Covid disruptions weigh on Wesfarmers' (ASX:WES) sales

Company News

by Lauren Evans

Wesfarmers (ASX:WES) expects a first half after tax profit of between $1.18 billion and $1.24 billion for the six months ending December 31, in line with consensus expectations.

The conglomerate’s performance for the half was supported by pleasing results in Bunnings and Wesfarmers Chemicals, Energy & Fertilisers, while results in Kmart and Officeworks were impacted by pandemic-related disruptions and costs.

Kmart and Target saw almost 25 per cent of store trading days lost due to government mandated store closure with combined sales declining 10.3 per cent for the period. Combined earnings before tax for Kmart and Target is expected to be between $215 and $223 million for the half.

Wesfarmers said higher costs during the half reflected commitments made to pay team members when no meaningful work was available during lockdowns, additional support to team members when required to isolate, rising international freight costs and costs associated with elevated domestic stock holdings.

Gross transaction value (GTV) growth for Catch was 1 per cent for the first half with elevated GTV growth during periods of lockdown offset by a decline in GTV, particularly within the in-stock business as restrictions eased.

Wesfarmers noted that retail trading conditions weakened in the last two weeks of 2021, and customer traffic remained subdued during the first half of January.

The company added that team member absenteeism associated with the Covid-19 Omicron variant has placed additional pressure on distribution centres and stores in some states, necessitating a reduction of trading hours in some stores and impacting supply chain productivity and stock availability.

Shares in Wesfarmers (ASX:WES) are trading 2.8 per cent higher at $55.52.

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