Bunnings has once again proved the star performer in the Wesfarmers stable, as the company expressed cautious optimism for the coming year.
Announcing Wesfarmers' retail sales results for the first quarter of the 2014 financial year, managing director Richard Goyder said he was generally pleased with the sales results, in particular the good performances of Coles, Bunnings, Officeworks and Kmart.
"Our continued focus on improving merchandise offers and value for customers was reflected in strong transaction and volume growth achieved across our retail businesses," Mr Goyder said.
"Coles' headline food and liquor sales growth for the quarter was 4.4 per cent. Comparable food and liquor sales grew 3.4 per cent, with volume growth remaining strong, particularly in fresh produce. Coles continued to offer customers better value through ongoing investment in lower prices, while making good progress in both product and store format innovation.
"Bunnings recorded strong total store sales growth of 10.4 per cent for the quarter, with store-on-store sales growing 7.1 per cent. Bunnings achieved good growth in both consumer and commercial areas as customers continue to respond well to our strategic initiatives, which are creating more value and better customer experiences.
"Officeworks' total sales grew 3.0 per cent for the quarter, with good transaction growth achieved in both the store network and online, consistent with Officeworks' 'every channel' strategy.
"As foreshadowed, Target's comparable sales performance was below last year, declining 5.2 per cent. Clearance activity of excess winter inventory during the quarter and the non-repeat of promotional activity in the same period last year significantly affected trading. During the quarter Target continued to strengthen its leadership team to oversee its longer term transformation with a number of key appointments made.
"Kmart's total sales for the quarter were 4.6 per cent above last year, with comparable sales increasing 2.0 per cent when adjusted for the effect of the Toy Sale change. Transactions and units sold increased for the fifteenth consecutive quarter, with good performances achieved in core apparel and home categories."
Mr Goyder said all of the retail divisions remained focused on providing customers stronger merchandise offers and better value, and were generally well placed for the important Christmas trading period.
Coles
Coles opened three supermarkets and closed three supermarkets during the quarter, with the pace of new store openings to increase over the balance of the year. At the end of the quarter, Coles had a total of 756 supermarkets.
Fifteen stores were refurbished during the quarter, with 360 stores in renewal format at the end of the quarter. Consistent with prior years, refurbishment activity will accelerate during the December quarter prior to Christmas.
"In a market that saw general decline during the quarter, we made progress in our liquor offer. We improved our pricing and range architectures to offer customers more value, and further optimised our store network," Mr McLeod said.
Coles opened six new liquor stores and closed four stores during the period, resulting in a total of 812 liquor stores at the end of the period.
Coles Express opened two new sites and closed four during the quarter, bringing the total store network to 634 sites.
Bunnings
Total sales for the quarter of $2.0 billion were up 10.3 per cent on the previous corresponding period. Total store sales for the quarter grew 10.4 per cent, while store-on-store growth was 7.1 per cent. Sales growth was achieved in all key trading regions, across all product categories and in both consumer and commercial areas.
John Gillam, managing director of Home Improvement and Office Supplies, said the positive momentum in the business and strong store transaction growth were pleasing.
"Good traction continues to be achieved in all key strategic initiatives, creating more value and better experiences for customers. Merchandise innovation and the ongoing development of our commercial offer were also highlights," Mr Gillam said.
During the first quarter five Bunnings Warehouses and one trade centre were opened. As at the end of September 2013, a further 21 stores were under construction, with new store openings for the 2014 financial year weighted towards the back-end of the year.
OfficeWorks
Total sales for the quarter4 were $373 million, up 3.0 per cent on the previous corresponding period. In line with Officeworks' 'every channel' strategy, strong transaction growth in both the store network and online drove an increase in sales across both channels.
Mr Gillam said the result was pleasing given market conditions.
"The business is progressing well, improving the offer for all customers in a highly integrated way across every channel. Officeworks also continued to expand its presence in the business to business market," Mr Gillam said.
During the first quarter, Officeworks opened three stores and closed two stores.
Total sales of $789 million for the quarter were 6.1 per cent below the previous corresponding period, with comparable7 store sales decreasing 5.2 per cent.
Target managing director Stuart Machin said that, as previously outlined, trading for the first quarter had been challenging, reflecting the continued clearance of excess winter inventory which delayed the launch of the spring / summer range.
"Sales were significantly affected by high levels of clearance activity and the non-repeat of the promotional activity of the prior corresponding period. As a result of this clearance activity winter inventories declined significantly during the quarter. Positively, where improvements have been made to ranges and price architectures, customers have responded favourably to the enhanced offers.
"During the quarter we completed further Christmas range reviews, and a major focus area remained the revitalisation of the senior leadership team. Importantly, the majority of new management will be in place by Christmas, following which transformation activities will accelerate," Mr Machin said.
During the quarter Target opened two new stores and closed one store.
Kmart
Total sales of $970 million for the quarter1 were 4.6 per cent above the previous corresponding period, with comparable store sales decreasing 1.2 per cent. Excluding the effect of the Toy Sale at the beginning of the quarter, which this year saw the removal of Christmas lay by, comparable store sales increased 2.08 per cent. Following the Toy Sale, the sales performance in everyday toys has been strong, reflecting a positive customer response to lower pricing and an improved range.
Kmart managing director Guy Russo said sales for the quarter were pleasing, with strong sales growth achieved across apparel and home categories. Within the apparel category, performance was particularly strong across children's wear, underwear and sleepwear. Sales in maturing categories such as video games, music and DVDs continued to decline during the quarter.
"The quarter represented the fifteenth consecutive quarter of growth in transactions and units sold, and reflects Kmart's continued focus on delivering low prices to families on everyday items," Mr Russo said.
During the period, Kmart completed six store refurbishments. Kmart opened one replacement store, Indooroopilly in Queensland and temporarily closed one store during the quarter.
