The fortunes of Wesfarmers are increasingly tied (and the share price for that matter) to the performance of its Bunnings hardware chain, judging by the latest trading update for the Perth based giant.
In a trading update issued ahead of its AGM yesterday, Wesfarmers said Bunnings had driven sales growth for the group in the first months of the 2020-21 financial year, helped by the continuing surge in online sales.
Wesfarmers said in the update its retail brands delivered online sales growth of 166% from July to October, or 98% if orders from locked-down metro Melbourne were excluded.
Including its Catch marketplace, total online sales across the Group increased to $1.3 billion in the year to date. That’s an annual rate of well over $5 billion.
Shares in the firm rose to near-record highs on Thursday, peaking at $49.39, just short of the $49.67 hit in August. The shares closed up 2.5% at $48.70.
Bunnings delivered the standout performance, with total sales growth of 25.2% thanks to customers spending more time around improving their homes.
Officeworks also continued to ride demand for home office supplies and products, with sales growth of 23.4%. Excluding metro Melbourne, the rise was 30.8%.
Trading was weaker at Kmart and Target, where government-mandated shutdowns in Victoria had resulted in the closure of 70 stores across the two brands during stage four restrictions.
When Victorian sales were included in the calculations, total Kmart sales growth was 3.7%, while Target was down 2.2%.
Wesfarmers CEO Rob Scott said that while the shutdowns in Victoria had been very tough for customers and staff, sales had been “very strong” since bricks and mortar stores had re-opened on October 28.
“Despite the challenging operating environment, the results across the Group’s retail businesses reflect their continued focus on meeting the changing needs of customers and delivering greater value, quality and convenience while providing safe and trusted environments for customers to shop,” he said.
Wesfarmers’ industrial businesses had solid quarters.
“The Group’s industrial divisions have made a pleasing start to the year,” Wesfarmers said in Thursday’s update.
“In Chemicals, Energy and Fertilisers demand for ammonium nitrate remains resilient but, as always, the outlook for the division is dependent on commodity prices and seasonal conditions.
“Within Industrial and Safety, Blackwoods has benefited from growth in sales to major customers and strong demand for safety and hygiene products while the demand from oil and gas, and general manufacturing customers has been weaker,” the statement said.