Kmart Group has managed to maintain sales and earnings growth in FY26 despite challenges in the second half, including weather-related impacts and foreign exchange rates with New Zealand.
The group – which manages both Kmart and Target, all housed under the overarching company Wesfarmers – saw total sales increase 2.8 per cent to $11.75 billion, with earnings before tax (EBT) jumping by $63 million to $1.1 billion.
Total sales in the second half softened slightly to 2.2 per cent, with comp sales staying in line at 2.7 per cent.
“Comparable sales growth in the second half reflected more challenging conditions for seasonal categories in the fourth quarter and the impact of a material deterioration in the exchange rate on Kmart’s New Zealand dollar-denominated sales,” Wesfarmers reported today.
“Adjusting for the New Zealand dollar impact, comparable sales growth for the second half was above the first half.”
The company added that Target’s performance in the first half was impacted by the closure of the Queensland distribution centre due to storm damage, but that this improved in the second half as stock flow normalised. Total sales growth in the second half was further impacted by a reset of the strategy in Anko Global.
“Kmart Group continued to benefit from its strong value credentials, with customer numbers and transaction volumes growing on the prior year. Prices were dropped on more than 2,500 items during the year, while product innovation in Anko’s ‘one-up’ and ‘two-up’ price tiers continued to generate strong demand.”
As for earnings growth at Kmart Group, Wesfarmers noted this was due to the solid trading performance as well as a focus on productivity and cost control. Productivity benefits, the company noted, were delivered through the continued digitisation of operations across stores, sourcing and supply chain.
“These benefits mitigated ongoing cost of doing business pressures, including increased fuel prices as a result of the Middle East conflict and the impact of investments in projects that are expected to deliver long-term operational benefits.”
Through the financial year, Kmart invested in 20 new stores trading in Kmart’s Plan C plus format, and launched another store concept called K Home, which is what some have considered a rival to IKEA.
Kmart Group reported that these formats supported the continued expansion of its total addressable market, as well as enhanced cross-shop between departments.
“Digitisation of store processes advanced through the expansion of RFID capabilities and the use of AI-enabled solutions,” the company added.
Kmart Group also constructed a new Next Gen omnichannel facility in New South Wales, as well as centralised online fulfilment scaled across Victoria and New South Wales, a new order management system, and an upcoming upgrade of its warehouse management system.
Kmart in particular saw an uplift in its digital operations, with digital sales increasing by 19.7 per cent. That includes marketplace gross merchandise revenue. Digital sales now make up 10.5 per cent of total revenue.
The group’s Anko brand is also scaling, with six stores opened in the Philippines by FY26 end. The return on capital here reportedly increased to 68.3 per cent.
Kmart opened two net new stores, and Target closed four stores during the year. There were 445 stores across Kmart and Target as at June 30, 2026.
“The 2027 financial year will represent a year of material investment for Kmart Group with the continued rollout of the Kmart Plan C plus store format, as well as further investment in core technology capabilities across stores and supply chain,” Wesfarmers reported.
“Earnings for the year will include costs associated with commissioning the Next Gen omnichannel fulfilment centre, including dual-site operations in New South Wales from October 2026.
“Progress to increase Kmart Group’s addressable market will also continue through the expansion of the third-party marketplace and further growth in the Anko store network in the Philippines.”