(Writes through, adding shares, fund manager and CEO comments)
SYDNEY, Aug 20 (Reuters) - Australian retail conglomerate Wesfarmers Ltd posted a better than expected annual profit on Thursday as shoppers stocked up on home improvement and office supplies due to COVID-19 lockdowns.
The results show the benefit of diversification as the pandemic ravages large swathes of the retail sector but presents opportunities for others.
Wesfarmers’ Bunnings hardware and Officeworks stationery chains reported double-digit profit jumps while its Australian Kmart and Target stores, already under pressure from a brick-and-mortar downturn, saw declines.
Underlying profit rose 7.4% to A$2.08 billion ($1.5 billion) for the year to end-June, beating the average analyst forecast of A$2 billion, according to a Refinitiv poll. Underlying profit excluded the contribution of sold assets and a A$525 million pre-tax impairment charge on Kmart.
Wesfarmers declared a final dividend of 77 Australian cents per share, in line with the previous year, plus a surprise special dividend of 18 cents per share from the proceeds of selling down its stake in grocery chain Coles Ltd.
“I’m happy to take any dividend at the moment, they’re pretty hard to come by,” said Jason Beddow, CEO of Argo Investments, a top-20 shareholder of Wesfarmers, referring to a pattern of companies withholding payouts due to the virus.
Wesfarmers shares edged up 0.7% to a record intraday peak of A$49.24 before easing to be flat by mid-session, against a broader market decline of 1%.
The company gave no profit forecasts for the year ahead, with sales expected to be impacted as government stimulus measures were unwound and the threat of a return to tighter movement restrictions remained.
Australia has its national borders and most state borders closed to contain the spread of the virus that has been linked to about 450 deaths, but Wesfarmers CEO Rob Scott called for a reopening of state borders, saying the restrictions were causing “enormous hardship”.
$1 = 1.3908 Australian dollars Reporting by Rashmi Ashok and Anushka Trivedi in Bengaluru; Editing by Rashmi Aich and Muralikumar Anantharaman
Our Standards: The Thomson Reuters Trust Principles.