Wesfarmers play it cool with $20b

NEW Wesfarmers chief Rob Scott has indicated there will not be any buying spree following the $20 billion Coles demerger, saying the group’s best growth opportunities lie in developing existing businesses.

The conglomerate will ramp up spending on developing its online sales capabilities and create a dedicated “advanced analytics centre” to make better use of its Flybuys loyalty program.

Flybuys, to be jointly owned by Wesfarmers and Coles, collects information on the shopping habits of more than eight million Australians.

Wesfarmers will hire up to 20 “data scientists” and “data engineers” for its new analytics centre, which will be co-located with the Flybuys team.

Together, the businesses will use the collected shopping data to drive growth across Wesfarmers’ retail portfolio, which includes Bunnings, Kmart, Target and Officeworks.

“We believe this opportunity with Flybuys is quite material,” Mr Scott said.

The update was provided as Mr Scott hosted his first strategy briefing day since replacing Richard Goyder — now AFL chairman — as Wesfarmers’ chief in November.

Investors were told Coles was building an “own-brand powerhouse” and wanted its private-label range to make up 40 per cent of sales by 2023 — up from the “high 20s” now.

Wesfarmers has previously said it will keep a stake of up to 20 per cent in Coles when the supermarket is spun off as an independently listed company during the next financial year.

It also emerged yesterday that Bunnings was moving to win large commercial accounts — such as those of schools, hospitals and aged-care centres.

The best opportunities for growth were within Wesfarmers’ existing stable, Mr Scott said.

While deal making would remain on the table, it would not be the “main game” and Mr Scott said he had no issue with returning excess cash to shareholders.

“We have no problem being smaller, having a smaller capital base,” he said.

Wesfarmers shares gained 1.8 per cent to close at $46.48.