Wesfarmers Ltd (ASX: WES) shares are in the green today.
Shares in the S&P/ASX 200 Index (ASX: XJO) retail stock – whose subsidiaries include global household names like Bunnings Warehouse, Kmart Australia, Officeworks and Priceline – closed yesterday trading for $67.64.
In late morning trade on Thursday, shares are changing hands for $67.88 apiece, up 0.4%.
For some context, the ASX 200 is down 0.1% at this same time.
This outperformance comes as Wesfarmers holds its annual general meeting (AGM).
Here's what's happening.
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Wesfarmers shares catching tailwinds from AGM
Wesfarmers shares look to be outperforming today after chairman Michael Chaney opened the meeting with a quick review of the company's strong FY 2024 performance amid some challenging conditions.
"Despite some external challenges in the economy – higher interest rates and inflation for example – your company produced an increase in profit and the directors declared higher dividends in the year," he said.
With Wesfarmers shares up an impressive 34% over 12 months, not including those dividends, Chaney highlighted the company's record-high FY 2024 net profit from continuing operations of $2.6 billion, which was up 3.7% from FY 2023.
"Kmart Group was the standout performer over the year, recording a 25% increase in profit," Chaney said.
Addressing the company's other business segments, he added:
Increases were also recorded by the Bunnings, Officeworks, Health and Industrial and Safety businesses; while earnings from Chemicals, Energy & Fertilisers fell, largely as a result of reduced international ammonia prices.
Chaney handed over the podium to Wesfarmers managing director Rob Scott.
A word from the CEO
Scott kicked off his address by noting the obvious yet crucial fact that, "A business that isn't profitable, isn't sustainable."
As for the sustainability of Wesfarmers shares going forward, Scott said:
In the forty years since Wesfarmers listed on ASX, we've seen many companies fail – unable to adapt to changing environments, with disruption in technology, consumer behaviour and regulatory landscapes.
Today we are seeing an acceleration of the disruptive changes that impact business, particularly through new technologies, global competition, geopolitics and regulation.
The Wesfarmers model of active portfolio management and divisional autonomy, combined with strong commercial and financial discipline, provides an excellent platform to adapt and prosper in the new world.
Scott also acknowledged the ongoing pressures many households and businesses are facing amid sticky inflation and high interest rates.
However, this could work to the relative benefit of Bunnings, Kmart and Officeworks, which are focused on offering low prices.
"The ability of Bunnings, Kmart and Officeworks to offer low prices is due to their relentless focus on managing their costs, and always looking for ways to be more efficient and productive," Scott said.
Commenting on recent trading in FY 2025 impacting Wesfarmers shares, Scott said, "In Bunnings, year-to-date sales growth remains resilient with positive sales growth in both consumer and commercial segments, albeit the weakness in residential construction is weighing on commercial sales."
On Kmart, he added:
The strength of the Kmart Group offer is evident through ongoing growth in units sold, transaction volumes and customer numbers. However, customers are increasingly seeking value and items per basket and average sell price have both experienced minor decreases.
Scott concluded:
While the outlook for the economy remains uncertain with ongoing challenges, Wesfarmers is well positioned with resilient businesses, a strong balance sheet and various platforms for future growth.
