At Wesfarmers' annual general meeting, chief executive Richard Goyder said the company would continue to remain cautious about the retail environment as the company enters trading for the festive season. 

“It is a challenging environment, but we are fortunate to have a number of turnaround businesses which have performance improvement opportunities within them, and our businesses are at the right end of the value chain. As always, the Christmas trading period and immediate aftermath will be important,” he said.

“We remain quite cautious on the near term, with current trading reflecting a subdued environment, continued deflation and, if anything, a more purposeful customer, notwithstanding the recent reduction in interest rates.”

But according to Goyder, given the trading environment, the group, which includes Target, Kmart, Bunnings, Coles and Officeworks, is “well placed”.

In its first quarter retail sale results, strong sales growth was seen in Coles food and liquor of 5.5 per cent while Bunnings experienced sales growth of 8.5 per cent.

On the other hand, sales for the Officeworks business were flat, following strong growth in the previous corresponding period. Solid double-digit transaction growth was offset by deflation across a number of categories, particularly in technology and furniture.

Target’s total sales for the quarter were down 1.4 per cent, affected by a continuing high level of promotional and clearance activity by retailers generally. The business remained competitive during the quarter and worked hard to ensure that seasonal inventory was tightly managed.

Kmart continued to focus on delivering the lowest possible prices across the store. Total sales were broadly in line with last year, with another quarter of strong growth in customer transactions and volumes offsetting the investment in lowering prices

“Trading in the group’s other retailers was affected by the low levels of consumer confidence, as well as continued price deflation given the high level of promotional activity experienced across the market,” Goyder said.