It’s no secret that Wesfarmers Ltd [ASX:WES] has been one of the best performing blue chip stocks on the ASX since the market crash in March.
The WES share price has continued its upward trajectory today thanks to this morning’s trade update, which shows considerable growth among its key retail businesses.
When we last visited WES in September, its share price had taken a hammering on the back of declining profits.
But things are looking up for WES in the new financial year.
At time of writing the WES share price is up 2.73% or $1.30 to trade at $48.87 per share.
Sales figure balloons during ‘uncertainty’
In a trading update released today, WES reported a significant pump in sales across some of its core brands during the beginning of FY2021.
Trading performance for the financial year ending 31 October 2020 show WES has been responding well to a period of ‘significant uncertainty and disruption.’
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Bunnings was the standout performer amongst the Group’s core retailers, growing sales by more than a quarter and reporting an increase of 30.9% in comparable sales growth.
However, Target has continued to struggle being the only business to report a decline in sales over the period despite efforts to revamp its stores.
In FY2020, Target sales slumped 2.6%, becoming Wesfarmers’ worst earner.
Group CEO Rob Scott commented:
‘Despite the challenging operating environment, the results across the Group’s retail businesses reflect their continued focus on meeting the changing needs of customers and delivering greater value, quality and convenience while providing safe and trusted environments for customers to shop.’
Unsurprisingly, it’s been online sales that has helped drive performance.
Year-to-date, the Group’s retail businesses delivered total online sales growth of 166%, excluding Catch.
Excluding online sales in metropolitan Melbourne, which were significantly elevated due to government-mandated trading restrictions, online sales growth was 98%.
Including Catch, total online sales across the Group increased to $1.3 billion year-to-date.
Will dividends rebound?
For many WES shareholders this will certainly be a burning question, with the group forced to cut dividends last financial year.
WES did not disclose financial information regarding its other business units, nor did they mention dividends.
Which makes it difficult to speculate on the overall performance of the company.
However, if we continue to see similar performance from its core retailers through the financial year, there might be a possibility of an increase in dividends.
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