Wesfarmers Ltd (ASX: WES) shares have performed impressively for shareholders, delivering capital growth of approximately 30% over the past year.
An important element of that share price rise has been the growing Wesfarmers profit.
Investors typically value a company based on how much profit it makes, so a stronger profit should help push the share price higher over time.
Bunnings and Kmart have excelled in the past year or two, providing customers with good-value products that may appeal more to households during this period of high cost of living.
In its FY24 result, Wesfarmers's total revenue increased by 1.5% to $44.2 billion, while Bunnings' revenue rose 2.3% to $19 billion, and Kmart Group's revenue increased 4.4% to $11.1 billion.
Wesfarmers' FY24 earnings increased by 3% to $3.75 billion, while Bunnings earnings increased by 0.9% to $2.25 billion, and Kmart Group earnings increased by 24.6% to $958 million.
With total net profit after tax (NPAT) growing by 3.7% to $2.56 billion, investors may be wondering if Wesfarmers can continue its winning streak.
Let's examine what the company could achieve in the coming years in terms of profit growth.
Expectations this financial year, FY25
We're already into the third month of the 2025 financial year, so it's not too long to wait until the company's annual general meeting in October. This is when Wesfarmers normally provides some comments about trading and also outlines some of its strategic initiatives.
When the company released its FY24 result, it said some household budgets were being challenged, and Wesfarmers' business costs, including wage increases, were expected to persist in FY25.
In terms of trading, Kmart Group and Bunnings delivered sales growth in the first eight weeks of FY25. Officeworks' sales growth was approximately 3% at the start of FY25.
The company continues to work on its lithium mine, concentrator and refinery.
Broker UBS is currently forecasting that in FY25, Wesfarmers' revenue could grow by 2.6% to $45.35 billion, and the NPAT could rise by 3.1% to $2.64 billion.
The broker recently reduced its price expectations for lithium over the next years between FY25 and FY27.
Next financial year, FY26
If RBA interest rate cuts happen in FY25, then the 2026 financial year could see the full economic benefits of those rate reductions.
FY26 could also be the year when Wesfarmers' lithium operations are fully online, which could mean the end of construction costs and the start of revenue generation for the lithium project.
Wesfarmers could benefit from a significant recovery in consumer sentiment, particularly if it means more household and construction spending at Bunnings.
Currently, UBS analysts are suggesting that Wesfarmers' FY26 revenue could rise by 4% year over year in FY26 to $47.2 billion. The NPAT could rise by 7.6% year over year to $2.84 billion.
What about FY27?
Ongoing profit growth could continue in the 2027 financial year, according to the analysts at UBS.
It's hard for a retail business of Wesfarmers' size to keep growing revenue and net profit at a good pace, but that's exactly what UBS expects the ASX blue-chip share to deliver.
According to the broker's projections, the company's revenue is projected to grow by 4% in FY27 to $49 billion, and the NPAT could rise again by 8.8% to $3.09 billion.
Finally, a look at FY28
The 2028 financial year is expected to show growth in the final year of this series of projections.
UBS projects Wesfarmers' revenue to grow by 4% to $51.06 billion, which could increase net profit by 7.2% to $3.3 billion.
While these projections don't show big increases, it's very promising that profit could steadily rise at a good rate. We don't know with certainty how the Wesfarmers share price will perform, but profit growth would probably be the most helpful factor in the next few years.
