Wesfarmers, the Australian conglomerate behind Bunnings, Kmart, and Officeworks, reported a 9.3% increase in net profit after tax to $1.6 billion for the first half of the 2026 financial year, a figure bolstered by strong performance from its discount department and hardware stores, even as broader economic headwinds mount.
The results, released on Thursday, showed group revenue grew 3.1% to $24.2 billion. While overall sales growth began the financial year positively, it ultimately fell short of market expectations, according to Wesfarmers Managing Director Rob Scott. “Australian consumer demand is solid, but cost of living pressures are being felt unevenly across the economy and impacting many households,” Scott stated. “The recent interest rate rise and uncertainty regarding the outlook for inflation and interest rates are affecting consumer sentiment.”
Bunnings led the growth, with revenue increasing 4.2% to $10.7 billion. The hardware chain demonstrated strength across all product categories, operating regions, and customer segments, including both consumer and commercial. Wesfarmers highlighted investments in its store network, merchandising, technology, digital platforms, retail media, and supply chain as contributing factors to Bunnings’ success. The company also noted the positive impact of its Hammer Media initiative.
Kmart Group, encompassing Kmart and Target, saw revenue rise 3.3% to $6.3 billion. Kmart’s performance was driven by strong sales in home and general merchandise, particularly its Anko product ranges. Kmart’s mobile app now has over 1.6 million monthly active users. However, Target experienced more challenging trading conditions, particularly in apparel, impacting overall Kmart Group results. Severe weather in Queensland disrupted Target’s distribution network, increasing transport costs and limiting sales.
Kmart Group is also progressing with modernization of its supply chain, including construction of a recent omnichannel facility in New South Wales and the commissioning of two new customer fulfillment centers. A new online order management system has also been implemented. The recently launched Kmart third-party marketplace is showing “early positive trading results.”
Officeworks, meanwhile, saw revenue increase 4.7% to $1.8 billion, but earnings declined 21.8% to $68 million. This decline is attributed to a significant transformation program aimed at transitioning to a low-cost operating model to support lower prices and sustainable earnings growth. Growth in technology and print & create categories was partially offset by lower furniture sales.
Wesfarmers’ gross capital expenditure increased 4.2% to $169 million, largely due to investments in omnichannel supply chain facilities by Bunnings and Kmart. Net capital expenditure, however, fell by 44% across the period. The company stated its retail divisions are “well positioned to drive profitable growth” despite the challenging economic climate.
The results reach amid concerns about the broader Australian economy, with many households feeling the impact of rising interest rates and cost of living pressures. Wesfarmers did not provide specific forward-looking guidance beyond reiterating its commitment to driving profitable growth across its retail businesses.
