Wesfarmers says cost-conscious consumers kept flocking to its Kmart stores during the second half of last year, helping the conglomerate lift its profit by three per cent.
The WA company announced on Thursday it made $1.43 billion in net profit after tax in the half year that ended December 31, up from $1.38 billion for the same period in 2022.
Revenue was up 0.5 per cent to $22.7 billion and Wesfarmers increased its dividend by 3.4 per cent to 91 cents per share.
Wesfarmers managing director Rob Scott said Wesfarmers retail divisions performed strongly during the half as households increasingly sought value.
"For the half, the Kmart Group reported very strong earnings, and saw more customers buy more Anko products," Mr Scott said, referring to Kmart's in-house brand.
"Customers like the Anko products and the price, including the new beauty and youth ranges."
Mr Scott told reporters that the strong performance of its Anko range was the result of many years of work. Apparel had been a standout performer, he added, with customers increasingly trusting the quality of the clothing.
Kmart Group, which includes Target stores, grew earnings to 26.5 per cent to $601 million, as revenue climbed 4.8 per cent to $6 billion.
Kmart's same-store sales were up 7.5 per cent, while Target same-store sales were down 2.9 per cent.
Bunnings sales were up 1.2 per cent, with Mr Scott saying its new ranges of pet and cleaning products had been successful.
"These ranges provide great value and have been trading well, bringing new customers into stores and supporting shopping frequency."
Officeworks posted $1.7 billion in sales, up 1.8 per cent from a year ago, and Mr Scott said it was continuing to gain market share in technology products.
Wesfarmers' Catch.com.au business saw gross transaction value drop 29.7 per cent to $317 million, which Wesfarmers said was due to a planned reduction in-stock range.
The e-commerce business, bought by Wesfarmers for $230 million in 2019, posted a $41 million loss, down from a $108 million loss a year ago.
Wesfarmers' chemicals, energy and fertilisers division saw earnings decrease 46.9 per cent to $172 million, driven by lower global commodity prices, especially for ammonia and fertiliser products.
For the first five weeks of 2024, Kmart Group has continued to deliver strong sales growth, Wesfarmers said.
E&P Capital retail analyst Phillip Kimber said it was a good result by Wesfarmers, with Kmart doing particularly well.
In late Thursday trading, Wesfarmers shares were up 5.0 per cent to a two-and-a-half-year high of $61.86.
