Wesfarmers warns on ‘onerous’ tax as shares fall on mixed trading outlook ahead of AGM

Wesfarmers shares have shed more than 4 per cent off a mixed trading update that warns cost-of-living pressures are still weighing on consumer confidence.

In speaking notes filed with the ASX ahead of Wesfarmers’ annual general meeting in Perth later on Thursday, chief executive Rob Scott said while sales growth at the group’s flagship retail chain Bunnings had improved on the June half-year, “consumers maintain a cautious outlook”.

“Cost pressure, especially in relation to domestic costs, presents challenges for many businesses and is weighing on business demand and investment,” Mr Scott will tell the AGM.

“These pressures are reflected across Wesfarmers’ divisions through higher domestic supply chain, labour, energy and regulatory costs and subdued business-to-business sales growth.”

However, shareholders will also hear that the group’s businesses, which also include Kmart, Target, Officeworks and industrial operations, are better placed than a year ago, as they “are more productive and efficient, and they have more growth opportunities”.

Wesfarmers shares were 4 per cent lower at $88.95 as at 8.10am.

Chair Michael Chaney will assure shareholders at the AGM “that, notwithstanding our track record, we are always on guard against suffering from hubris – thinking that we can relax and the returns will keep coming”.

“The fact is that we operate in a very competitive world and it will only be through constant innovation and reinvention that the company will continue to prosper,” he will say.

A longtime lobbyist for meaningful tax reform in Australia, Mr Chaney will also warn the Federal Government against adopting the Productivity Commission’s recommendation for a 5 five per cent cash flow tax on large companies.

The new charge, he says, “would make Australia’s taxation regime one of the most onerous in the world; and have no doubt – it would drive investment offshore”.

Mr Scott says that “Bunnings’ year-to-date sales growth is ahead of the growth recorded in the second half of the 2025 financial year, supported by solid trading in the consumer segment”.

“The commercial segment also delivered positive sales growth despite soft sales to builder customers which reflects ongoing supply side challenges resulting in weak residential construction activity.

Sales growth at Kmart Group, including Target, for the new financial year so far was “broadly in line” with the June half, but Officeworks’ interim earnings were expected to be between $15 million and $25m weaker because of lower margins and the rollout of a new IT system.

Higher contracted gas prices will reduce profit at Wesfarmers’ WA-based chemicals and energy division, while the industrial and safety business is being held back by challenging trading conditions blamed on subdued demand from the mining and resources sectors.

In August, Wesfarmers disclosed a 14 per cent rise in annual net profit to $2.93 billion — including a gain on the $770m sale of its Coregas business — and rewarded its 479,000 shareholders with a special $1.50-a-share capital distribution on top of its ordinary final dividend of $1.11.

The financial performance came amid a sharply appreciating share price that has lifted Wesfarmers’ market value over $100 billion for the first time.