(Reuters) – Australian retail conglomerate Wesfarmers Ltd posted a 2.9% drop in annual profit on Friday, hurt by COVID-driven store closures, sticky supply chain bottlenecks and rising costs.
Retailers across the globe have been grappling with higher prices of raw materials, while inflation has also dented demand from consumers who have started prioritizing essentials.
In Australia, government-mandated store closures in the first half of the year to quell COVID-19 outbreaks also contributed to higher expenses and led to staff absenteeism.
“COVID-19 continued to present operational complexity and create increased trading variability during the year,” Wesfarmers said, referring to its home improvement chain Bunnings.
But performance improved at Bunnings – which brings in more than two-thirds of the company’s profit – after a weak first half, with total store sales rising 7.8% in the latter six months.
The company said net profit after tax, excluding one-off costs, came in at A$2.35 billion ($1.64 billion), compared with A$2.42 billion a year earlier. The figure beat the A$2.22 billion expected by analysts, according to Refinitiv data.
Wesfarmers expects net capital expenditure of between A$1 billion and A$1.25 billion for fiscal 2023, compared to A$884 million in the reported period.
($1 = 1.4331 Australian dollars)
(Reporting by Harish Sridharan in Bengaluru; Editing by Aditya Soni)
