Wesfarmers says COVID-19 disrupts H1 operations but bumps up online sales

Kmart and Target reported online sales are up by 44% compared to the same period last year.
Written by Aimee Chanthadavong, Contributor

Australian retail group Wesfarmers has reported as part of its 2022 half-year results update that combined online sales for Kmart and Target were 44% higher than the prior corresponding period.

Despite the uptick in online sales, combined Kmart and Target sales declined 10% year-on-year for the first half and 5% on a two-year basis.

Wesfarmers said retail conditions and the performance of Kmart Group -- which is made up of Kmart, Target, and Catch -- have continued to be impacted by COVID-related disruptions and costs.

"Kmart and Target trading performance through the first half of the 2022 financial year was significantly impacted by COVID-19 restrictions, with almost 25% of store trading days lost due to government-mandated store closures," the company stated on Monday.

"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."

Wesfarmers said it now expects to report group net profit after tax of between AU$1.18 billion and AU$1.24 billion for the half year ending 31 December 2021.

In earnings before tax (EBT) terms, for Kmart and Target combined, it is expected to land between AU$215 and $223 million for the half. Meanwhile, Catch will see an EBT loss of between $45 and $43 million, which Wesfarmers said will reflect the continued investment in team, technology, marketing and other capabilities to support the growth of the business.

For Kmart Group, EBT is expected to be between $170 and $180 million for the half.

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