Australia’s Wesfarmers shares slide despite forecast-beating $1.1 billion profit

By Sneha Kumar and Christine Chen

Feb 19 (Reuters) – Wesfarmers, Australia’s biggest non-food retailer, on Thursday warned of uneven consumer spending as its second-half sales growth missed expectations, sending its shares down by their most in over three months despite a forecast-beating first-half profit.

Wesfarmers, which owns the country’s most popular hardware chain Bunnings, and discount retailer Kmart, posted a 9.3% rise in its interim net profit after tax to A$1.6 billion ($1.13 billion), beating the Visible Alpha consensus estimate of A$1.56 billion.

CEO Rob Scott said consumer demand had been “solid” so far for the second half, with sales in line with the first half, but higher costs were weighing on consumers unevenly.

He warned the uncertain outlooks for inflation and interest rates were also affecting consumer sentiment and spending.

“Inflation is arguably one of the major challenges for the Australian economy because it is impacting the cost of living,” he told reporters.

“The problem with inflation is, although it’s felt broadly across the economy, it is also felt somewhat unevenly. So it is lower-income families that bear the brunt of it.”

Australia’s underlying inflation picked up to 3.4% last quarter, the fastest pace in over a year. That prompted the Reserve Bank of Australia to raise rates for the first time in two years by 25 basis points to 3.85% in a unanimous decision this month.

Shares in Wesfarmers slipped as much as 6.1% to A$83.85 in early trading, the biggest one-day drop since late October 2025.

The company said it planned price cuts to retain cost-conscious consumers over the next half, funded in part by savings through productivity initiatives, such as the expanded use of artificial intelligence.

In the six months ended December 31, sales growth at the Wesfarmers’ top-performing division, Bunnings, lifted earnings before interest and taxes 5.5% to A$1.4 billion. Kmart recorded a 7% rise in earnings to A$733 million.

But the company still fell short of market expectations for second-half growth on both counts.

At Wesfarmers CEF, its chemicals, energy and fertilisers division, earnings rose 18% to A$210 million due to higher prices for its lithium business.

Analysts at Jarden said there would be some “share price weakness” due to the lower multiple lithium business driving the company’s profit beat.

Citi said “while earnings are ahead, the strength in lithium had been well understood by the market”.

($1 = 1.4207 Australian dollars)

(Reporting by Sneha Kumar and Rajasik Mukherjee in Bengaluru; Editing by Maju Samuel, Alan Barona and Lincoln Feast.)