Wesfarmers 22% E-Commerce Growth

By Peter Krideras | 21 Feb 2018

Wesfarmers has announced an 87% profit plunge, with its bricks and mortar focused Bunnings stores spelling disaster. The retail group says a greater focus on online will be one of its core strategies moving forward.

As its Bunnings UK store losses continue to accelerate and Target underperforms, more than $1.3 billion has been wiped off Wesfarmers 2018 half-year profit, a downgrade of 87 percent, reporting a net profit of $212 million, down $1.57 billion for the same period last year.

The plummet is largely due to a $1 billion writedown of its Bunnings UK and Ireland businesses as well as a $306 million writedown in the value of its Target business.

“The loss for the half reflected continued trading and execution challenges as a result of the rapid repositioning of Homebase following the acquisition,” Wesfarmers managing director Rob Scott said in a statement. “The management team has been strengthened and a review is underway to identify the actions required to improve shareholder returns.”

Wesfarmers biggest retail business, Coles, saw its profit fall 14.1 percent to $790 million. While rival Woolworths has outpaced Coles in every sales quarter since December 2016, the grocery chain still hasn’t revealed its 2018 half-year figures as yet.

Kmart was ahead, however, with sales up 5.4 percent, which Scott attributes largely to investing “significantly in the customer offer during the half delivering greater value for customers and driving continued growth in volumes”.

Online Performance

Wesfarmers success in its e-commerce channels for the first half, however, was overshadowed by its doom and gloom with Bunnings. The group reported that online sales were up 22 percent to $761 million for the first half of the 2018 financial year.

Officeworks continued to strengthen is its market-leading “every-channel” proposition to customers, with free click-and-collect and free same day delivery paying off.

Coles also invested in improving convenience for online customers, including opening a second dark store opened in Sydney, increased fulfilment options and delivery efficiency, as well as significant expansion in click-and-collect sites.

Wesfarmers’ department stores also delivered strong online sales growth, by leveraging Flybuys to deliver better value and greater personalisation to shoppers.

The group says that it will continue to drive sustainable growth for Kmart by improving product availability online and in-store, focusing on competitive prices and refurbishing its store network. Growing the online offerings will also be part of Target’s strategy moving forward,  along with improving fashionability, sales mix and quality of sales.

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1 Comment

One thought on “Wesfarmers 22% E-Commerce Growth”

  1. Anthony says:

    To some extent the increase in online will be cannibalising their own stores sales, so the growth in their online strategy is more defensive then offensive. I.e. Bunnings and officeworks have no large threats (on or offline), so an online strategy won’t take sales from anyone else except themselves.

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