Spending spurs growth

WESFARMERS boss Rob Scott said its businesses were in a good position to benefit from the return to normal trading but that lockdowns and store closures had significantly affected trading conditions for the group’s retail arms in recent months.

There was, however, early evidence that economies coming out of lockdowns were benefiting from elevated spending. Pent-up demand from consumers was starting to pour into Wesfarmers’s retail chains, such as hardware giant Bunnings, Officeworks and discount department stores Kmart and Target, in New South Wales as lockdowns in that state ended last week.

Wesfarmers revealed on Thursday that the sales declines in the first eight weeks of the 2022 financial year had turned around, with sales growth returning to some of its retail business in recent weeks.

Mr Scott said since August, when Wesfarmers delivered its full-year results, there had been an improvement in sales for its key retail chain Bunnings

as well as Officeworks and online marketplace Catch. Results in Kmart and Target have been impacted by temporary store closures, however.

“Lockdowns, governmentmandated store closures and other restrictions have significantly impacted trading conditions for the group’s retail businesses in recent months,” Mr Scott was expected to say at the company’s annual general meeting in Perth later on Thursday. “There have been periods during which almost half of our retail stores were either closed or restricted in some way.

“Overall sales growth remains impacted by these restrictions, but our businesses are well positioned for the resumption of normal trade as restrictions continue to ease.”

Mr Scott said Wesfarmers had seen strong sales growth across stores in affected areas that had started to re-open, including those in NSW last week, demonstrating a level of pent-up customer demand in these areas.

“At our full-year results in August, we provided trading results for the first eight weeks of the financial year to give some context around the impact of lockdowns. Since then, sales growth has improved in Bunnings, Officeworks and Catch, while results in Kmart and Target have continued to be impacted by temporary store closures,” Mr Scott said.

Kmart and Target had recorded a 14.3 per cent slide in sales between July and August, with that sales plunge worsened by the permanent closure of some stores. For Bunnings, which proved itself a huge sales driver through the first year of the pandemic, sales were down 4.7 per cent for the first seven weeks of 2022.

“Trading performance in states and regions less impacted by restrictions has been resilient through the financial year to date,” Mr Scott said.

“Online sales have also remained strong despite some capacity constraints in online distribution channels. It is pleasing to see that the investment and focus directed to these capabilities over recent years has enabled our businesses to continue to serve customers, even during periods of significant disruption.”