Kmart working to build sales after patchy result
WESFARMERS chief executive Rob Scott has blamed “patchy” retail conditions in November and December for a sales slump at discount department store heavyweight Kmart.
But Mr Scott said he does not believe consumers are in distress as they face falling property prices, stagnant wage growth and higher energy and fuel bills.
Mr Scott also said a reluctance by Kmart to discount as deeply as it did last Christmas had prompted the rare sales retreat which occurred during the crucial holiday trading period.
“Overall customers are value conscious,” Mr Scott said yesterday. “There are some cost of living issues out there, but overall Christmas trading was broadly in line with our expectations.”
Kmart has traditionally been one of Wesfarmers’ top performers, ringing up year after year of strong sales growth under former chief Guy Russo who retired late last year.
Mr Scott said the Kmart team, now led by general manager Ian Bailey, was working to revive sales with a particular focus on the women’s apparel category.
“Women’s apparel is a dynamic category and we need to make sure we have product that is resonating really strongly with our customers,” Mr Scott said. “And that is what we have been working on.” Likefor-like sales at Kmart fell 0.6 per cent for the six months to December, Wesfarmers reported yesterday.
The result is a turnaround from the 3 per cent growth the chain posted in the same period a year earlier.
Like-for-like sales strip out the impact of stores opening and closing to give a better view of a retailer’s performance.
As well as weaker sales in womenswear, Wesfarmers said the decision by Kmart to stop selling DVDs had also impacted to overall result.
Wesfarmers also owns Bunnings, Target and Officeworks.
In Target, total half-year sales increased by 0.2 per cent while like-for-like rose 0.5 per cent.
The update on Kmart was delivered as investment bank Morgan Stanley declared Woolworths had won the Christmas trading period, outperforming Coles for the third year in a row.
Wesfarmers spun off Coles last year but remains its biggest shareholder with a 15 per cent stake.
The Perth-based conglomerate warned shareholders at its annual meeting in November that strong sales momentum at Kmart would start to moderate.
Wesfarmers is expecting to post earnings before interest and tax of between $385 million and $400 million when it reports its half year results on February 21.
Shares in Wesfarmers lost 2.16 per cent yesterday, or 69c, to close at $31.26.
– THE AUSTRALIAN
SALES DOWN: Wesfarmers managing director Rob Scott.