Wesfarmers Limited (ASX:WES) operates a diversified portfolio spanning home improvement, general merchandise, office products, health and beauty, chemicals, fertilisers and lithium. Its FY26 result showed higher Earnings across several major divisions, led by Bunnings and Kmart, while the group also announced an important Leadership transition at Bunnings, its largest earnings contributor.

Underlying Profit Rises 8.3%

Revenue increased 3.4% to A$47.274 billion for the year ended 30 June 2026.

EBIT excluding significant items increased 7.3% to A$4.493 billion, while NPAT excluding significant items rose 8.3% to A$2.874 billion.

Statutory NPAT was also A$2.874 billion, down 1.8% from FY25.

There were no significant items in FY26. The statutory decline reflects comparison with FY25, when significant gains increased the reported result.

Bunnings Remains the Largest Earnings Contributor

Bunnings Revenue increased 4.1% to A$20.399 billion.

Earnings rose 5.1% to A$2.455 billion, while earnings excluding net property contributions increased 5.0%.

Total store sales increased 4.0%, with growth recorded across consumer and commercial customers, product categories and regions.

The division continued investing in digital capability, stores, Supply chain and its commercial customer offering.

Leadership Changes in February 2027

Michael Schneider has advised that he will retire as Managing Director of Bunnings Group in February 2027.

He will be succeeded by Rachael McVitty, currently Bunnings Group’s Chief Customer Officer.

McVitty has spent more than 17 years with Wesfarmers and has previously held senior roles including Bunnings Chief Financial Officer, Chief Executive of Blackwoods and Chief Financial Officer of Wesfarmers Industrials.

The internal appointment provides continuity as Bunnings continues expanding its retail and commercial operations.

Bunnings Takes on Industrial Businesses

Blackwoods and Workwear Group transitioned into Bunnings Group from 1 July 2026.

The move brings together businesses serving complementary commercial customers.

Wesfarmers expects Blackwoods’ product range and fulfilment capabilities to support Bunnings’ offer to small and medium-sized enterprises and larger commercial customers.

The expanded structure increases the scope of the Business McVitty will oversee after taking the leadership role.

Early FY27 Bunnings Trading Improves

During the first seven weeks of FY27, Bunnings sales growth was slightly higher than the 3.9% growth recorded in the second half of FY26.

Trading benefited partly from unseasonably dry weather during July.

Management continues to expect subdued residential building conditions in the near term, although housing undersupply and population growth may support activity over a longer timeframe.

Kmart Group Continues Earnings Growth

Kmart Group revenue increased 2.8% to A$11.751 billion.

Earnings increased 6.0% to A$1.109 billion.

Comparable sales rose 2.7%, supported by customer volumes, product development and cost control.

The business continued investing in its store network, supply-chain infrastructure and digital capabilities.

FY27 will include further Investment in Kmart’s store formats and omnichannel fulfilment operations.

Health Earnings Improve

Wesfarmers Health revenue increased 9.1% to A$6.474 billion.

Earnings rose 18.8% to A$76 million.

Priceline Pharmacy delivered headline network sales growth of 12.7%, including dispensary sales.

The division also benefited from improving wholesale performance and continued expansion in consumer health, beauty and digital services.

Management remains focused on its multi-year transformation program.

WesCEF Benefits From Lithium Improvement

WesCEF revenue increased 5.9% to A$3.138 billion.

Earnings rose 18.5% to A$473 million.

Lithium earnings improved to A$40 million compared with a A$59 million loss in FY25, supported by higher spodumene pricing and improved production at Mt Holland.

The group has also approved an expansion of the Mt Holland mine and concentrator, increasing its future Capital requirements.

Officeworks Earnings Decline

Officeworks revenue increased 3.7% to A$3.698 billion, but earnings fell 22.2% to A$165 million.

The decline mainly reflected one-off costs associated with its transformation program.

Wesfarmers expects FY27 Officeworks earnings to improve as benefits from a structurally lower cost base begin to emerge, although additional transformation costs are still expected.

The program is scheduled for completion by the end of calendar 2027.

Dividend Increases to A$2.22 Per Share

Wesfarmers declared a fully franked final Dividend of A$1.20 per share.

This took total FY26 Ordinary Dividends to A$2.22 per share, up 7.8%.

The group had also paid a A$1.50 per Share Capital management distribution during FY26, comprising a A$1.10 capital return and a fully franked 40-cent special dividend.

Ordinary dividend decisions remain linked to earnings, cash flows, capital requirements and franking-credit availability.

Free Cash Flow Rises Despite Lower Operating Cash Flow

Free cash flow increased 15.8% to A$3.992 billion.

However, Operating Cash Flow declined 6.5% to A$4.272 billion, partly because WesCEF and Health deliberately increased working capital.

Net financial Debt stood at A$5.295 billion at 30 June 2026.

The group expects borrowing costs to rise in FY27 because of higher net debt, Capital Expenditure and funding costs.

FY27 Investment Is Set to Increase

Wesfarmers expects FY27 net capital expenditure of A$1.3 billion to A$1.5 billion.

This includes approximately A$200 million relating to the Mt Holland mine and concentrator expansion.

The group is also increasing investment in stores, refurbishments and supply chains.

Balancing those investments with dividends and balance-sheet capacity will remain an important part of capital allocation during FY27.

Key Risks and Areas to Watch

Consumer Demand and operating-cost Inflation remain important variables across Wesfarmers’ retail divisions.

Bunnings also faces a leadership transition while integrating Blackwoods and Workwear Group.

Officeworks must deliver benefits from its transformation program, while WesCEF remains exposed to lithium and chemical-market conditions.

Bunnings sales growth, the February 2027 leadership handover, Officeworks recovery, net debt and FY27 capital expenditure will be key indicators.