Despite the recent market rout, Wesfarmers shares actually delivered in Q1. Here’s the lowdown

Despite the recent market rout, Wesfarmers shares actually delivered in Q1. Here's the lowdown

The ASX 200 retail-focused favourite posted a gain for the three months ended 30 September.

Brooke Cooper

Brooke has been a Motley Fool contributor since early 2021. She holds a Bachelor of Communication with specialisations in journalism and international studies from Charles Sturt University. Brooke aims to inform and excite Aussies keen to grow their wealth by investing in ASX companies. When not writing or researching, you'll likely find Brooke gallivanting around South East Queensland.

Published October 10, 2022 9:35 am AEDT

The three months ended 30 September were rough on the broader market. Yet Wesfarmers Ltd (ASX: WES) shares gained over the period.

After closing June trading at $41.91, the Wesfarmers share price was $42.72 at the end of September. That marks a 1.93% gain for the most recent quarter.

Indeed, at its highest point of the quarter, the S&P/ASX 200 Index (ASX: XJO) retail-focused conglomerate's stock was swapping hands for $49.27 – 17.5% higher than its June close.

Meanwhile, the ASX 200 tumbled 1.43% over the September quarter.

So, what pushed the Wesfarmers share price to outperform the market? Let's take a look.

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What went right (and wrong) for Wesfarmers shares in Q1?

Certainly, the September quarter was rough on both the ASX 200 and Australians' back pockets.

The Reserve Bank of Australia hiked interest rates from 0.85% to 2.35% over that period while high energy prices and inflation also took their toll on consumers.

Of course, what's bad for consumers is generally also bad for S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) shares. And such impacts seemingly took their toll late in the quarter.

However, Wesfarmers' full-year earnings, released in August, surpassed expectations.

The company posted $36.8 billion of revenue – up 8.5% year on year — and $3.6 billion of earnings before interest and tax, down 3.8%. Its after-tax profits slumped 1.2% to $2.35 billion.

The ASX 200 favourite also upped its full-year dividend offering by 1.1%, declaring a $1 final dividend. That was paid out last week.

Finally, it revealed the first seven weeks of financial year 2023 had brought continually robust trading conditions and benefits for both the company's retail businesses – including iconic Aussie hardware store Bunnings – and its industrial businesses.

That might have bolstered the market's hopes for the stock just in time for a September downturn.

The Wesfarmers share price tumbled 9% last month compared to the ASX 200's 7.3% slump.

And while the stock outperformed over the September quarter, it closed the period nearly 29% lower than it started 2022. For comparison, the ASX 200 dumped close to 15% over the first nine months of the year.

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