Wesfarmers Profit Misses Estimates, Names Department Stores CEOby
Retailer says Kmart stores head Guy Russo to lead new unit
Mining unit posts loss in the first half amid low coal prices
Wesfarmers Ltd. posted a 1.2 percent increase in first-half profit and created a new department stores division as the nation’s largest retailer seeks to trim costs.
Net income was A$1.39 billion ($1 billion) in the six months ended Dec. 31, up from A$1.38 billion, the Perth, Western Australia-based company said in a regulatory statement Wednesday. That compared with expectations for a profit of A$1.43 billion, according to the mean estimate of three analysts surveyed by Bloomberg.
Losses at the mining unit weighed on the profit and demonstrated the challenges ahead for Managing Director Richard Goyder as the company’s retail operations face increased competition. Wesfarmers said the head of its Kmart stores, Guy Russo, will be elevated to the position of chief executive officer of the new department stores unit that includes the Target chain.
Wesfarmers shares fell 1.3 percent at 10:15 a.m. in Sydney, trimming this year’s gain to 3.4 percent. The benchmark S&P/ASX 200 Index has declined 7 percent year to date.
Earnings were driven by the home-improvement and office-supplies unit, which had a 13.8 percent increase in net income before interest and tax. The measure at the Coles supermarket business climbed 5.6 percent on the back of a 4.9 percent rise in comparable store food and liquor sales in the second quarter, the best since the three months ending March 2013, data compiled by Bloomberg show.
The mining business recorded a loss of A$118 million and the company said the short-term outlook remains challenging amid low coal prices and as production was affected by wet weather in the first two months of the year.