Wesfarmers flags challenging Q1 trading conditions
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The news: Wesfarmers chief executive Rob Scott will warn investors at the company's annual general meeting later today of challenging business and consumer spending conditions, and will not comment on sales growth rates across any its divisions.
The context: Scott will say that Bunnings sales are positive in both its consumer and commercial segments, but that weakness in residential construction is weighing on commercial sales.
He will tell investors that Kmart is seeing "ongoing growth in units sold, transaction volumes and customer numbers", with items per basket and average sell prices experiencing "minor decreases".
Meanwhile, Wesfarmers' chemicals, energy and fertilisers business WesCEF saw "losses associated with depressed global lithium prices on spodumene sales" which will "impact earnings".
More broadly, Scott will note "elevated inflation and interest rates continue to place pressure on household and business demand".
E&P Capital analyst Phillip Kimber said that he does not expect material changes to consensus forecasts due to the "limited specifics" of Scott's announcement. However, there may be downgrades of around 1% to 2% "given the generally cautious tone", he said.
What they said: "No specific growth rates were provided — but we note if [Wesfarmer]'s sales growth rates had accelerated in any division — it is likely this would have been called out," Kimber said.
The sources: ASX announcement, E&P Capital research
