Wesfarmers Faces Uneven Consumer Spending Amid Inflation Concerns

Wesfarmers, Australia's largest non-food retailer, reports mixed consumer spending impacting its second-half sales, despite surpassing profits in the first half. Inflation and rising interest rates are influencing consumer sentiment. Wesfarmers plans price cuts and productivity improvements to appeal to cost-conscious consumers.

Australia's leading non-food retailer, Wesfarmers, has cautioned that uneven consumer spending is overshadowing its sales growth, sending its shares plummeting following a forecast-surpassing first-half profit. Wesfarmers owns the widely popular Bunnings and discount retailer Kmart, with an impressive interim net profit rising by 9.3% after tax, reaching A$1.6 billion.

Despite solid consumer demand in the second half, CEO Rob Scott attributes the uneven impact of inflation on consumers as a notable challenge. Australia's rising inflation, recorded at 3.4% last quarter, has triggered a 25 basis point rate increase by the Reserve Bank, impacting consumer spending sentiment.

In response to market expectations, Wesfarmers aims to implement price cuts by leveraging productivity improvements and expanding the use of artificial intelligence. Acknowledging the mixed outlook, the company experiences a significant share drop, amidst the varying contributions to its earning divisions.

(With inputs from agencies.)