Target starts shutting Aussie stores: dates confirmed

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    2022 Half-year results update

    Wesfarmers today provided an update in relation to the Group’s preliminary profit result for the half-year
    ended 31 December 2021, including details on the significant impact of COVID-related disruptions and
    costs on the performance of Kmart Group.
    The Group also provided an update on recent retail trading conditions. Further details on the 2022 half-year
    results and current trading will be provided at Wesfarmers’ results announcement on 17 February 2022.
    Wesfarmers preliminary half-year profit result1
    Wesfarmers expects to report net profit after tax (NPAT) of between $1,180 and $1,240 million, in line with
    current consensus expectations, for the half-year ended 31 December 2021.
    The Group’s performance for the half was supported by pleasing results in Bunnings and Wesfarmers
    Chemicals, Energy & Fertilisers, while results in Kmart Group and Officeworks were impacted by
    COVID-related disruptions and costs.
    Kmart Group half-year trading results
    Kmart and Target trading performance through the first half of the 2022 financial year was significantly
    impacted by COVID-19 restrictions, with almost 25 per cent of store trading days lost due to governmentmandated store closures.
    Trading conditions improved as restrictions eased during the second quarter of the 2022 financial year, but
    customer traffic to stores was impacted by rising community transmission of COVID-19 in some states,
    particularly during the Christmas trading period. Ongoing global supply chain disruptions were well
    managed during the period as a result of investments made to hold additional inventory domestically, but
    high levels of COVID-related absenteeism in New South Wales and Victorian distribution centres impacted
    the ability to deliver stock to stores in line with customer demand.
    Combined Kmart and Target sales declined 10.3 per cent for the first half and declined 5.2 per cent on a
    two-year basis. In addition to the factors outlined above, the decline in sales also reflected the permanent
    closure of 14 Target stores and 48 Target Country stores as part of the planned network changes, largely
    executed during the 2021 financial year. The performance of converted stores, when adjusted to exclude
    the impact of lockdowns, has been pleasing and in line with the business case. Combined online sales for
    Kmart and Target were 44.2 per cent higher than the prior corresponding period.
    Gross transaction value (GTV) growth for Catch was 1.0 per cent for the first half with elevated GTV growth
    during periods of lockdown offset by a decline in GTV, particularly within the in-stock business, as
    restrictions eased. Catch GTV growth on a two-year basis was 97.5 per cent for the half.
    1 All preliminary results are subject to review by the Group’s auditor.
    2 See page 3 for relevant retail calendars.
    3 Total sales growth and two-year total sales growth is calculated as growth between the first half of the 2022 financial
    year and the corresponding periods in the 2021 and 2020 financial years respectively.
    Half-year ended 31 December 20212 Total sales growth3
    2Y total sales growth3
    Online penetration
    (% sales)
    Kmart and Target (10.3) (5.2) K: 14.3 | T: 26.9
    Catch (gross transaction value) 1.0 97.5 100
    Page 2 of 3
    Kmart Group preliminary half-year earnings results
    Combined earnings before tax (EBT) for Kmart and Target is expected to be between $215 and
    $223 million for the half.
    Higher costs during the half reflected commitments made to pay team members when no meaningful work
    was available during lockdowns, additional support to team members when required to isolate, rising
    international freight costs and costs associated with elevated domestic stock holdings. In addition, the rapid
    temporary shift to online channels during lockdowns, combined with reduced team member availability,
    also impacted productivity and profitability during the period.
    An EBT loss for Catch of between $45 and $43 million is expected for the half, reflecting continued
    investment in team, technology, marketing, and capabilities to support long-term growth, as well as higher
    levels of inventory clearance compared to the prior corresponding period.
    For Kmart Group, EBT is expected to be between $170 and $180 million for the half.
    Recent retail trading conditions
    As a result of increasing cases of the COVID-19 Omicron variant in some states, retail trading conditions
    weakened in the last two weeks of the 2021 calendar year, and customer traffic to stores has remained
    subdued during the first half of January.
    Team member absenteeism associated with the COVID-19 Omicron variant has placed additional pressure
    on distribution centres and stores in some states, necessitating a reduction of trading hours in some stores
    and impacting supply chain productivity and stock availability. These issues are expected to persist while
    COVID-19 cases and the number of team members requiring to isolate remain elevated.

    courtesy of Bell Direct


    i hold WES

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