Shares of diversified retail powerhouse Wesfarmers Ltd (ASX: WES) climbed around 1% in late morning trade today following the release of its 2015 annual profit result.
In the year ended 30 June 2015, Wesfarmers experienced a 3.7% lift in revenues, but a 9.3% drop in statutory net profit.
However, excluding the effect of the Insurance division divestment and an impairment associated with Target, profit rose 8.3% year over year.
The key drivers of the results were once again a profit margin improvement from Coles, and a robust performance from Bunnings Warehouse and Officeworks.
In addition to profit margins expanding from 4.47% to 4.66%, Coles also saw increased sales momentum thanks to growth in customer transactions, average basket size and sales density.
"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," Managing Director, Richard Goyder, said.
The Industrials and Safety and Resources divisions were the only blemishes on an otherwise good report card from Wesfarmers.
A final dividend of $1.11 per share was declared, up from $1.05 last year, taking the full-year payout to $2 per share.
Wesfarmers' dividend reinvestment plan (DRP) will also be in effect for the final payment.
Outlook
Despite the challenges facing some of Wesfarmers' smaller business units, Mr Goyder said the company looks forward to delivering increased value to shareholders in the years ahead. The Group is well placed to strengthen and further build upon its existing businesses with a focus on seeking to deliver improved returns to shareholders, he said.
Is it time to buy Wesfarmers shares? Personally, I think Wesfarmers' results were solid and it beat most of my conservative growth expectations. However, based on a quick update on key metrics in my valuation models, I continue to believe Wesfarmers is not priced for buyers today.
