Kmart work­ing to build sales after patchy re­sult

The Advertiser - - BUSINESS JOURNAL - ELI GREENBLAT

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.

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