WES -7.05%: slipped today after flagging weaker earnings from its Officeworks division, offsetting steady trading across the group’s core retail businesses. The update didn’t contain any major surprises, but the tone was softer and when combined with a ‘rich’ valuation, is easy to understand why sellers dominated the daily flows.
- Officeworks: 1H26 earnings expected to be A$15–25m lower YoY, hit by slimmer margins, restructuring costs and an ERP system overhaul.
- Bunnings: Year-to-date sales growth tracking ahead of 2H25, confirming ongoing resilience in the hardware segment.
- Kmart Group: Sales growth broadly in line with 2H25, with management noting strong performance from its private-label Anko brand.
- Industrial & Safety: Conditions remain challenging amid subdued demand from mining and resources customers.
Management said group performance remains in line with expectations, though results will hinge on the crucial Black Friday and Christmas trading window.
WES is great business with a reputation for steady execution, but the drag from Officeworks and mixed industrial trends temper the otherwise resilient Bunnings and Kmart performance.
We don’t own Wesfarmers and sit neutral on it – it’s a high-quality diversified conglomerate, but with the stock trading on a full multiple and growth largely driven by mature divisions, we see limited near-term upside.
MM is neutral on WES ~$86
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