Wesfarmers Ltd (ASX:WES), the Perth-based conglomerate behind Bunnings, Kmart and Officeworks, has beaten profit expectations, delivering a 14% lift in annual profit to A$2.93 billion. The group will return A$1.7 billion to shareholders through a special dividend of A$1.50 per share, on top of a fully franked final dividend of A$1.11 per share.
The result was powered by Bunnings and Kmart, offsetting weaker performance from its chemicals and fertilisers division as lithium-related losses weighed. Revenue rose 3.4% to A$45.7 billion, with profit after tax and excluding significant items increasing 3.8% to A$2.65 billion, ahead of market forecasts.
Retail division drives growth
Bunnings once again led performance with earnings up 3.8% to A$2.34 billion on sales of A$19.59 billion. Kmart Group lifted earnings 9.2% to A$1.046 billion, with sales of A$11.43 billion. Officeworks added modest growth, with earnings up 1.9% to A$212 million. By contrast, Wesfarmers Chemicals, Energy and Fertilisers fell 9.3% to A$399 million as lithium project losses and softer ammonia prices offset stability in chemicals.
Chief executive Rob Scott said the resilience of the retail businesses demonstrated the “quality of the group’s businesses and teams” despite ongoing cost pressures across labour, energy and supply chains.
Dividend payout exceeds expectations
The board announced a fully franked final dividend of A$1.11 per share, up from A$1.07 last year, bringing the annual ordinary dividend to A$2.06 per share. Additionally, Wesfarmers proposed a special capital return of A$1.50 per share, well above market expectations of A$1.00.
If approved at the October 30, AGM, the distribution will comprise A$1.10 in capital return and A$0.40 as a fully franked dividend. Payment is scheduled for December 4, subject to Australian Taxation Office confirmation. Chief financial officer Anthony Gianotti said the distribution reflected the strength of the balance sheet and would not compromise Wesfarmers’ ability to pursue growth opportunities.
Strong start to 2026 financial year
Momentum has carried into the new financial year, with Bunnings reporting stronger sales growth than in the second half of FY25. Kmart Group maintained momentum, with sales growth in line with the strong second half, while Officeworks’ growth was steady.
Analysts remain cautious on valuation. Barrenjoey’s Tom Kierath described the result as “appealing to those looking for a safe-harbour investment” but said Wesfarmers shares remained “hardly cheap”.
The company highlighted productivity initiatives, including digital transformation and AI adoption, as central to managing ongoing inflationary pressures.
Succession planning and governance
Wesfarmers confirmed that former BHP chairman and Amcor chief executive Ken MacKenzie will succeed Michael Chaney as chairman in 2026. MacKenzie will join the board in June 2026 and stand for election at the AGM later that year.
The early move ensures a smooth leadership transition, with Chaney set to step down after nearly two decades in the role.
Retail crime and regulatory push
Scott raised concerns about organised retail theft, particularly in Victoria, where crime levels are “disproportionately high”. He said stolen goods, including power tools, often end up on online marketplaces and black markets.
Wesfarmers is lobbying the Victorian government, alongside other retailers, for tougher laws and is advocating for the responsible use of facial recognition technology to curb theft. Scott said such measures would “materially reduce the incidence of retail crime” while protecting staff and customers.