Wesfarmers to dish out $2.3b to shareholders after bumper year

Retail conglomerate Wesfarmers has surprised investors with a $2.3 billion return of capital after a solid financial year which saw profits jump 16 per cent.

The company, which owns Bunnings, Kmart, Target and Officeworks, said it would issue shareholders with a $2-a-share payment in December in a move the company said would reset its capital structure and guarantee a good return for investors after a bumper financial year.

Bunnings owner Wesfarmers has surprised shareholders with a $2.3 billion return of capital.Credit: Jacky Ghossein

This is on top of an additional 90 cent per share dividend set to be paid by the business on October 7, bringing the full-year payout for Wesfarmers shareholders to $3.78 a share.

Wesfarmers has been a major beneficiary of the COVID-19 pandemic thanks to the general consumer spending boom and many of its stores being allowed to trade through lockdowns.

Revenue for the 12 months to the end of June rose 10 per cent to $33.9 billion, and net profit after tax jumped 16.2 per cent to $2.4 billion. When stripping out one-off costs such as an impairment on Kmart and the valuation of the company’s investment in Coles, earnings soared 40.2 per cent.

However, recent lockdowns are threatening to dent Wesfarmer’s continued strong performance, with the business reporting sharp falls in sales for all its divisions through July and August.

Sales at Bunnings are down 4.7 per cent and trade across Kmart and Target has fallen 14.3 per cent. Online retailer Catch’s gross transaction value has dropped 8.5 per cent. Officeworks, which has been allowed to remain open for much of NSW’s lockdown, only reported a 1.5 per cent fall.

The lockdowns have also imposed additional costs on Wesfarmers, including payroll costs of $2 million to $4 million a week as Wesfarmers continues to pay the wages of all permanent and many casual team members throughout lockdowns.

Rob Scott, the company’s managing director, said impacts of lockdowns had become more acute and any further widespread restrictions would negatively impact the business.

“While COVID-19 had a significant impact on operations during the year, the Group’s businesses maintained their focus on building deeper customer relationships and trust,” Mr Scott said.

“In line with Wesfarmers’ objective of delivering superior and sustainable long-term returns, the businesses continued to invest in providing greater value, quality and convenience for customers, including through strengthened data and digital capabilities.”

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