Australia’s Kmart Group, parent company to low-price department stores Kmart and Target, has recorded a revenue lift of 4.8 per cent to $5.9 billion for the first half of FY24.
The revenue lift was driven by Kmart, which recorded a 7.8 per cent lift in sales, with Target offsetting the growth with a 5.1 per cent decline compared to the first half of FY23. Despite the decline, Target delivered positive earnings for the half.
Target’s performance was variable across categories, with relatively stronger performance in apparel but challenging trading conditions across toys, home and general merchandise categories. The latter have since been largely replaced with Kmart’s Anko range amid a continued integration of processes and structures between Kmart and Target.
The introduction of select Anko ranges across hard home and general merchandise into Target was completed in February 2024. Anko ranges at Kmart also cover apparel and accessories.
Meanwhile, Kmart reported an improvement in availability through further digitisation of the business, adding sales increased across all categories, with units sold, transaction volumes and customer numbers all growing on the prior corresponding period.
Kmart’s apparel category was cited as a key driver, as a result of improvements in the product offer. This includes a fabric consolidation effort undertaken during 2023, where Kmart halved the number of fabric options in its library.
The low-price department store has also continued the roll out of RFID capability across its stores.
Return on capital for Kmart Group increased to 58.8 per cent, with Wesfarmers citing higher earnings and a continued stabilisation in global supply chain conditions. There were 449 stores across Kmart and Target as at December 31, 2023.
Wesfarmers managing director Rob Scott said the company’s retail divisions, which also include Officeworks and Bunnings, have executed strongly during the half as households increasingly seek out value.
This is reportedly buoyed by low unemployment and strong population, driving demand and contributing to the need for additional housing stock.
“In this environment, the retail divisions’ core offer of everyday products with market-leading value credentials supported growth in sales and customer transaction numbers,” Scott said.
“The retail divisions have benefitted from a proactive focus on productivity and efficiency initiatives in recent years, which together with their unique sourcing capabilities and strong supplier partnerships enabled them to mitigate ongoing cost pressures and provide compelling value for customers during the half.”
“Kmart Group delivered record earnings for the half, reflecting the market-leading value credentials of its Anko products as well as actions to drive cost efficiencies, and a moderation in some key input costs.”
The moderation in key input costs include international freight, as well as mitigating the impact of ongoing cost of doing business pressures and higher shrinkage.