Guy Russo, managing director of Kmart, said in his results presentation that Kmart was continuing to lead on price and value and was continuing to source at lowest cost.
Target
Target did not fare as well as other businesses in the Wesfarmers group, with earnings before interest and tax of $244 million.
“Target and its numbers are quite conspicuous, but this is an area Wesfarmers expects benefits from over the coming years,” said Piotrowski.
“In fact, the group is only in the early part of a four-year turnaround where Wesfarmers is trying to reposition the Target brand, as they believe there is a gap in the market for a mid-tier department store.”
Part of the reason for Target’s underperformance was $40 million provisioning taken for streamlining supply chain issues, an amount flagged by Dene Rogers, Target’s managing director, in his results presentation.
Rogers said Target was refocusing on quality, style and experience, rather than just price.
Insurance
Wesfarmers’ insurance division took a $108 million hit for provisioning as a result of the Christchurch earthquake.
“When you take that out of the equation, the insurance business actually performed quite well and this is an area that is expected to continue to improve,” Piotrowski said.
Rob Scott, the managing director of Wesfarmers’ insurance division, said the Christchurch earthquake was the largest-ever insured loss in the southern hemisphere.
He hopes to get the insurance division back on track through strong momentum from premium rate increases.
This article first appeared at SmartCompany.
