The Wesfarmers Ltd (ASX: WES) share price is under the spotlight after announcing a FY25 trading update.
Wesfarmers is the parent company that owns Bunnings, Kmart Group, Officeworks, Priceline and other businesses.
Wesfarmers FY25 trading update
The business held its annual general meeting (AGM) today to tell investors how FY24 went, its initiatives and a trading update for the 2025 financial year.
Wesfarmers explained that elevated inflation and interest rates continue to place pressure on household and business demand.
However, under these conditions, the ‘everyday low price’ offering of its retail businesses is “resonating with customers who are seeking better value, and supports growth in customer numbers and transactions.”
Segment performance
First, Bunnings. Its year-to-date sales growth “remains resilient,” with positive sales growth in both consumer and commercial segments. However, the weakness in residential construction is weighing on commercial sales. Wesfarmers said growth in the consumer segment has been “pleasing”, thanks to ongoing demand for repairs and maintenance.
Next, Kmart Group. Wesfarmers said the discount retailer is benefiting from the “strong value credentials and uniqueness of its Anko products”. It said the strength of its offering is useful for growth in units sold, transaction volumes and customer numbers. The company said “customers are increasingly seeking value and items per basket and average sell price have both experienced minor decreases.”
Wesfarmers said Kmart and Target continue to improve their offerings and aim to provide shoppers with greater value.
Officeworks’ revenue continues to be supported by higher technology sales, which now represents 59% of its sales. However, challenging business conditions is harming smaller business customer demand.
In the health division, the transformation program is “gaining pace with pleasing sales growth in Priceline” after price improvements on key value lines.
WesCEF (which is chemicals, energy and fertilisers) saw strong plant operating performance. However, losses due to low global lithium prices will impact earnings.
Outlook for the Wesfarmers share price
The company said while the outlook for the economy “remains uncertain with ongoing challenges, Wesfarmers is well positioned with resilient businesses, a strong balance sheet and various platforms for future growth.”
I think Wesfarmers is one of the best ASX retail shares around. It doesn’t seem great value, but I’d still back it as a long-term investment because of the quality of its retail operations and its willingness to invest in new sectors such as healthcare.
I would say Wesfarmers is one of the more appealing ASX dividend shares around.
