Wesfarmers warns of sales volatility at Bunnings, Kmart

Retail giant Wesfarmers has warned of volatile and negative sales at its major retailers Kmart, Target, Bunnings and Officeworks in recent months as the company struggles to match the roaring growth seen through COVID last year.

In a high-level trading update provided to investors ahead of Wesfarmers’ strategy day on Thursday, the Perth-based retail conglomerate said its retail businesses had seen “significant volatility” in its monthly sales growth.

Sales at Wesfarmers’ retail businesses such as Bunnings have slowed in recent months.Credit: Jacky Ghossein

Many of Wesfarmers’ businesses were major beneficiaries of last year’s lockdowns, with housebound shoppers flocking to Bunnings and Officeworks for DIY supplies and home office setups.

However, that heightened growth a year ago has been difficult for the business to match, with Wesfarmers saying sales had “generally moderated” and had even been negative in some months for some businesses.

Chief executive Rob Scott told shareholders while he was feeling positive about Australia’s economic recovery in the long term, short-term risks, such as the current lockdown in Victoria, remained.

“Australia’s economic recovery and employment growth continues to lead the world and there are reasons to be positive about the outlook for household income and business activity,” he said.

“However, in the shorter term, there remains significant risk and uncertainties – the potential for future lockdowns, speed of community vaccination, further COVID mutations and the risk of punitive taxes and regulations that dampen job creation and investment.”

On a two-year basis, stripping out the effects of the pandemic, all of Wesfarmers’ businesses reported strong sales growth. However, online growth at the retailers’ businesses had also moderated as more customers returned to shopping in-store, though overall online penetration has remained above pre-COVID levels.

Mr Scott also said the company was continuing to see pricing pressures due to increased shipping and freight costs and some higher prices for raw materials such as timber and cotton, though noted these were short-term impacts.

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