Finance Consumer Bunnings, Officeworks reap sales rewards from virus restrictions
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Bunnings, Officeworks reap sales rewards from virus restrictions

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Bunnings is thanking its staff with cash handouts. Photo: Getty
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Bunnings and Officeworks are continuing to enjoy bumper sales growth as customers spend more time at home, amid continued coronavirus restrictions.

Sales growth at Bunnings is up 19.2 per cent in the second half of the financial year, compared to 5.8 per cent in the first half.

At Officeworks, sales growth jumped 27.8 per cent between January and May, compared to 11.5 per cent in the first half.

Sales at online marketplace Catch – also owned by parent company Wesfarmers – surged 68.7 per cent in the second half amid a broader boost as customers turned to shopping online during COVID-19.

Total online sales across Wesfarmers increased 60 per cent to $1.9 billion, including Catch.

The company said Bunnings has enjoyed continued growth in consumer and commercial markets across all major Australian trading regions and in all product categories. At Officeworks, there has been strong demand for technology, home office furniture and learning and education products.

But Wesfarmers also outlined additional costs at Bunnings, with about $20 million spent in additional cleaning, security and protective equipment to respond to COVID-19 in the past three months.

In addition, Bunnings will have costs of $70 million in the 2020 financial year associated with trading restrictions in New Zealand, the permanent closure of seven small-format stores and the accelerated rollout of its online offering, including writing-off legacy e-commerce platform assets.

At Officeworks, earnings growth in the second half is expected to be moderated by changes in sales mix and continued investment in price, team, technology and COVID-19 related operating costs.

Wesfarmers has also cautioned that it is uncertain whether the higher levels of sales growth will continue for the remainder of the calendar year, given the significant changes to usual customer shopping patterns and likely changes to government measures.

While sales momentum in Kmart and Target has improved in recent weeks, with a general increase in customer footfall in shopping centres, both businesses continue to underperform. Second-half sales at Kmart grew just 4.1 per cent in Kmart and fell 1.8 per cent at Target.

In May, Wesfarmers said it would close or convert 167 Targets across Australia, at the cost of up to 1300 jobs, after a massive review of the struggling discount retail chain.

-with AAP