Despite trading in a difficult period for retailers, Wesfarmers has achieved a net profit after tax of $1.9 million for the full year ended 30 June 2011, an increase of 22.8 per cent on the previous corresponding period.
This result was helped by its retail businesses that recorded solid combined earnings growth for the year, up 8.2 per cent to $2.5 million, particularly strong performances from Coles and Bunnings, which outpaced revenue growth of 5.4 per cent for the same period.
Managing director Richard Goyder said the Group’s result reflected a strong performance during a year affected by natural disasters and a subdued retail trading environment.
“It is pleasing to report solid earnings growth across the Group’s retail divisions, ahead of sales growth. During the period all of our retail businesses have reinvested to deliver improvements in value, quality and service. This investment continues to be rewarded by increased customer transactions and volume growth across all retail brands,” Goyder said.
“The Group’s retail businesses are well-placed given the strong foundations and improvement plans in each division targeted at improving the customer offering, driving operational efficiencies and reducing costs of doing business.”
The Coles division delivered strong earnings growth of 21.2 per cent for the year, increasing earnings by $204 million to $1,166 million. The result confirms that the Coles turnaround remains on track, with the business growing faster than the market for nine consecutive quarters. A range of efficiency programs also drove improvements, including the completion of the Easy Ordering grocery and dairy roll-out in stores. The store renewal program continued to drive positive results with 144 renewal stores trading at year-end.
Liquor trading was more subdued during the year despite pleasing 1st Choice performance as customers continued to shift to big box liquor formats.
Bunnings was also another strong performer where earnings increased by 10.2 per cent to $802 million for the year. Earnings growth was underpinned by good merchandising execution and a strong focus on cost management. Network expansion resulted in 27 new locations being opened during the year.
Kmart and Officeworks both recorded earnings improvements and strong uplift in customer transactions and unit growth as they continued to make good progress in repositioning their offers. Kmart delivered earnings growth of 4.1 per cent, supported by improvements in product sourcing and reductions in the cost of doing business while Officeworks generated earnings of $80 million, 8.1 per cent higher than the previous year
Additionally, sales in many of Target’s core departments were solid, but were offset by declining sales in electrical and ladies outerwear.
“The Group remains positive in its outlook, subject to any adverse shocks from a fragile global economy, given the solid operating fundamentals in place across the divisions and an expected recovery from one-off impacts associated with natural disasters experienced during the prior period,” the company said.
“While the outlook for future performance of the Group’s retail divisions remains subject to any further declines in consumer confidence, the retail brands are well-placed given their staples and value-based positioning. There remains significant opportunity to continue to improve the turnaround businesses of Coles, Kmart and Officeworks, while Bunnings and Target are expected to benefit from ongoing initiatives to enhance the customer experience and investment in new and refurbished stores.”