Wesfarmers has undertaken a restructure of Kmart and Target, bringing the operations of both stores under the one Department Stores division and re-organising management to head up the new entity.
Kmart’s current managing director Guy Russo will become CEO of the newly-created Department Stores division, overseeing both the Kmart and Target businesses. Meanwhile, Target managing director Stuart Machin will continue in his role until July 2016 after which he will take on a new senior role in the group. Kmart’s current COO Ian Bailey becomes the new the store's managing director.
In a statement to the ASX this morning the retail group says that the "restructure of its department store businesses which will enable Kmart and Target to maximise and share opportunities where appropriate"
Wesfarmers stresses that both "iconic" brands will be maintained and grown.
“This is the right time to draw together some functions of the individual businesses to ensure we get maximum reward from the strong work that has been undertaken in both,” says Wesfarmers managing director Richard Goyder.
“The newly-formed division will allow streamlined coordination of functions, where it makes sense to do so, such as in property, finance, and corporate affairs and sustainability."
“Individually, both Kmart and Target have been through challenging times since we acquired them in 2007," he continues.
"Kmart was in very poor shape when we took ownership, but Guy Russo, Ian Bailey and their team have done an outstanding job and the business has been trading very strongly for several years."
Earnings before interest and tax at Coles increased 5.6% to $945 million in the six months to Dec 31, on revenue growth of 3.1%. Kmart’s earnings for the same period grew 10.4% to $319 million on revenue growth of 12.6%. Target’s earnings of $74 million were 5.7% higher on the corresponding period, with revenue up 1.9%.
Wesfarmers recently confirmed it will acquire UK DIY chain Homebase for $340m, expanding its Bunnings proposition into international territories for the first time.
Coles is one of the biggest spending advertisers in Australia. Last year it spent in the region of $50 million, according to Nielsen. It is believed its media business is currently up for review, although sources refused to be drawn on the matter.
Email Nicola at nicolariches@yaffa.com.au.