The Wesfarmers Ltd (ASX: WES) share price is on watch today after releasing a large investor presentation.
Why investors are watching the Wesfarmers share price
Wesfarmers has released an investor presentation that was more than 100 pages, detailing plans for each of its divisions.
It opened the presentation by reminding investors that its primary objective is to provide a satisfactory return to shareholders. Wesfarmers has four key strategies to generate returns.
The first is strengthening existing businesses through operating excellence and satisfying customer needs.
Next, is to secure growth opportunities through entrepreneurial initiatives.
Another is to renew the portfolio through value-adding acquisitions.
The final strategy is to ensure sustainability through responsible long-term management.
How is the ASX share going to keep winning?
It’s going to invest around $100 million to develop its digital and data capabilities.
Wesfarmers has plans for particular businesses as well. With Catch, it’s going to keep investing for growth to expand its fulfilment, talent and marketing. For Bunnings, it wants to improve its commercial offering for builders, tradespeople and organisations. It also pointed out it has an agreement to acquire Beaumont Tiles.
The diversified business also continues to invest in its supply chain operations to support in-store and online growth. It’s focused on improving efficiency, lowering costs and supporting higher volumes. Examples include optimisation of pick and pack processes, and also leveraging new technology to support digitisation and exploration of automation opportunities.
Trading update
Wesfarmers said that it’s now cycling against COVID-19 impacts a year ago, leading to “significant volatility” in monthly sales growth. That might mean sales are now showing a bit of a decline, considering how strong sales were 12 months ago for businesses like Bunnings and Officeworks.
However, on a two-year basis, all of the retail businesses are seeing “strong” sales growth.
Online growth has moderated as customer traffic to stores increase. Online penetration has reduced, but remains above pre-COVID levels.
Wesfarmers said that there has been a good operating performance and pleasing trading has continued in the industrial businesses.
Summary thoughts on Wesfarmers and the share price
Wesfarmers is a great business, but it was inevitable that it was going to be hard to keep growing in the short-term.
It might be a little historically expensive, but I’d rather have Wesfarmers in my portfolio than most other blue chips.
