Wesfarmers has increased its dividend after beating consensus expectations with a $2.35 billion profit for 2021/22.
The KMart and Bunnings owner saw net profit after tax for the 12 months to June 30 fall 2.9 per cent during what managing director Rob Scott was the most disruptive year of the pandemic, including weeks in which nearly half of the group's retail stores were closed or subject to trading restrictions.
For the second half as restrictions eased, NPAT was up 13.1 per cent, Mr Scott said.
The company announced a fully-franked final dividend of $1 per share, up from 90 cents per share a year ago. Analysts had expected a 83.5 cent per share dividend and a full-year profit of $2.2 billion.
Sales in the first seven weeks of 2022/23 have remained robust and have been particularly strong for the division that consists of Kmart and Target.
Kmart Group managing director Ian Bailey told analysts that Kmart was uniquely positioned to grow in an inflationary environment.
"I think the first point thing to point out that our average retail prices are so low that any increase are going to be modest," he said.
Unlike most of its competitors, Kmart also has a complete line of sight on how its products are constructed, Mr Bailey said. If it sees that the prices of certain raw materials are rising, it can work with suppliers to modify their construction.
Wesfarmers said that while inflation overall remained elevated, it has moderated recently for such inputs such as cotton, timber and plastic resins.
Bunnings had also seen positive sales growth the past seven weeks, after increasing revenue 5.2 per cent in 2021/22 to $17.75 billion and earnings by 0.9 per cent to $2.2 billion.
Officeworks sales have been flat so far in FY2023 after a year in which revenue grew 4.6 per cent to $3.2 billion but earnings fell 14.6 per cent to $181 million as the chain was hit by lockdowns, closures and inefficiencies related to a transition to a new customer fulfilment centre in Victoria.
Wesfarmers expects to lose $100 million in 2022/23 on its OneDigital ecommerce operation, which it has boosted this financial year by moving Catch.com.au from Kmart Group into the operation.
Wesfarmers has opened a new fulfilment centre for Catch in NSW as its part of its strategy to transform the website from "what was initially very much an off price, highly discounted parallel import type proposition, to a more customer-centric, strategic proposition," Mr Scott said.
E&P Financial analyst Phillip Kimber wrote in a note that overall Wesfarmers had beaten consensus estimates by six per cent, and provided solid commentary on sales on its future outlook.
"Even with risks around the Australian economy (in particular consumer spending) - we expect consensus upgrades of 3-5% following the result," he wrote.
At 2pm AEST, Wesfarmers shares were up 1.8 per cent to $48.43.
