Wesfarmers Share Price Jumps Thanks to Bunnings Contribution and Coles Demerge

Bunnings have pulled through for Wesfarmers Ltd [ASX:WES], as the business has displayed significant growth.

Ever since disconnecting from Coles, Wesfarmers have relied on Bunnings to be their largest contributor.

Wesfarmers share price shot up by 1.05% today.

Throughout last week, their share value rose significantly, valuing their shares at $42.45 today.

Bunnings outshines Coles

Half year results for Wesfarmers displayed that Bunnings had overtaken Coles’ sale momentum.

Bunnings, the Australian chain, jumped in its overall profit and earnings, while still maintaining its successful reputation across the country.

Despite Bunnings’ relevant success across the business, its UK contribution is falling on rougher times, while currently being under review.

Fortunately, Bunnings Australia are still the leading retailer of home improvement and outdoor living products across Australia and New Zealand.

How has the demerge with Coles impacted Wesfarmers?

After acquiring Coles back in 2007, Wesfarmers have successfully managed to turn the business around.

They now feel that their job is done and have moved away from Coles, looking for new ventures.

However, Coles is lagging behind its strongest competitor, Woolworths.

Wesfarmers are now being left with, Kmart, Officeworks and Bunnings, while searching for new ventures.

They believe this demerge, will help extend the groups large history of managing its business portfolio list.

The demerger has contributed in helping Wesfarmers focus more on growth opportunities which goes in line with its remaining businesses, and certain pursuits of different acquisitions.

Insideretail.com reported that chairman Michael Chaney stated:

A demerger would significantly reposition Wesfarmers capital towards higher growth opportunities in its remaining businesses, notably Bunnings Australia and New Zealand, Kmart and the Industrials division.

Regards,

Ryan Clarkson-Ledward,
For Money Morning

PS: Australian Real Estate Game Plan: Tips on how to hunt down the best real estate deals in today’s white-hot property market. Download the free report today ‘Australian Real Estate Game Plan’.


Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks by dissecting the latest events affecting the world.

To find out more about the publications Ryan works on and how you can subscribe, please click on the corresponding link here:


Money Morning Australia