LOCKDOWN HANDY FOR BUNNINGS
WESFARMERS says it is seeing significant demand growth in its Bunnings and Officeworks businesses as customers spend more time at home, amid coronavirus restrictions.
Sales growth at Bunnings is up 19.2 per cent in the second half of the financial year, compared with 5.8 per cent in the first half.
Officeworks has also seen sales growth jump to 27.8 per cent between January and May, compared with 11.5 per cent in the first half.
Sales at online marketplace Catch surged 68.7 per cent in the second half amid a broader boost to online sales as customers preferred shopping online during COVID-19.
Total online sales across the group increased 60 per cent to $1.9 billion, including Catch.
Wesfarmers said Bunnings had seen continued growth in consumer and commercial markets across all major Australian trading regions and in all product categories, while at Officeworks, there had been strong demand for technology, home office furniture and learning and education products.
But it has also outlined additional costs at Bunnings, with about $20 million spent in more cleaning, security and protective equipment to respond to COVID-19 over the past three months.
In addition, Bunnings will incur costs of $70 million in the 2020 financial year associated with trading restrictions in New Zealand, the closure of seven small-format stores and the accelerated rollout of its online offering, including the write-off of legacy e-commerce platform assets.
At Officeworks, earnings growth in the second half is expected to be moderated by changes in sales mix and continued investment in price, team, technology and COVID-19-related operating costs.
Wesfarmers has also cautioned that it is uncertain whether the higher levels of sales growth will continue for the remainder of the calendar year, given the significant changes to usual customer shopping patterns and likely changes to government measures.
While sales momentum in Kmart and Target has improved in recent weeks with a general increase in customer footfall, both businesses continue to underperform. Second half sales grew only 4.1 per cent in Kmart and dropped 1.8 per cent at Target.