Wesfarmers Annual Profit Falls Slightly, Recent Trading Mixed at Retail Brands

By David Winning

SYDNEY--Australian conglomerate Wesfarmers said its annual profit fell by 1.8%, but said its portfolio of retail brands can withstand stiffening headwinds that include falling house prices, elevated interest rates and weak consumer sentiment.

Wesfarmers reported a net profit of 2.87 billion Australian dollars (US$2.06 billion) for the 12 months through June, down from A$2.93 billion a year earlier. It said revenue increased by 3.4% to A$47.27 billion, while earnings before interest and tax, or Ebit, rose by 0.6% to A$4.49 billion.

Directors of the company declared a final dividend of A$1.20 a share. That was up from A$1.11 a year earlier and brought the total payout for fiscal 2026 to A$2.22.

Investors appear to view Wesfarmers as one of the most defensive stocks in the retail sector because of its focus on value. Its Bunnings home-improvement chain pledges to beat competitors' prices, while Kmart and Target offer products that are attractively priced for shoppers wrestling with cost-of-living pressures.

This is reflected in Wesfarmers's share price, which is down less than 10% compared to 12 months ago despite the pivot by Australia's central bank to raising rates given a resurgence in inflation. Other retail stocks such as JB Hi-Fi, Super Retail and Metcash are down by more than 20%.

Wesfarmers's spread of operations, which include a lithium project in Western Australia and an industrial chemicals business, also offers a point of difference and can support profits when the retail climate darkens.

Wesfarmers said its key retail chains all achieved an improved revenue performance during the 2026 fiscal year, with sales at Bunnings rising by 4.1%, Officeworks up 3.7% and Kmart Group growing 2.8%. However, Officeworks's earnings fell by 22% to A$165 million.

Its chemicals, energy and fertilizer unit returned to earnings growth as prices of lithium rallied.

"Our businesses focused on mitigating cost pressures through productivity initiatives and were able to deliver more value, better service and increased convenience for our retail and business customers," said Chief Executive Rob Scott. "As households continued to experience cost of living pressures, our retail businesses dropped prices on thousands of products during the year to support household budgets."

Some analysts worry that Wesfarmers won't be immune from challenges facing the consumer, especially its Bunnings chain as falling home prices curb spending on renovations and new builds. House prices have taken a hit from the federal government's decision to end negative gearing for all properties other than those newly constructed.

Wesfarmers addressed those concerns on Thursday, stating the retail divisions are well positioned to grow profitably despite consumer sentiment taking a knock.

"Higher costs of doing business, driven by elevated labor, energy and supply chain costs, are expected to persist in the 2027 financial year," Wesfarmers said. It expects to mitigate these impacts partly by leveraging AI and technology.

It said trading in the first seven weeks of fiscal 2027 was mixed at its brands. Dry weather in July helped Bunnings's sales growth to slightly outpace what it achieved in the second half of fiscal 2026. Wesfarmers maintained the pace of sales growth at Kmart Group, but it said Officeworks's sales growth had slowed.

Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

August 26, 2026 18:19 ET (22:19 GMT)