Kmart works 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 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 period.
“Overall customers are value conscious,” Mr Scott said.
“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.
Like-for-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. As well as weaker sales in womenswear, Wesfarmers said the decision by Kmart to stop selling DVDs had also impacted the 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. Mr Scott said consumers were aware of the pressures on their budgets but were not shunning stores or radically pulling back on spending.
“We don’t see any evidence that there is a broad change in consumer spending across the board,” he said. “We find that when we get our offer right we can generate good sales.”
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.
It is also expected to gain $2.1 billion to $2.3 billion from the November demerger of is Coles supermarket division, and $670 million to $680 million from the sales of its stake in the Bengalla coal mine.