The Wesfarmers Ltd (ASX: WES) share price is down 4% after providing a FY27 sales update.
Wesfarmers has a number of retail brands including Bunnings, Kmart, Target, Officeworks and Priceline. It also has a health division and a chemicals, energy and fertilisers segment called WesCEF.
FY27 trading update
The company said a that a strong operating performance in WesCEF helps to offset some moderation in retail demand.
In August, the company noted that the outlook for inflation, house prices, interest rates and tax settings were weighing on consumer sentiment.
Wesfarmers noted that elevated inflation and higher interest rates continue to put pressure on household and business budgets.
However, management believe its retail divisions are well positioned with their strong value credentials, expanding their offers and growing its marketplace capabilities.
Divisional performance
For Bunnings Group, FY27 year-to-date sales growth has moderated since the second half of FY26. Despite a stronger start to the quarter, lower sales across seasonal categories and the commercial segment in recent weeks has weighed on overall sales performance.
Kmart Group’s sales growth is broadly in line with the second half of FY26, supported by the strong value credentials of its Anko product range. Construction of its new omnichannel facility in Moorebank, NSW, is expected to reach practical completion in November 2026, with commissioning in the first quarter of FY28.
Kmart Group’s earnings in FY27 is expected to include operating expenses of between $30 million to $40 million associated with the dual occupancy costs, technology implementation and other project expenses to prepare the site.
Officeworks’ sales growth was broadly in line with the second half of FY26. Its transformation program remains on track for completion by the end of the 2027 calendar year, along with a structurally lower cost base, should help improve earnings.
Wesfarmers said that in the health division, Priceline Pharmacy continues to deliver strong network sales growth, while the relaunch of the Sister Club loyalty program as Pulse Rewards in August has been well received.
The health division’s wholesale performance continues to improve, supported by the ongoing automation of the fulfilment centres, with the Adelaide centre now live and Perth opening next year.
Finally, for WesCEF, earnings in HY27 will benefit from the lag effect of ammonia pass through pricing, recent capacity expansion and improved pricing of lithium sales.
Spodumene concentrate production at Mt Holland is expected to be in line with the nameplate capacity of approximately 380,000 tonnes (with WesCEF’s share being 190,000 tonnes), with more than half of this production sold to market and sales weighted towards the first half of the financial year. Production rates at the refinery are expected to increase through the second half of the financial year as further odour mitigation solutions are implemented.
Final thoughts on the Wesfarmers share price
Wesfarmers is a high-quality business with great retail brands that could continue to perform during this period of economic difficulties.
It’s one of the ASX blue-chip shares I’d be very happy to own for the long-term and I think it’s a solid buy today with conditions leading to a cheaper valuation.
