, and inflation pose risks.

However, he told investors at a strategy day that Wesfarmers is positioned well to handle the post-COVID landscape.

“Customer feedback has been showing there are growing concerns about inflation and where longer-term interest rates are headed,” Scott said.

“Wesfarmers’ retail divisions are well equipped to manage inflationary pressures and view this as an opportunity to profitably grow share while extending value credentials.”

Scott feels we will avoid the pressures currently seen in the US.

“The Australian economy is in relatively good shape with low unemployment and high accumulated household savings, providing a strong base.

“But there are clearly some macro risks on the horizon that need to be navigated. This includes broad based inflationary pressure, rising interest rates, and also labor shortages.

“We need to be mindful of the impact on demand should inflationary pressure impact costs and the cost of living pressures and cost of doing business pressures for business.”

CFO Anthony Gianotti said the company had successfully walked the line between having bloated inventory and being caught short.

“It’s clearly a factor that we’re thinking through quite carefully,” he said.

“We have tried to stay away from seasonal inventory… which should alleviate this issue around having excessive clearance activity.

“We’re also conscious of the fact that there continue to be global supply chain disruptions.”

Wesfarmers recently launched digital unit OneDigital will post an operating loss of around $70 million for 2022, which Scott attributes to “heavy lifting” around the launch of this division. He says this will drop over time.

“Once we get through the heavy lifting around this investment in the launch, we will have delivered a more seamless shopping experience across all of our digital channels on our retail stores,” he said.

 

 

 


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