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#Business Model/Strategy
Last edited 2 months ago

08-June-2024: Wesfarmers (WES) have always been innovators and for one of Australia's largest companies, surprisingly nimble in terms of WES' management thinking on their feet and making good strategic decisions. Not sure how their "One Pass" is making them any money - it's likely to further increase their market share, but they are already leaders in most categories. I received a small Target order (a hoodie and T-shirt) delivered this morning, and four Bunnings orders during the week that I didn't have to pay any delivery fees for. Hint: if you order two or more bags of potting mix, top dressing soil, etc. they'll charge you $25 to $50 for delivery but if you order one at a time - up to 25L and some 50L bags, even 4 orders on the same day, they are all delivered for free with "One Pass" and the delivery driver told me he gets paid $5/order delivered, even when he delivers 4 or 5 orders to the same person on the same day, so he's loving it!. Some of these deliveries are for items that cost me LESS than $5, so hard to see how WES is making money out of that. I imagine they'll close that loophole at some point.

Point is, they're definitely embracing the whole online shopping side of things, with free delivery on most items removing that impediment and encouraging more people to try it out. And it won't do their market share any harm. My Target delivery came from one of their online-only stores that are not open to the public, so basically a distribution warehouse set up for online orders. It makes sense.

WES famously bought Coles a few years back when they were struggling, and that acquisition came with Target and K-Mart, and WES turned Coles around and spun them out into a separate company again (COL) around the time they were being perceived as market leaders over Woolworths once more. But they kept K-Mart and Target and they continue to improve those two businesses and grow their online presence and market share. They already owned Bunnings and Officeworks of course, both clear market leaders in their segments. So what's next for Wesfarmers.

Two main growth areas.

The first is their foray into lithium with their purchase of Kidman Resources in 2019 for $776m - so they owned Mt Holland in WA, however they are aware of their own strengths and weaknesses, so they partnered with global lithium giant Sociedad Quimica y Minera de Chile (SQM), forming a JV (joint venture) partnership called Covalent Lithium with a plan to jointly develop the Mt Holland lithium mine and build a lithium hydroxide plant at Kwinana, south of Perth. These projects have had some setbacks, but WES are moving into lithium, and, importantly, their JV partner is from Chile, not China, something that is a big positive when you see companies like IGO who partnered with Tianqi - a Chinese lithium specialist company - and are now finding themselves on the wrong side of US legislation that seeks to either ban or else impose heavy tarriffs on lithium produced by Chinese companies - legislation introduced by Biden but that would also be kept in place by Trump if he wins the election later this year and becomes POTUS again - in fact Trump would likely take it even further - coz he's knows that anti-Chinese tirades and tariffs play well within his demographic (supporters).

Covalent sits within Wesfarmers' Chemicals, Energy and Fertilisers (WesCEF) division, which posted record earnings of $540 million in FY22 and beat that by +23.9% in FY23 to post a new record earnings number of $669.


Source: WES-2023-full-year-results.pdf

Ian Hansen (picured below), Wesfarmers' MD of their WesCEF division, said in 2022 that there were two key factors at play in the company’s battery minerals strategy.

“One is how do we get involved further in this thematic of battery minerals, and obviously Australia, in particular, is blessed with a number of key components for electric vehicles and batteries in terms of minerals,” he said.

“The second component of going further downstream into battery manufacture is, I think, a lot more challenging in Australia given there is ... no car manufacturing in Australia.

“The more we learn about the battery sector, the more we see the battery manufacturers having very close relationships with the individual car manufacturers, the OEMs (original equipment manufacturers) because the batteries really dictate the car’s performance.

“The design of the batteries, the nuance of batteries both the chemistry and packaging reflect the performance of the car and so individual OEMs want to have their battery suppliers very close to them, so they can rapidly enhance, modify, change the battery design or packaging design to optimise the vehicle design.

“I think the prospect of a battery manufacturing sector in Australia is a little bit more challenging than us getting involved in further minerals opportunities.”

Source: Wesfarmers: Record earnings push Bunnings owner deeper into battery metals beyond lithium ( [29-Aug-2022]


Ian Hansen is in charge of Wesfarmers’ sprawling chemicals, energy and fertiliser division (WesCEF). Photo: Tony McDonough

OK, so there's that.

WES' latest division however is their Wesfarmers Health (Care) division, which posted negative earnings (a loss) of $25m in FY22, a $45m profit in FY23, and is really just getting started.

Wesfarmers' Health was formed in March 2022 with WES' acquisition of API (Australian Pharmaceutical Industries) which is the main distributor of both regulated drugs and non-regulated products to pharmacies in all Australian states, and also includes more than 470 Priceline Pharmacy stores, 975 independent Soul Pattinson Chemist stores, Pharmacist Advice and Club Premium pharmacy members, over 80 Clear Skincare clinics across Australia and New Zealand as well as a health and personal care product range manufactured in New Zealand and marketed across Australasia and the United Kingdom by API Consumer Brands.

WES Health also bought InstantScripts in the middle of last year (2023) and then Silk Laser towards the end of the year.

Source: Wesfarmers Health enters agreement to acquire digital health business InstantScripts

SILK Laser Australia Limited Acquisition (

API Acquisition (

However, that's just the beginning, and WES have form for making big acquisitions. How big? Well, have a look at this:

Wesfarmers Reportedly Runs the Ruler over Ramsay Health Care - MarketScreener

Wesfarmers Reportedly Runs the Ruler over Ramsay Health Care

April 23, 2024 at 02:32 pm

The $74 billion Australian listed conglomerate Wesfarmers Limited (ASX:WES) is understood to have been carrying out detailed work in recent months, weighing up the merits of buying Ramsay Health Care Limited (ASX:RHC). It is understood that Wesfarmers - which owns Target, Kmart, Officeworks and other industrial and healthcare assets - is interested in securing Ramsay's Australian business. However, with its shares performing strongly and a $74 billion market value, it's not inconceivable that Wesfarmers buys all of the $12 billion private hospital operator and sells off the international assets to other parties.

Some believe that the timing could now be right for Wesfarmers to embark on its next major acquisition, after bedding down the 2022 purchase of Priceline pharmacy chain owner Australian Pharmaceutical Industries for $763 million to seed its healthcare unit. Whether it remains serious about a deal remains unclear. Wesfarmers is usually assessing the acquisition of a handful of targets at any given time, and maintains an active mergers and acquisitions team.

It has looked at plenty of opportunities in the past before opting to walk away, and can treat targets as simply a due diligence exercise. Another possibility is that it could simply be weighing up a tilt at Ramsay's pharmacy unit, which it has expressed interest in before. Still, Wesfarmers' share price has rallied since the start of this year so it could take advantage of that, while the healthcare sector has been struggling with high costs and staff shortages, dampening the performance of Australian listed stocks trading in the space, including Ramsay.

Also weighing in Wesfarmers' favour is the fact that Ramsay's shareholders have been unhappy with the company's performance since Kohlberg Kravis Roberts walked away from a bid in 2022, causing its share price to tumble, and the could be more open to a buyout. The David Thodey-chaired Ramsay is believed to be thinking about a potential exit from its European hospital owner, Ramsay Sante, in which it has a 52.79% stake. DataRoom understands that Wesfarmers has carried out work on all aspects of the Ramsay business, including its real estate, and has been speaking to healthcare funds and industry figures.

--- ends ---

So perhaps, watch this space!

I hold WES shares, but no RHC at this point (have held them previously and rate them as a very decent business, just not as good as WES).

Australia's largest listed private hospital and health clinic operator Ramsay Health Care (RHC) would be a major acquisition - RHC's market cap is currently around $11.3 Billion, however WES' m/cap is $75.2B, so in that context, perhaps not such a big acquisition.



Above: Rob Scott, CEO & MD, Wesfarmers (WES). Below: Emily Amos, MD of Wesfarmers Health.


Emily Amos (


Wesfarmers’ Emily Amos: New health boss has plans for growth ( [23-Sep-2022]

New Wesfarmers health boss plans for growth

by Carrie LaFrenz, Senior reporter, AFR, Sep 23, 2022

Emily Amos’ first stab at a career was to become a young economist at what was then Pacific Power – the NSW-owned monopoly power generator.

It wasn’t long before it dawned on her that was not the right path.

Fast-forward 25 years and she appears to have found her groove quickly at Western Australia-based Wesfarmers. The conglomerate feels “relatively familiar”, she says, just five months into the job of bedding down its latest $774 million buy – major drug wholesaler Australian Pharmaceutical Industries (API).


Emily Amos is the new MD of Wesfarmers’ health division, where she is in charge of integrating API – the owner of Priceline Pharmacy. Photo: Louie Douvis

In her first in-depth interview, Amos says that after chatting with Wesfarmers boss Rob Scott, she could see this was a perfect role for her. It married the skills she had honed over many years – at supermarkets giant Woolworths for over a decade, and more recently as the head of Australia’s second-largest private health insurer, Bupa.

“I feel like both my health and my retail background has set me up well because I think you have to be able to set up a vision, but you really do need to learn how businesses operate to understand how work flows through the organisation so that you can actually deliver on the transformation agenda,” she tells The Australian Financial Review.

Amos held various roles at Woolworths, including setting up the Everyday Rewards loyalty program, looking after data and analytics, and spearheading the buyout of data service firm Quantium. She also had a stint as finance director of Endeavour Drinks. Before her time at the supermarket giant, she worked at Sainsbury’s in UK.

Not only has she become familiar with some of the key tools that retailers are using to deliver growth in digital, data and ecommerce, but she also has experience of senior finance roles.

Adept at fixing businesses

“There’s nothing like a stint as a finance director of a business to really focus you on commercial performance,” she says from her home in Sydney’s eastern suburbs.

The 50-year-old mother of three teenagers is adept at fixing and building businesses. This is just as well because API – which owns the Priceline Pharmacy chain and Clear Skincare clinics – has never quite lived up to its full potential.

API is the foundation asset of what one day, according to Scott, will be a $10 billion health and wellbeing division for the WA-based conglomerate, whose stable already includes Kmart, Bunnings and Officeworks.

Amos has been travelling around Australia, spending time in stores, meeting people in warehouses and learning what pharmacists do day-to-day. A key part of wrangling API is dealing with a large number of franchisee pharmacists. There is a group that is unhappy – about 30 signed up to and then abandoned a class action lawsuit that alleged they were being charged unfair fees in breach of state regulations.

“I think it’s important for leaders to be really visible, and actually allow all of your team members to ask you questions,” she says.

Amos is looking to prioritise digital and data investment. This may include developing new and innovative products and services within the busines,s including digital health initiatives. Other targets could include rivals such as Sigma Healthcare, and eventually private hospitals and beauty businesses.

API’s Sister Club, which boasts over 7.5 million members and is the fourth-largest loyalty program in Australia in terms of market penetration, represents the biggest opportunity. Amos plans to use this data to jumpstart sales, help expand ranges, and improve pricing and promotions.

Over the past financial year, Priceline was supported by strong sales in all major health categories due to the large numbers of cold, flu and COVID-19 cases that came with people returning to more normal patterns of working, travelling and socialising as lockdowns ended.

This was partially offset by weakness in beauty, as people cocooned at home amid the pandemic. Amos says beauty is pivotal to Priceline – which plays in the affordably priced market where many teenagers experiment with make-up.

While Amos seems to be excited by the opportunity to enter the fast-growing $30 billion health, wellbeing and beauty sector, it will be no easy task.

The big grocery chains have been beefing up their beauty offerings and discount rival Chemist Warehouse is also pressuring Priceline’s sales. Specialty beauty retailers such as Mecca and Sephora, and online players like Adore Beauty, are also growing. Amos is a former director at Adore.

More clinics envisaged

She will also need to steer the Clear Skincare business back on track after it was smashed during COVID-19. Amos says medical aesthetics will continue to grow because laser hair removal and botox are no longer considered discretionary right across the age spectrum. She sees room for up to 30 more clinics in Australia and New Zealand, from the current 96 sites.

“It’s a good margin business, so it’s really about operational execution and discipline,” she says.

Since taking over API, Wesfarmers has also revealed staff underpayment problems dating back about six years. Amos says Wesfarmers will announce more details on this in early 2023, but she is not expecting a blowout like the $500 million-plus underpayment scandal at Woolworths.

API’s wholesale drug business is the engine room – it posted about $3 billion in sales in fiscal 2021 – but it also earns low margins. Amos understands having a more efficient warehouse (at Marsden Park) is one way to solve this problem, and expects gains from the second half of this year from the highly automated distribution centre.

API operates 90 Priceline stores, 376 Priceline pharmacy franchise stores and 93 Clear Skincare Clinics. Amos is passionate about making healthcare more accessible and seamless for consumers, and plans eventually to add other businesses.

“Populations are ageing, we’re coming out of COVID and everyone’s really focused on how they can be well, stay well, and get healthier,” she says.

Screening, diagnosis, and treatment management are all areas of the digital health journey, which API could further extend. Priceline already offers SiSU Health Stations, which provide services such as measuring blood pressure, heart rates and the body mass index (BMI). Amos says this could be linked to a telehealth offering.

Amos grew up in Parramatta, the oldest of five children. Her father is an architect and her mother stayed home, although she trained as a primary school teacher. Amos is an early riser: often starting the day with yoga, a walk, or a ride on her Peloton.

Those who have worked with Amos say she is driven and goal-focused. Despite being at the tail-end of a COVID-19 infection, she pushed ahead with this interview rather than postponing – an insight into her determination.

She claims she is not a detailed, “in the background thinker” but does like to understand how businesses work and know where the opportunities are to make money.

“But really, my job as a leader is to inspire the people that work for me to actually do the delivering,” she says.

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Remember - you heard it here first.

13665d19cf7fb3b1d8b5238f64c240f64f5ad9.png [even if you didn't]

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Valuation of $77.00
Added 2 months ago


$58.77 is my 3 year price target for WES from here, so by May/June 2026. They should do that easily, and go on from there.

This company is always evolving - and they are now creating a Health Care division with the acquisition of API in March 2022.



Source: 30-May-2023: Wesfarmers 2023 Strategy Briefing Day Presentation

The following shows how they have performed so far, in terms of Total Shareholder Returns (TSR):


Have a look at their Mission Statement (below): Their Primary objective is to provide a "satisfactory return to shareholders".


They have certainly delivered on that objective.

Not a microcap or nanocap with multi-bagger potential, but a large cap which keeps delivering above-market TSRs for their shareholders.

I hold WES shares both here and IRL.

Further Reading: Results & presentations (

08-June-2024: Update: New PT: $77.

They've divested Coles, are progressing Covalent, and are building out WES Health now. No change to the investment thesis. They will continue to grow and their share price will continue to rise over time to reflect that growth. Unlike a company that sticks to a single sector and can become mature, WES keep morphing into new areas and changing parts of themselves, developing new arms, then selling some of those off once they've weaved their magic (turned them around with their savvy business, marketing and supply chain know-how), so every 5 years you can look at Wesfarmers and some of it will be the same (like Bunnings) and some of it will be different (like no Coles now but they have API and are running the ruler over RHC).

I hold WES in my largest real-money portfolio.

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Valuation of $46.50
Added 6 months ago

WES are scheduled to provide interim results on 15 February 2024.

Given the dramatic fall in Spodumene and Lithium Hydroxide prices since the last update it was worth having a look at the valuation.

WES estimate 190,000t of Lithium Hydroxide production by FY26.

Estimate market value of LiOH in FY26 at $14,000/t (with $7,000/t production cost) infers eps from lithium at $0.15. This is a substational reduction from only 6 months ago.

Also, the increasing gas input costs to the CEF Division were flagged 6 months ago so expect this to negatively impact the upcoming results.

I wouldn't expect the retail division sales to compensate for the above headwinds in the current retail environment.

FY26 EPS = $2.32. With a PE of 26.7 Share Price FY26 = $61.90.

Current Valuation $46.50.

The current run in the WES share price could only be justified based on Lithium prices of 6 months ago.

The current share price appears to have run ahead of reality.

I'll go out on a limb and predict the upcoming results to disappoint the market.

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#Future Returns on Lithium
Added 11 months ago

Wesfarmers released some impressive FY23 results last week.

Revenue up 18%. NPAT up 4.8%. All in a subdued retail trading environment.

Some really interesting discussion followed the results presentation regarding the Mt Holland project. I have outlined the timeline of events as per the discussion:


Commissioning and ramp up of concentrator Oct/Nov 2023.

Produce 50,000t (WES share) spodumene concentrate in FY24


Produce 190,000t (WES share) spodumene.

Commission hydroxide refinery late CY24.

Lithium hydroxide available for sale by early to mid CY25.


Lithium hydroxide refining.

Based on the above timeline, my take on the future revenues is outlined below. I am no lithium expert so please correct me if the numbers are horribly wrong.


50,000t x $4,000/t (net margin) = $200M


190,000t x $4,000/t (net margin) = $760M.


8t spodumene produces 1t lithium hydroxide, therefore

190,000t/8 = 23,750t lithium hydroxide x ($50,000/t - $7,000/t) $43,000/t net margin = $1B.

The lithium operation has the potential to increase profits by 40% in FY26.

I remember Ben Clark (TMS Capital) saying that the market is not pricing the lithium operation into the WES share price.

Based on this I would have to agree.

Lithium experts please feel free to rip this apart.

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Added one year ago

Director on-market trade for WES. Always interests me these 'relative' small trades from directors who you assume have significant wealth behind them. Maybe its false assumption....

And I say small trade in jest... as dropping $20k is significant for others....


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#2023 Strategy Update
Last edited one year ago

30-May-2023: 2023 Strategy Briefing Day Presentation

View The Webcast:

02-May-2023: Macquarie Australia Conference Presentation and Address by MD, Rob Scott

For all the latest WES results and presentations: Results & presentations (

Today's 2023 Strategy Update (top link above) is long - at 104 slides - so I'm just going to reproduce the 4 that sum up this company best - in my opinion:




So this isn't your average microcap or nanocap stock that is largely under the radar and could go to zero or multibag. No, this one is a large cap that just keeps grinding higher over time. The best way to check how a company has looked after their shareholders is to look at their TSR - Total Shareholder Return - which include share price appreciation and dividends, and assumes that all dividends were reinvested back into the company using their DRP. In this case they also assume full participation in all of WES' capital management initiatives over the years.


Their TSR has well and truly outperformed the All Ordinaries Accumulation Index (XAO) which is represented there by that grey line. In fact, they've absolutely smashed it. Over that period, the All Ords Accumulation Index has performed almost identically to the ASX200 Accumulation Index (XJO). They both include reinvested dividends - that's the "accumulation" bit. Over shorter time periods there can be a little bit of divergence between the XAO and the XJO Indices, but they tend to have very similar returns to each other over decent time periods, like decades. WES, however, has done a LOT better than both of them.

Disclosure: I hold WES shares in real life and here on

OK, one more slide:

How's this for a mission statement: Their primary objective is...



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Added 2 years ago

A few facts on the Mt Holland project

* Capex of $950m

* FID approved July 2021

* Production begins 2024

Not many facts on EBIT or financials. Will need to go back to Kidman announcements to find the information although most of that will be out of date.

not held but thinking of taking a position.

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Added 2 years ago

While the share prices of lithium miners/developers continue to outperform the broader market (PLS, LTR, CXO, IGO) it seems Wesfarmers is being left behind.

It seems the market has forgotten the takeover of Kidman Resources a few years ago when lithium was at the bottom of the cycle.

Time to do some research into Wesfarmers lithium asset while market is still asleep.

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##Wesfarmers vs Amazon
Added 2 years ago

Hi gang

wondering what people's thoughts might be on the medium term impact of Amazon's Australian ramp up on Wesfarmer's top and bottom lines ? I remember Rob Scott saying that there is nothing that Bunnings (50% of sales) sells that you can't purchase online - and that was over a year ago. Might be jumping at shadows, but sometimes 'only the paranoid survive'.

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#API acquisition approved
Added 2 years ago

Wesfarmers today announced that it has received confirmation from the Australian Competition and Consumer Commission (ACCC) that it will not oppose Wesfarmers’ proposed acquisition of Australian Pharmaceutical Industries Limited (ASX:API). Deal expected to go through end of Q1 2022.

Finally moving ahead. WES wasting too much effort back and forth on this acquisition IMHO but yes pharma is a rapidly growing space with all the COVID fears, ageing population, vitamin supplement market.

Disc: I hold.

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Added 3 years ago

Curious. I'm wondering if they are trying something broader with this.


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#Woolworths bid for Priceline (
Added 3 years ago

Woolworths Group (ASX: WOW) has today thrown its hat in the ring to acquire Australian Pharmaceutical Industries (ASX: API) for $872 million, representing a 13 per cent premium to the offer on the table from retail rival Wesfarmers (ASX: WES).

What? I thought this was a done deal already?

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Valuation of $57.50
Edited 3 years ago

Moving average down price range:

Buy at $55

Sell at $60

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#Return Shareholder Capital ex1
Added 3 years ago

WESFARMERS Returning $2 per share ex18/11/21

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#Flybuys loyalty program
Added 3 years ago

Flybuys loyalty program (linked to many credit cards), are now to be offered at Bunnings and Officeworks. Probably the future priceline too.

Interesting move, in my opinion a wasted opportunity for Wesfarmers.... unless Flybuys are offering some sort of deal where points are traded for lawnmowers and laptops?

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#Bunnings sells Kitchenaids
Added 3 years ago

Through a deal with, Bunnings is offering online purchases of kitchen equipment and utensils from crockery to blenders.  Basically Bunnings is becoming an Amazon marketplace.

This is going to be interesting. It won't be a stretch to be selling washing machines, bed linen, kids toys, laptops through Bunnings.

Bunnings is offering their carparks as vaccination centres.  When will they open a pharmacy in the corner of their stores?  Or maybe it's Officeworks that needs the pharmacy for the busy professionals to pick up a script with their replacement printer?

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#Bull Case
Added 3 years ago

Business acquisitions are good if synnergistic.  Aust Pharmacy should be one of these.

However I'm actually more excited by their investment in Artifical Intelligence into the business.  This should allow strong insights into product segmentation, customer spend, distribution economies of scale of merchandise and dare I say it staff,

Artificial Intelligence PLUS synnergy of merchandise base PLUS massive reach of physical stores, WES is a winner in my opinion. 

PE currently 27.7, quite high though.

Disc: I bought at $55

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#COVID-19 Updates
Added 4 years ago

04-Aug-2020:  COVID-19 update - Trading restrictions in Victoria

[I hold WES shares]

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#Business Update
Last edited 4 years ago

22-May-2020:  Kmart Group update and expected FY20 significant items

Kmart Group update

  • First phase of Target review has identified actions to accelerate the growth of Kmart and address the unsustainable financial performance of Target
  • Actions include the conversion of suitable Target stores to Kmart stores, the closure of a number of Target stores and a restructuring of the Target store support office
  • Redeployment opportunities in Kmart and other Wesfarmers businesses will minimise the effect of these changes on Target team members

Significant items expected in the 2020 full-year results

  • Restructuring costs and provisions in Kmart Group of approximately $120 to $170 million before tax, primarily reflecting Target store closure costs, inventory write-offs and a restructure of the Target store support office  
  • Non-cash impairment in Kmart Group of approximately $430 to $480 million before tax, including an impairment of the Target brand name
  • Non-cash impairment in the Industrial and Safety division of approximately $300 million before tax, primarily relating to the impairment of goodwill
  • Pre-tax gain on sale of 10.1 per cent interest in Coles of $290 million, and one-off pre-tax gain of $221 million on the revaluation of the remaining Coles investment  
  • The estimates of the significant items remain subject to auditor review

[ on link above for further details...]

Disclosure:  I hold WES shares.

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#COVID-19 Updates
Added 4 years ago

28-Apr-2020:  COVID-19 update

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#Further COL selldown
Added 4 years ago

31-Mar-2020:  WES: Wesfarmers sells 5.2 per cent of Coles Group

Also:  COL: Sale by Wesfarmers of 5.2 per cent of Coles Group

Following the sale, Wesfarmers retains a 4.9 per cent interest in Coles and has agreed to retain its remaining shares in Coles for at least 60 days from today.

COL & WES also remain 50/50 JV partners in Flybuys and will continue to work together.

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