Wesfarmers reports an 89% increase in digital sales as COVID-19 restricts people to their homes

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Jun 9, 2020
  • Wesfarmers reports an 89% increase in digital sales as COVID-19 restricts people to their homes.
  • The Australian retailer attributes much of the increase in online sales to Officeworks & Bunnings.
  • Bunnings to book £38.40 million in costs due to an accelerated launch of its e-commerce unit.

Wesfarmers (ASX: WES) reported an unparalleled 89% increase in its digital sales in 2020 so far on Tuesday. The Australian company attributed the increase in online sales to the Coronavirus pandemic that restricted people to their homes and increased demand for internet shopping. Wesfarmers also highlighted its Officeworks and Bunnings units to have posted the strongest digital sales in the past five months.  

COVID-19 has so far infected more than 7,200 people in Australia and caused over 100 deaths. On Monday, New Zealand lifted all Coronavirus restrictions branding the country completely free of the novel respiratory disease.

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Shares of the company posted an over 2% intraday decline on Tuesday. At £22.91 per share, Wesfarmers has recovered roughly 35% in the past three months from a year to date low of £17 per share in the last week of March. Learn more about how to invest in the stock market.

The retail sector is increasingly relying on e-commerce

According to the Australian retail giant, the two units that primarily focus on office supplies and hardware products have contributed the most in lifting its second-half (to date) digital sales growth above what it recorded in the first half, as the novel flu-like virus pushed companies into relying on work from home arrangements.

Wesfarmers’ sales growth, as per the experts, hints at an increasing reliance of the retail sector on online sales amidst the health crisis.  

The Perth-headquartered company, however, remained uncertain if it will be able to sustain the robust growth in digital sales in the upcoming months. As COVID-19 restrictions are eased, the retailer added, shopping trends can be expected to shift back to the brick-and-mortar stores.  

Bunnings to book £38.40 million in costs due to COVID-19

Bunnings currently operates over 370 locations in New Zealand and Australia combined. The hardware chain is expected to see roughly £38.40 million in costs ascribed to an accelerated launch of its e-commerce unit, COVID-19 driven store closures, and the nationwide lockdown in New Zealand at large.

In its report on Tuesday, Wesfarmers also declared sales at Target and Kmart (discount department stores) to have climbed in recent weeks. The retailer attributed this increase particularly to a higher demand for winter clothing.

As the pandemic weighed on demand, Wesfarmers announced last month that around 65% of its Target locations will either be closed or rebranded. The move was likely to result in up to £357 million one-off charges.

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