Wesfarmers Shares Drop as CEO Says Inflation Hitting Buyers

Article content(Bloomberg) — Australian conglomerate Wesfarmers Ltd.’s shares dropped the most since October after the first-half performance of its key retail units fell short of analyst expectations.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentShares in the group, which also produces lithium and industrial products, closed down 5.6% in Sydney on Thursday, the biggest drop since Oct. 30.

Kmart Australia Ltd. and Bunnings Group, which make up the lion’s share of Wesfarmers’ revenue, brought in A$17 billion ($12 billion) in the six months through December, below estimates.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle contentPersistent inflation continues to affect shoppers, Wesfarmers Chief Executive Officer Rob Scott said in an interview with Bloomberg TV Thursday. Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article content“We generally have inflation tracking at almost double the level of economic growth in Australia,” Scott said. Following the recent interest rate hike, “we are seeing customers be more value conscious,” he said, adding the company has lowered prices across thousands of products throughout its retail chains. Article contentThe group’s retail arm has “historically performed quite well in these environments,” Scott said.Article contentWhile the country’s consumer spending has been holding up, according to Commonwealth Bank of Australia, that momentum is expected to slow as borrowing costs rise. Thursday’s jobs data was stronger than forecast, which reinforced expectations of another interest rate increase in May. Article contentCitigroup Inc. analyst Adrian Lemme said that Bunnings revenue was 2% short of their forecast while Kmart’s revenue missed by 1%. Across the first six weeks of 2026, Bunnings and Officeworks tracked in line with expectations, while Kmart was ahead of the 3.2% expected growth, according to Citi Research.Article contentWesfarmers’ other divisions, including chemicals, energy and fertilizers, also failed to hit estimates, though its health and industrial safety divisions outperformed.Article contentHigh valuations in the S&P/ASX 200 index have created an environment of high expectations this earnings season, increasing the risk of sharp selloffs for companies that disappoint.Article content—With assistance from Andy Clarke and Paul Allen.Article content(Adds CEO comments in third to fifth paragraphs, context in last paragraph.)Article contentTrending Garry Marr: For young Canadians who bought at peak of market, Home Buyers' Plan was invitation to disaster First-Time Homebuyers Cooler inflation gives Bank of Canada an opening to cut rates if economy falters, say economists Economy Posthaste: Canada's biggest city is losing momentum, and that's a problem for the whole country News Subscriber only. The private sector elite enjoying steak through Cuba's crisis Subscriber only Financial Times Matthew Lau: We should let some universities fail FP Comment Share this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. Garry Marr: For young Canadians who bought at peak of market, Home Buyers' Plan was invitation to disaster First-Time Homebuyers Cooler inflation gives Bank of Canada an opening to cut rates if economy falters, say economists Economy Posthaste: Canada's biggest city is losing momentum, and that's a problem for the whole country News Subscriber only. The private sector elite enjoying steak through Cuba's crisis Subscriber only Financial Times Matthew Lau: We should let some universities fail FP Comment