A revision of their tech stack is one key reason why Kmart and Target together have managed to keep their costs so low that their total earnings for FY24 nearly hit $1 billion.
Alongside that, Kmart Group’s total revenue also peaked at $11.1 billion.
According to the group’s parent company Wesfarmers, the 24.5 per cent lift in earnings to $958 million for Kmart Group was predominately driven by Kmart itself.
Kmart’s total sales increased 6.3 per cent for the year, with comparable sales increasing 6.4 per cent. Meanwhile, Target’s total sales declined 4.5 per cent for the year, with comparable sales decreasing 3.6 per cent.
“Earnings growth for the year reflected Kmart’s strong trading performance, including strong growth in apparel sales,” the group reported. “Well-executed pricing strategies enabled the business to deliver profitable growth in share of wallet while extending Kmart’s lowest price positioning.
“Kmart Group’s continued focus on productivity, along with moderation in key input costs, mitigated the impact of ongoing cost of doing business pressures.”
Speaking at the Wesfarmers AGM this week, managing director Rob Scott said each of its retail subsidiaries - which also includes Officeworks and Bunnings - held a relentless focus on managing costs to keep prices down and seeking new ways to be more efficient and productive.
“In the past year, there have been many examples of this,” Scott said.
“Kmart Group has started to realise the benefits from its implementation of RFID technologies and robots, to monitor apparel inventory. This has freed our team to focus on customers and made their job easier, improved stock management and availability and delivered higher sales.
“Kmart’s direct sourcing capabilities provide unique products through the Anko brand, at low prices, and sourced in an ethical and sustainable manner. Kmart has focused on digitising many of its product design, sourcing and inventory processes, which further reduces costs.”
Kmart Group’s earnings lift also comes despite a $9 million lift in capital expenditure to $136 million in FY24.
According to Wesfarmers, Kmart Group will continue to progress its strategic agenda in cost saving and product development in a bid to keep sales and earnings up in FY25. The wider group expects this growth to moderate compared to FY24.
“Performance in the 2025 financial year will be influenced by ongoing cost of living pressures affecting customers’ spending capacity, particularly in New Zealand, as well as by increased competitive intensity,” the group reported.
“Productivity and cost control will be a focus, with cost pressures expected to persist across operating expenses. The continued digitisation of sourcing, supply chain and store operations and the integration of Kmart and Target systems, processes and organisational structures provide the opportunity to drive greater efficiencies and to further fractionalise costs.”
During the year, Kmart launched new product ranges in beauty and womenswear youth, continuing to update offerings in growing demographics.
Kmart Group further invested in digital capability, including expanding the use of 3D design and building interlinked design, planning and ranging tools.
“Kmart Group is focused on leveraging its product development capabilities to grow share in existing categories and deliver new and expanded ranges. This will be supported by a more digitally-enabled supply chain to reduce cost and lead times and improve availability.”