Popular retailer Kmart saw earnings plunge by more than $300 million in the first half of FY2021-2022 as COVID-19 closures forced stores to keep their doors closed to customers.
Revealed in parent company Wesfarmer's half-yearly results today, for the half-year ending December 31, 2021 Kmart Group reported a 63.4 per cent fall in earnings from $478 million to $178 million and revenue declined by 9.6 per cent to $4.9 billion.
Wesfarmers Managing Director Rob Scott said government mandated closures saw almost a quarter of Kmart's standard trading days lost.
"Combined Kmart and Target earnings declined 55.8 per cent to $222 million for the half, reflecting the significant impact of government-mandated store closures, which led to the loss of almost 25 per cent of store trading days during the half, as well as higher costs and lower stock availability as a result of domestic supply chain disruptions," Mr Scott said.
"The Group's commitment to pay team mem members where there was no meaningful work during lockdowns and when they were required to isolate also led to additional costs during the half."
Mr Scott said Target stores who had already transitioned to Kmart stores were performing well.
"The planned changes to the Target store network were completed during the half and the performance of Kmart stores that have been converted from Target stores continues to be pleasing and in line with the initial business case, after adjusting for the impact of lockdowns," Mr Scott said.
"Kmart and Target continued to invest in data and digital capabilities, and strong growth in online sales for the half of over 44 per cent reflected ongoing improvements to the digital experience for customers, as well as elevated online demand during lockdowns."
Despite the impacts of COVID-19 on Kmart, Wesfarmers reported an overall strong financial result for the period thanks largely to the performance of hardware retailer Bunnings and Wesfarmers Chemicals, Energy and Fertilisers.
Wesfarmers limited reported a statutory net profit after tax of $1.2 billion for the half-year, a fall of 14.2 per cent compared to the same period last year.
"The first half of the 2022 financial year was the most disrupted period for our businesses since the onset of COVID-19, with extended government-mandated store closures and trading restrictions in Australia and New Zealand," Mr Scott said.
"The Group also made significant investments in the half to support our team members, through payroll support and assistance programs, to help manage the significant personal impacts from extended lockdowns."
Bunnings increased its revenue by 1.7 per cent to $9.2 billion for the half, while earnings declined 1.2 per cent to $1.259 billion.
"Bunnings delivered pleasing sales and earning results in the context of the significant disruptions to tradition conditions during the half and the very strong growth in the prior corresponding period," Mr Scott said.
"Bunnings' performance for the half reflected its ability to meet customers' needs through a range of operating conditions and further highlighted the resilience and flexibility of its model."
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Wesfarmers directors have determined to pay a fully-franked ordinary interim dividend of $0.80 per share.
