Wesfarmers’ Long-Standing Department Store Star Dims Sooner Than Expected; AUD 30 FVE Unchanged
Wide-moat Wesfarmers had bad news awaiting investors, just before kicking off its 2019 Strategy Day. The market wasn’t impressed, with the shares declining about 5%, but remaining overvalued. Severe competition in the department store sector is stifling sales growth at discounters Kmart and Target--together they represent Kmart Group. Price cutting and elevated promotional activity slashed their gross margins in the second half of fiscal 2019. In addition to structural headwinds, discretionary r...Wesfarmers is engaged in the retailing operations including supermarkets, merchandise and department stores, fuel, liquor and convenience outlets; retailing of home improvement and outdoor living products and supply of building materials; retailing of office and technology products; coal mining and production; gas processing and distribution; industrial and safety product distribution; and chemicals and fertilisers manufacture; and investments. Co.'s retail operations includes Coles, which operates Coles Supermarkets, Coles Express, Liquorland, Vintage Cellars, First Choice Liquor, and Spirit Hotels, among others; while its departmental operations include Kmart and Target retailers.
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