Profits at discount department stores Kmart and Target have been hit hard by a year of COVID-19 disruptions, but owner Wesfarmers says the brands are recovering and well positioned for the cost-of-living crisis.
On Friday morning, Wesfarmers revealed a 2.9 percent drop in after-tax net profit to $2.3 billion for 2022, due to retail business restrictions seen in the first half of the year.
The company said profit had rebounded in the six months to June 30, rising 13.1 percent.
The retail giant’s Kmart Group, which includes Kmart, Target and online retailer Catch, felt the lion’s share of the brunt, with revenue shrinking 3.5% to $9.6 billion and falling 35 percent. .7% of earnings before interest and taxes to $505 million.
Kmart’s sales were up 0.5 percent for the year overall, while Target’s were down 15.8 percent, largely due to the closure of Target and Target Country stores in the past two years.
However, Wesfarmers managing director Rob Scott said conditions at retailers had improved.
“Kmart Group’s results improved significantly in the second half, with Kmart and Target achieving strong earnings growth of 19.4 percent in the second half, benefiting from actions taken in recent years to optimize the store network,” it said. .
As inflationary pressures hit family budgets, the company says the stores are well suited to shoppers on tight budgets.