Wesfarmers lifts profit
The Coles owner made a net profit of $2.69 billion in the year to June 30, up from $2.26 billion in the previous year.
Earnings from Coles supermarkets were up nine per cent to $1.67 billion.
Wesfarmers expects further growth from its retail businesses in 2014/15, though Target will continue to face challenges.
“Coles, Bunnings, Officeworks and Kmart all have good momentum as they lead into the 2015 financial year, while Target is expected to undergo significant change and improve as it progresses its transformation plan,” the company said.
It will return $1.1 billion to shareholders through payments of $1 per share, though the distribution is contingent on a ruling from the Australian Taxation Office (ATO).
The payment will come on top of Wesfarmers’ final dividend of $1.05 per share, and a special dividend of ten cents per share, which takes its full year dividends to $2 per share.
MD Richard Goyder, said Coles lifted sales despite another slide in grocery prices.
“Coles delivered another good result, with sales growth accelerating in the final quarter,” he said.
“Increased earnings were driven by improvements in customer value, increased fresh sales, a better store experience and lower costs of doing business.”
He said Coles’ liquor store business did not perform as well, but earnings were expected to grow following a restructure of the division.
Meanwhile, Bunnings lifted earnings 8.3 per cent during the year, while earnings from Officeworks and Kmart were up 10.8 per cent and 6.4 per cent, respectively.
But Target continued to drag, with earnings down 36.8 per cent.
Goyder said strong competition pushed down the department store’s prices and profit margins, though the company cut costs and improved store standards during the year.
He said the lower prices were also the result of Wesfarmers’ strategy to turn around the business and attract more customers.
Outside of the retail businesses, earnings from Wesfarmers’ chemicals division were down 11.2 per cent to $221 million, while earnings from the resources division were down 12.2 per cent and industrial and safety earnings were also lower.
At 1025 AEST, Wesfarmers shares were up 79 cents, or 1.8 per cent, at $44.79.