Low-price retail company Kmart Group has recorded a $43 million lift in earnings for the first half of FY25, off the back of a 2 per cent lift in revenue.
The group – which covers both Kmart and Target – delivered revenue of $6.1 billion, with earnings before tax of $644 million – up 7.2 per cent compared to the same half in FY24.
On a comparable store basis, sales increased 1.9 per cent.
“Kmart Group’s earnings growth was supported by the market-leading value and appeal of its Anko product ranges, and productivity initiatives undertaken in recent years, including the integration of Kmart and Target’s systems and processes,” Wesfarmers managing director Rob Scott said. “Officeworks benefited from above-market growth in technology, as it continued to evolve its offer.”
Units sold, transaction volumes and customer numbers also grew on the prior corresponding period, with minor reductions in items per basket and average sell price.
“Earnings growth for the half reflected the solid trading performance, including continued strong growth in apparel and the introduction of Anko ranges into Target,” Wesfarmers reported in its half year report. “In addition, productivity benefits were delivered through the integration of Kmart and Target’s systems and processes, and the digitisation of operations across stores, sourcing and supply chain.
“These benefits mitigated the impact of ongoing cost of doing business pressures and volatility in foreign exchange rates.”
Kmart Group also continued to invest in “strategic initiatives” such as the development of its data and digital assets, and upgrades to its omnichannel customer experience and new OnePass member benefits launched during the half.
The expansion of Anko into new markets globally also “progressed well” according to Wesfarmers, although revenue and earnings remain immaterial to Kmart Group results.
“The [Anko] business continued to develop a strong pipeline of partnership opportunities with major global retailers, and during the half received initial orders from customers that included Walmart Canada,” Wesfarmers added. “Return on capital increased to 65.9 per cent, reflecting higher earnings and strong capital discipline.
Kmart also opened one new store during the period, bringing its total count to 447 locations across Kmart and Target as at 31 December 2024.
Wesfarmers added that revenue and earnings growth should continue in the second half of FY25, noting that productivity and cost control will remain a focus, to mitigate cost pressures that are expected to persist across operating expenses, and ongoing weakness in the Australian dollar against the US currency.
“The continued digitisation of sourcing, supply chain and store operations provide the opportunity to drive greater efficiencies and to further fractionalise costs,” the report added.
“Efforts to increase Kmart’s addressable market will also continue, along with the distribution of Anko products into new markets globally, including Anko stores in the Philippines.
“The second half of the 2025 financial year will see investment in core capabilities in technology for stores and supply chain to enable future growth."
Meanwhile, the integration of the Catch e-commerce fulfilment centres in the fourth quarter of the 2025 financial year – following the recently announced wind down of the online platform – "is expected to improve the customer experience and efficiency of Kmart Group’s e-commerce operations.”