Kmart and its sister business Target posted a sales rise of 24.1 per cent to $5.7 billion over the second half of 2022, parent company Wesfarmers revealed on Wednesday.
Kmart Group earnings soared by 114 per cent to $475 million, Wesfarmers stated.
“Kmart Group’s significant earnings result reflected strong operational execution, with comparable sales and volume growth,” Wesfarmers boss Rob Scott told investors.
“Customers continued to respond positively to Kmart’s lowest price[s].”
Bunnings, also owned by Wesfarmers, saw sales rise 6.3 per cent to $9.7 billion, with earnings of $1.2 billion (up by about 2 per cent).
The result comes just six months after Kmart Group’s boss said the retailer was making changes to its product manufacturing to ensure it could keep it prices low as rising inflation hit businesses and families.
The department store has been taking advantage of a business model called “vertical integration” to control what materials are being used to produce its products, allowing it to modify things as prices move around.
“If there’s a particular product type or material that’s going up in price faster than others, we’ll look to see how we can modify the construction of the product,” Kmart Group boss Ian Bailey said in August.
Kmart was benefitting from an ongoing conversion of many Target stores, which are poorer performers, Wesfarmers told investors.
But not every brand of the Perth-based retail conglomerate Wesfarmers is doing a roaring trade.
Catch, the online marketplace, posted a $108 million loss over the period, which Mr Scott admitted was “disappointing”.
“A reset of online demand following the COVID-19 period resulted in surplus inventory and an unsustainable cost base,” Mr Scott said.
