COVID-19 curbs Wesfarmers' (ASX:WES) first half-year profit

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COVID-19 curbs Wesfarmers' (ASX:WES) first half-year profit

Wesfarmers, update, net profit after tax, Covid-19, restrictions, Omicron variant
Image source: © Andreyyalansky19 | Megapixl.com

Highlights

  • Wesfarmers updates the Group's preliminary profit result for the half-year ended 31 December 2021.  
  • The Group expects to report the first-half NPAT between AU$1.18 billion and AU$1.24 billion, a decline from last year's AU$1.41 billion.  
  • The decline in NPAT is a result of COVID-19-induced restrictions. The new Omicron variant of Coronavirus continues to impact the Group's supply chain productivity and stock availability. 

ASX-listed diversified Company engaged in various business operations, such as home improvement and outdoor living, Wesfarmers Limited (ASX:WES) shared an update concerning the Group's preliminary profit result for the half-year ended 31 December 2021. The announcement also provided details on the significant impact of COVID-related disruptions and costs on the performance of Kmart Group, along with an update on recent retail trading conditions.   

Today's announcement informed:  

  • Wesfarmers expects to report a net profit after tax (NPAT) of between AU$1.18 billion and AU$1.24 billion. 
  • Trading conditions improved as restrictions eased during the second quarter of the 2022 financial year. Still, rising community transmission of COVID-19 in some states impacted customer traffic to stores, especially during the Christmas trading period.
  • Combined Kmart and target sales declined 10.3% for the first half and declined 5.2% on a two-year basis.
  • An EBT loss for Catch of between AU$45 and AU$43 million is expected for the half, indicating continued investment in team, technology, marketing, and capabilities to encourage long-term growth and higher levels of inventory clearance against the prior corresponding period.
  • For Kmart Group, EBT is expected to be between AU$170 and AU$180 million for the half.  

Australia-based retail conglomerate held that the trading activity of Kmart for the initial half of the current financial year was considerably affected due to COVID-19 induced restrictions, with a quarter of store trading days lost due to government-mandated store closures. It is to be noted that The Kmart Group is one of the top revenue-contributing units of Wesfarmers.   

Today, the stock WES was spotted trading 2.166% higher at AU$55.170 per share on ASX at 10:51 AM AEDT.   

Bottom Line:  

Wesfarmers has said that due to surging cases of Omicron variant of COVID-19 in some states, retail trading conditions weakened in the last two weeks of 2021, and customer traffic in stores has stayed subdued for the first half of January. Besides, team member absenteeism related to the Omicron variant has put further pressure on distribution centres and stores in some states, necessitating reduced trading hours in some stores and impacting supply chain productivity and stock availability. 

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