(Reuters) – Wesfarmers Ltd said on Friday that sales growth at its division had been flat so far in the new financial year after the Australian retailer reported 2022 lower profits. very strong.
The company said sales improved in the second half of the year, particularly in its Kmart segment, which includes Target-branded stores, and momentum continued as COVID restrictions eased Continuing into the new financial year.
In an effort to quell the COVID-19 outbreak in Australia, the government enforced store closures in the first half of the financial year 2022, resulting in increased spending and a loss of staff absence from work.
Retailers including Wesfarmers have also been grappling with rising raw material prices and falling demand as inflation-stricken consumers prioritise essentials.
“Kmart operates in an inflationary environment to extend its low-price lead and profitably increase its share of customers’ wallets,” the company said in a statement
Retail trading conditions remained strong in the first seven weeks of the new financial year, Wesfarmers said.
“While headline inflation remains high, prices for some inputs such as cotton, lumber and plastic resins have slowed in recent months,” the company said.
Last quarter’s solid Australian retail sales data showed that Australian consumer spending remained strong even as inflation hit 21 new year highs.
The company’s home improvement chain, Bunnings, which contributes nearly two-thirds of Wesfarmers’ annual profit, improved after a weak first half, with total store sales up in the last six months 7.8%.
Wesfarmers net profit after tax, excluding one-time costs, fell 2.9% to $2.35 $1 billion ($1.884 billion), but beat analysts’ estimates of A$2.25 billion, according to Refinitiv.
The company expects net capital expenditure to be between A$1 billion and A$1. 25 Fiscal 2023, compared to A$ million 25 a year ago.
($1 = 1.4331 AUD)