Wesfarmers WES:ASX Delivers 9.3% Profit Lift on Retail Resilience
Today's H1 FY26 result confirmed statutory net profit after tax of $1.603 billion for the half-year ended 31 December 2025.
"Our divisions remain focused on delivering value for customers through lower prices and better experiences, while driving the productivity outcomes that support long-term earnings growth." — Rob Scott, Managing Director & CEO, Wesfarmers Recent Price Action Wesfarmers shares have largely tracked sideways over the past three months, underperforming a broadly firmer ASX 200 as cost-of-living concerns and subdued residential construction weighed on sentiment toward the consumer discretionary sector. Wesfarmers earnings lift on Bunnings and Kmart strength The Group's two workhorses again carried the result. Bunnings continued to demonstrate its structural dominance in home improvement despite a weak residential construction backdrop, while Kmart Group sustained earnings momentum through disciplined cost management and value positioning that resonated with budget-conscious shoppers. WesCEF also contributed meaningfully to the group's 9.3% NPAT growth. Officeworks remains the soft spot in the portfolio. Citi previously flagged a potential EBIT decline of $15–25 million for the half due to an ongoing business reset, and investors will be watching divisional disclosures closely for confirmation of the magnitude and timeline for recovery. The Health division continues its transformation, shifting focus toward the higher-margin Consumer segment while wringing out inefficiencies in Pharmaceutical Wholesale. Macquarie had anticipated Health would help offset softness in Kmart margins, and the overall result suggests that balance largely held. Capital & Financial Position Wesfarmers maintained its hallmark financial discipline through the half, with management continuing to prioritise productivity initiatives across divisions to absorb cost pressures without sacrificing competitive pricing. The Covalent Lithium project remains on schedule for refinery commissioning in mid-calendar 2025, representing the Group's most significant near-term capital deployment and a potential earnings catalyst as lithium markets stabilise. What's next… The result supports Wesfarmers' reputation as a core defensive holding, and consensus EPS forecasts are unlikely to shift materially following an in-line print. Broker targets cluster tightly between $90–$92.60 for the major houses, implying limited near-term upside from current levels. The key debates heading into H2 FY26 are the pace of Officeworks' reset, Covalent's commissioning execution, and whether easing inflation allows Kmart and Bunnings to hold margins while sustaining volume growth. Our stance remains constructive but patient — the risk/reward is balanced rather than compelling at current prices.
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