Wesfarmers reports strong first half earnings

Wesfarmers Ltd has today released its strong results for the first half of FY23. The company notes it is responding well to market conditions especially highlighting value credentials, strong operating results and its broad omnichannel offering.

Wesfarmers saw an increase in profit and interim dividend with $22.6b in revenue, a $1.4b NPAT, up 14.1 percent on the same time last year, and a $0.88 interim dividend.

The company highlights Kmart Group as having the strongest EBT growth at 114 percent, now sitting at $475b for the half. Kmart Group, which encompasses Kmart and Target, had “significant sales and earnings growth with strong execution.” The company highlights strong underlying growth in addition to the impact of cycling lockdowns as customers responded positively to Kmart’s lowest price positioning. Revenue increased by 24.1 percent to $5.71b for the Group.

Bunnings Group continues to remain Wesfarmers standout performer with a revenue of $9.79b, a small growth on the year before at 6.3 percent. In its report, Wesfarmers highlights the resilience of Bunnings’ operating model and highlights a 70 percent return on capital, citing continued inventory investment and normalisation in stock coverage following COVID-19 related supply chain disruptions and demand volatility in recent years, and continued investment in store network, and digital / tech enablement to support long-term growth.

The first half has also seen Wesfarmers data and digital capabilities expand with the growth of the OnePass program. The company highlights the over 210m digital interactions a month across its digital offerings, vs 94m in 2019, a huge growth that has taken place over the past four years as the company made this a priority.

Catch however delivered disappointing results with a GTV decline of 26.8 percent and and EBT loss of $75m. Managing Director Rob Scott stated, “Sales and earnings performance in Catch was disappointing, reflecting the moderation in online demand as well as the impact of operational and execution issues. Restructuring activities within Catch commenced in December 2022, with $33 million in costs associated with these actions recognised in the first half.” Last week, reports the company had laid off up to 100 staff showed indications of poor performance for the online marketplace.

“The retail businesses benefitted from their well-established value credentials and omnichannel offer as customer shopping behaviours began to normalise,” said Managing Director Rob Scott.

“Growth across the retail businesses also reflected the impact of COVID-related lockdowns in the prior corresponding period.”

Looking forward, Wesfarmers maintains its long-term focus and continues to invest in strengthening its existing operations, renewing the portfolio and developing platforms for long-term growth.

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