Wesfarmers profit dive

Bunnings UK exit, Target decline hits bottom line

WESFARMERS has suffered a 58 per cent drop in full-year net profit after taking more than $1.3 billion in costs and losses on its disastrous Bunnings UK exit and a $300 million writedown on underperforming Target.

The retail conglomerate posted a net profit for 2017-18 of $1.2 billion, down from $2.87 billion a year ago.

After selling out of Bunnings UK in May for a $375 million loss, Wesfarmers said yesterday the collapsed business cost $1.02 billion in impairments, writeoffs and store closure provisions.

Wesfarmers’ retail operations achieved a 5.2 per cent increase in earnings, led by strong results from Bunnings in Australia and New Zealand, as well as its department stores and Officeworks.

Target continued to be a problem, suffering a 5 per cent decline in comparable sales growth in the year.

Bunnings’ Australia and New Zealand lifted pre-tax earnings 12 per cent to $1.5 bilion, while supermarket chain Coles, which is destined to be spun off by November, recorded a 6.8 per cent drop in earnings to $1.5 billion.

Wesfarmers also announced that Guy Russo, who guided the successful turnaround of Kmart, will retire as chief executive of its department stores division, to be replaced by Kmart managing director Ian Bailey.

Chief financial officer of the division Marina Joanou has taken over Mr Russo’s role as managing director of Target.

Wesfarmers will retain 15 per cent of Coles post-separation and told investors this would allow it to focus on generating cash for its leading stores. “Continued earnings growth is expected across the group’s retail businesses,” it said in a statement.

Wesfarmers recorded a $123 million profit on its sale of the Curragh coal mine during the year. Excluding significant items, profit after tax from continuing operations rose 5.2 per cent to $2.9 billion for