Wesfarmers (ASX: WES) Flags Strong Sales Growth During FY21

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Wesfarmers Flags Strong Sales Growth During FY21

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  • Retails sales growth are seeing record growth across all businesses.
  • Retail Sales rose 1.1 per cent month on month increase in April.
  • Macquarie Group recently placed an Outperform rating on Wesfarmers.

Wesfarmers (ASX: WES) has today released a Strategy Briefing for the 3rd of June to discuss the progress and future pathways for its diversified collection of subsidiaries. Wesfarmers own and operate a range of Brands, including Bunnings, Officeworks and Kmart Group, which provide office supplies, industrial products, chemicals, apparel to general merchandise.

AS a Group Wesfarmers has the invention to cover three long-term value creation opportunities, including addressing climate and environment concerns, ethical sourcing, and developing diversity and Inclusion in its workforce. The company believes these key foundations will strengthen existing business and secure future growth opportunities by satisfying consumer needs and engaging in entrepreneurial activities.

Since 2018 the company has delivered on a wide range of objectives. The company has accelerated data d digital capabilities by establishing the Advanced Analytics Centre with the employment of 400 new staff. Portfolio growth has been achieved through the demerger of Coles and the acquisition of Catch.com.au. Finally, Wesfarmers has addressed the underperformance of different areas by divesting Homebase and simplifying their target business.

When commenting on the company’s recent trading performance, Wesfarmers commented on how significant volatility from early in the current financial year had somewhat subdued, leading to “record strong sales growth.” Though online growth had slowed, considering Australian consumer mobility has significantly increased, general demand has remained strong.

The Australian Bureau of Statistics (ABS) released Retail Trade figures today saw a 1.1 per cent month on month increase in April and 25 per cent increase against April last year. This clearly exhibits the robustness of the domestic economy’s recovery.

Moving Forward, the company have provided “renewed Priorities.” They include “Develop a market-leading data and digital ecosystem, invest in platforms for long term growth and Accelerate the pace of continuous improvement.” To meet these ambitious targets, the company expects to spend a collective $650 to $750 million in net capital expenditure this financial year, with investment expected to increase next financial year.

Macquarie Group recently placed an Outperform rating on Wesfarmers due to their “opportunity to invest in diversified business such as expansion in chemicals, lithium or growing regional distribution centres for Bunnings.” Their diversification across a variety of industries is also a significant benefit.

Wesfarmers opened trading today at $56.01 per share, almost exactly on the company’s all-time highs. In the last year, the company’s shares have surged over 30 per cent and year to date, Wesfarmers is up almost 10 per cent.

Louis Mosmann

Louis Mosmann is a Private Wealth Client and Research Assistant at KOSEC- Kodari Securities. Louis covers macroeconomic events, global markets and ASX300 company announcements, allowing clients to make more informed investment decisions. Email Louis at l.mosmann@kosec.com.au.

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