Record Kmart earnings drive Wesfarmers

Record earnings from discount retailers Kmart and Target have helped counter flat growth at hardware chain Bunnings and Officeworks to deliver Wesfarmers a better than expected interim net profit of $1.42bn.

However, the retail giant says cost pressures in the economy and supply chain challenges remain a threat.

Wesfarmers was able to balance ongoing losses at its online marketplace Catch, a near 50 per cent slide at its chemicals and energy division and tiny profits from its newly created health arm with stronger performances at Kmart and its industrial services business.

Wesfarmers posted a 3 per cent lift in December half profit as earnings rose 1.6 per cent to $2.19bn, built on a portfolio of retail, chemicals, industrial services, health and resources operations that combined generated sales of $22.67bn, up 0.5 per cent and in line with expectations.

Kmart’s earnings were up 26.5 per cent at $601m.

Wesfarmers did beat analyst forecasts for its interim profit by almost $100m and the company also hiked its interim dividend to 91c per share, up from 88c, and payable on March 27.

Its traditional workhorse of profit growth, Bunnings, had a quieter first half with earnings up 0.3 per cent to $1.28bn, although excluding its property development deals earnings for the period rose 3.1 per cent.

Officeworks reported a 1.2 per cent earnings lift to $86m, supported by continued growth in categories including stationery and education, while the industrial and safety services division had a 4.3 per cent gain in earnings to $49m.