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Wesfarmers profit jumps after retail spending spree

The Advertiser 2020-08-20 08:25:00

Wesfarmers has booked full-year earnings of more than $2 billion after the Federal Government’s COVID-19 stimulus measures boosted retail sales.

The 2019-20 net profit was an 8.2 per cent improvement on the previous financial year when it racked up costs for the Coles demerger.

The latest result came after the group took a $525 million pre-tax impairment relating to closing underperforming Target stores and converting some into Kmarts.

The diversified conglomerate’s revenue jumped by more than 10 per cent due to higher retail sales, particularly at its cash cow Bunnings hardware chain and also Officeworks as customers spent more time working, learning and doing projects at home.

Sales growth was also strong for Kmart despite volatile trading conditions, Wesfarmers said, while online sales overall jumped 60 per cent, with the recent acquisition of online department store Catch proving a smart move.

The group said restrictions in Victoria and New Zealand would likely affect sales, but the outlook was generally for higher demand across its retailers.

“Online sales have increased significantly through July and August across all retail businesses,” Wesfarmers said.

But sales would be affected by the gradual removal of government stimulus measures.

“The continued impact of COVID-19 and potential government responses presents significant uncertainty for the operating environment,” Wesfarmers said.

The group declared a final dividend of 77 cents per share, bringing the full-year payout to $1.52 per share.

Originally published as Hardware giant Wesfarmers’ cash cow