The Wesfarmers Ltd (ASX: WES) share price had a very strong performance in 2025, significantly outperforming the ASX 200 (ASX: XJO).
Wesfarmers is the parent company of a number of impressive retailers including Bunnings, Kmart, Officeworks and Priceline. It also has other businesses including healthcare, chemicals, energy and fertilisers (WesCEF) and industrial & safety.
Let’s see how well Wesfarmers shares performed last year.
Wesfarmers share price performance
The Wesfarmers share price rose by 13.5% in 2025, compared to a rise of 6.25% for the ASX 200. In other words, it more than doubled the performance of the index.
Its financial performance clearly impressed the market.
The 2025 financial year result was solid considering the challenging conditions for building products and Australian households amid inflation and relatively high interest rates.
In the 12 months to 30 June 2025, the company reported 3.4% revenue growth to $45.7 billion and 14.4% net profit after tax (NPAT) growth to $2.9 billion. Underlying net profit grew 3.8% to $2.65 billion.
The most recent update from the business – from the AGM in October – was promising. The company has been investing in more efficient ways of working.
For example, at Bunnings it has improved team member productivity and inventory efficiency through investment in in-store technology and a new demand and replenishment system.
Wesfarmers said its businesses are increasingly using AI, including in demand forecasting, to enhance team and customer experience, in marketing and maintaining product availability.
Its main businesses – Kmart and Bunnings – are continuing to grow sales at least as strongly as the rate in the second half of FY25 as they win customers on their value credentials.
Is it a buy for 2026?
Buying at the current Wesfarmers share price means investing at 29x FY27’s estimated earnings, using the projection from Commsec. This isn’t cheap for such a large business which isn’t rocketing revenue like a software business. But, the quality of the business is seemingly increasing as time goes on.
In FY25, Wesfarmers reported that Bunnings’ return on capital (ROC) rose to 71.5%, up from 69.2% in FY24. Kmart achieved a ROC of 67.5% in FY25, compared to 65.7% in FY24.
If those businesses continue growing earnings and achieving such a high ROC, it could be one of the best ASX retailers to own over the rest of the decade.
Plus, I’m excited by how much earnings could benefit from expansion in healthcare (a huge industry with good tailwinds), lithium mining and Anko retailing in the Philippines.
I think it’s a good investment for the long-term, though I’m not expecting strong capital growth because it’s starting at a fairly high value.
