Wesfarmers posts AU$3.76b in pre-tax earnings, online sales see boost

Australia's largest retail chain, Wesfarmers, posted an EBIT of AU$3.76 billion, with a revenue of AU$62.4 billion for the 2015 financial year. The conglomerate witnessed growth in its online sales, and saw the adoption of digital payment systems across the 12 months ending June 30 2015.

Wesfarmers has recorded an annual earnings before interest and taxes (EBIT) of AU$3.76 billion, down 9.4 percent from FY14's AU$3.66 billion in absolute terms thanks to the disposal of its insurance division, but posted an underlying increase of 5.4 percent.

The retail giant's grocery arm, Coles was the top retail performer this year, leveraging off its growing digital bag of tricks, whilst homegoods store Target increased its online sales by 51 percent.

With an operating revenue of AU$62.4 billion, Richard Goyder, managing director of the Perth-based conglomerate said it was pleasing for his company to record a solid increase in underlying profit for the year.

"The group's retail portfolio delivered strong earnings growth," the managing director said. "All our retail businesses grew earnings and benefited from their hard work to deliver an improved merchandise offer and genuinely better value for customers."

Wesfarmer's highest retail performer, Coles experienced an EBIT increase of 6.6 percent year-on-year to AU$1.78 billion, and made over AU$38 billion in revenue.

During the company's end of year results presentation, John Durkan, Coles managing director, highlighted the success of his division's financial service offerings, such as the Coles mobile wallet.

The grocery chain's mobile wallet was launched in July last year, which integrates near-field communications (NFC) into its iOS and Android smartphone apps. The mobile wallet allows customers to view Flybuys accounts in-app, along with their Coles credit card account, available credit, and transaction history.

Durkan commented on the competitive nature of the wallet, as well as the successful accomplishment of his division in reaching 880,000 insurance and credit card customers.

"Further improvements were also made to Coles' store network as well as online, financial services, and Flybuys business platforms," Durkan said.

The Coles online store experienced strong customer growth, and its online "click and collect" function helped the 12 percent increase in the division's efficiency.

Coles online general manager Mark Cripsey had previously told ZDNet that the "click and collect" was a result of redefining a business model, saying that in order to keep up with the demand of customers, Coles needed to be as agile as startups are when it comes to releasing new products on the market.

The company's home improvement and office supplies division -- which includes Officeworks and trades supply chain Bunnings Warehouse -- posted an 11.5 percent EBIT increase from FY14 to AU$1.2 billion. Bunnings carried the stationary supplier on its shoulders, with the latter pulling in EBIT of AU$118 million, versus the harware store accounting for AU$1 billion of the division's earnings.

John Gillam, managing director for the division said that Bunnings had its "business strength advanced", with an IT refresh, which saw the overhaul of its stock database requirements.

"In each of the 2016 and 2017 financial years, 15 to 18 new Bunnings stores are expected to open," Gillam said. "Achieving greater brand reach, both digitally and physically provides a significant growth opportunity, and includes the expansion of Bunnings' digital ecosystem and strong new store pipeline."

Officeworks continued to back its online presence, with Gillam claiming that the online enhancements were received favourably by customers.

Target saw its earnings increase by 4.7 percent year-on-year, with the homewares-focused chain claiming EBIT of AU$90 million.

Stuart Machin, Target's managing director made note of his division's online sales growth, experiencing a year-on-year increase of 51 percent, also marking the departments first year of positive earnings.

"[Target] benefited from investment in a more robust and scalable platform," he said.

Machin told shareholders that Target will continue to invest in the company's online presence to keep up its momentum.

Kmart experienced 18 percent growth year-on-year and EBIT of AU$432 million, opened 11 new stores, and completed 29 refurbishments -- placing its unmanned assistive checkouts in the middle of the store floor.

On the retail giant as a whole, Goyder told shareholders he believes the group is well placed, and will seek to create increased value for customers.

"Each business has strategies aimed at driving increased merchandise innovation, better customer service, and extending channel reach and performance through improving store networks and digital offers," Goyder said.

"As the group enters the 2016 financial year, the Coles, Bunnings, Officeworks, and Kmart businesses all have good momentum, with Target expected to improve as its transformation plan continues."


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