MENU

Wesfarmers Ltd reports quarterly sales, Bunnings still the crown jewel

Photo credit: AS 1979

Wesfarmers Ltd (ASX: WES) is Australia’s largest retail business, it operates Bunnings, Coles, Target, Kmart and Officeworks.

Every quarter the conglomerate reports its quarterly sales figures, so investors can see how the retail giant is tracking.

Wesfarmers reported that Bunnings Australia & New Zealand grew sales by 8.9% to just over $3 billion. Most of this growth was achieved through strong same store sales growth, which was 7.7% for the quarter. Managing Director Rob Scott attributed this performance to continued focus on delivering increased value and better experiences for customers.

However, investors will likely be disappointed by the Bunnings UK & Ireland result. Sales decreased by 6.5% to $374 million, however it was even worse in local currency terms with total sales down 13.5% and same store sales down 15.4%. Management said that trading results had improved early in the quarter but severe weather in March had significantly affected trading, particularly for outdoor products.

Coles’ total sales increased by 0.3% to $9.05 billion. Convenience sales dropped by 8% whilst Food & Liquor increased by 1.9%. Comparable food and liquor sales increased 0.9% and price deflation came in at 0.7% for the quarter.

Coles Managing Director John Durkan said “Continued improvement in customer satisfaction levels was a highlight for the quarter, particularly in the areas of customer service, range and availability, which supported continue growth in customer transactions.”

Department store sales increased by 6.2%, within this figure Kmart achieved sales growth of 10.2% whilst Target’s sales fell by 2%. Kmart achieved growth in all categories compared to last year by maintaining price leadership as well as improving its product offering, according to Kmart’s Managing Director, Ian Bailey.

Finally, Officeworks achieved sales growth of 8.8% to almost $600 million. Officeworks Managing Director Mark Ward said the continuation of strong sales growth across stores and online in a competitive market was very pleasing.

Foolish takeaway

Bunnings ANZ and Kmart continue to impress, their sales growth is very good considering how sluggish the Australian economy is. Wesfarmers will need to work hard turning Bunnings UK&I around before it turns into another Masters.

Overall, I thought this was a decent release by Wesfarmers and I can see why Coles is being ejected from the group – it’s unlikely its sales, let alone profit, is going to shoot upwards any time soon.

I wouldn’t buy Wesfarmers at the current share price, but if it acquires other businesses with good growth prospects it could become an interesting option.

If you're looking for a solid growth option, I'd rather buy this top growth share which is predicting to grow its profit by at least 30% this year, that's why it's in my portfolio.

OUR #1 dividend pick to grow your wealth over the new financial year is revealed for FREE here!

Financial year 2018 is here and The Motley Fool's dividend detective Andrew Page has revealed his must buy dividend share to grow your wealth in 2018.

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.