Published
Feb 15, 2017
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Wesfarmers profit gains 13% on positive Kmart, Target suffers

Published
Feb 15, 2017

Wesfarmers said on Wednesday that first-half profits gained 13.2% on last year, a much better-than-expected increase, to $1.58 billion (US$1.2 billion), where analysts had predicted a profit of $1.47 billion for the six months ending December 31.


Kmart


The owner of Target, Kmart in Australia and supermarket giant Coles, said group earnings before interest and tax rose 15.1% to $2.43 billion, helped by a $256 million turnaround in the firm's resources division on the back of surging coal prices.

Total group sales were up 4.3% to $34.9 billion, just missing expectations of around $35.1 billion. This was affected by a sales dip of 0.2% to $20.05 billion at Coles, said the group.

After vast product improvements at the group's Kmart division in recent years, the affordable apparel and lifestyle retailer continued to remain the strongest link in Wesfarmers' department store division chain. The group said Kmart's EBIT rose 16.3% to $371 million. This was offset by a struggling Target, which recorded a $58 million slump in earnings to $16 million.

However, Wesfarmers added that Target's performance in the second half is expected to improve as a new merchandise range is implemented and costs fall, much like the strategy already taken with Kmart to position it as a value store.

In a separate statement this week, Wesfarmers said managing director Richard Goyder will step down this year after more than 12 years in charge of the company to be replaced by his new deputy, Rob Scott. Goyder is retiring, with Scott taking the helm at the group's annual general meeting in November. He will be promoted to deputy chief executive with immediate effect.

The incoming chief has filled various senior roles at Wesfarmers since joining in 2004. This includes finance director of Coles. Scott was also a gold medal winning rower at the Atlanta Olympic Games in 1996.









 

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