Wesfarmers boss Rob Scott has called for more stringent controls around hotel quarantine and better-managed lockdowns, warning shortfalls in managing the pandemic are causing “enormous” hardship for businesses and individuals.
Mr Scott, who oversees the chains Bunnings, Kmart, Target and Officeworks, said he supported the concept of snap lockdowns, but they needed to be better executed.
“We need to be focusing back on the core area of risk which is hotel quarantine, and doing more to contain the risk at that level,” he said. “If you go back over what’s driven the various snap lockdowns, the origin of the problem has been hotel quarantining.
“There will always be a need [for lockdowns] in some circumstances, but an inconsistency in approach and snap decisions can result in enormous personal and business hardship.”
Both state and federal governments should decide on a national framework for hotel quarantine, Mr Scott said, though it should not become the sole responsibility of the federal government.
“We should have some consistency around the protocols and the standards, and there’s a lot we can learn from different states to raise the bar around the standards and the process to better manage the risk,” he said.
The retail boss made his comments as Wesfarmers’ businesses faced patchy trading conditions in recent months due to lockdown measures in Victoria and other states. However, the retail conglomerate pulled through the pandemic strongly, reporting a 16.6 per cent rise in sales to $17.7 billion for the last six months of 2020 on Thursday.
All of the company’s retail divisions have been major beneficiaries of heightened spending through COVID lockdowns. Net profit jumped 25.5 per cent to $1.4 billion thanks to surging sales at home improvement chain Bunnings and a better-than-expected performance at Kmart and Target.
Wesfarmers is in the midst of turning around Target, announcing last year it would shut or convert 167 stores to the Kmart chain. The turnaround effort appears to be on track, with the business expected to report a full-year profit thanks to the COVID-19 sales boom. Earnings at the two chains jumped 44.3 per cent for the half to just over half a billion dollars. Target reported a small profit in 2019 after writing losses every other year since 2015.
Mr Scott acknowledged the business had greatly benefited from the pandemic, especially as stock shortages led to lower levels of discounting.
”There’s no question there’s been some COVID-related benefits for Target in terms of the demand for product,” he said. “We’ve had a scarcity of stock but very strong demand, meaning there’s been less clearance activity across the board.“
Hardware chain Bunnings reported more than $1 billion in profit for the half, and sales at its DIY stores rose 27.7 per cent on a comparable basis as Australians spent up on home improvements during the pandemic.
Wesfarmers’ shares dipped 2 per cent early in the day but recovered to close up slightly at $54.49.
Mr Scott said the result was pleasing, especially Wesfarmers’ growth in online sales, which doubled across the group and topped $2 billion for the half, aided by a near doubling in transaction growth at recently-acquired online marketplace Catch.
Wesfarmers’ sales have continued to hold up across the second half of the financial year, though some fluctuations had been seen from the lockdowns in Western Australia and Victoria.
However, sales growth is expected to moderate from March as the company’s performance begins to compare with the soaring growth figures early on in the pandemic.
Mr Scott said he was far more optimistic about the state of the economy than he was six months ago, and he was confident about growth in the short term, but echoed the concerns of Coles boss Steven Cain when mulling the potential impact of lower immigration over the long term.
“Population growth and immigration is very important for Australia over the long term,” he said. “I’m less concerned about short-term impact than I would be about the long-term impact and the effect that would have on the Australian economy.”
Morgan Stanley analysts said the result was broadly in line with expectations, with positive signs of growth continuing into the new year, especially for Bunnings. “Bunnings is well placed to benefit from housing strength and elevated sales in the absence of international travel,” they said.
Wesfarmers declared an 88 cent dividend, up 17 per cent on the prior corresponding half, payable on March 31.
On Wednesday night, prior to its results, Wesfarmers announced it would forge ahead with a $950 million investment to construct a lithium mine in the Western Australian region of Mt Holland.
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Source: Thanks smh.com