Kmart is expected to trade strong amid an inflationary market, according to parent company Wesfarmers.
Wesfarmers has reported a 2.9% drop in net profits after tax to $2.3 billion for 2022, citing retail lockdowns in the first half of the year.
Kmart Group, which includes Kmart, Target and Catch, recorded a 3.5% dip in revenues to $9.6 billion and an earnings dip of 39.7%.
Kmart sales increased by 0.5% cent for the year, while Target’s declined 15.8% amid the closure of Target and Target Country stores.
Wesfarmers managing director Rob Scott said performance has improved in the second half.
"Kmart and Target’s results for the year were materially impacted by COVID-related temporary store closures in the first half.
"As COVID-related disruptions eased, combined Kmart and Target trading results improved significantly, with strong combined earnings growth of 19.4 per cent in the second half.
“Kmart’s instore stock availability improved as labour availability and congestion issues at domestic ports and distribution centres eased through the second half.
"Kmart continues to actively manage the mix and quantity of its inventory, and its overall inventory position remains appropriate for the trading environment and to manage ongoing supply chain variability.
"Catch’s gross transaction value increased 1.6 per cent to $989 million for the year, with growth in marketplace sales partially offset by weakness in the in-stock business.
"Catch’s earnings performance continued to reflect investment in team, technology, governance, marketing and capabilities, and the expansion of automation and fulfilment capacity to support long-term growth ambitions.”
In a report to shareholders, the Group revealed Kmart as a strong contender for the current trading landscape.
“Kmart is uniquely positioned in an inflationary environment to extend its low-price leadership and profitably grow its share of customer wallet.”
Wesfarmers reported that retail trading conditions have remained robust through the first seven weeks of the 2023 financial year.
Sales growth has been particularly strong in Kmart Group, with sales significantly higher on both a one year and two year basis.