While several of Wesfarmers’ stable of retailers have seen significant growth during the COVID-19 crisis, the nationwide decline in footfall levels has hit department store Target particularly hard.

While third quarter sales across Kmart Group stayed relatively flat compared to levels seen in the first half of the year, recent weeks have seen Target’s in-store sales momentum decline significantly.

The difficult conditions are expected to continue while social distancing and isolation measures remain in place, said Wesfarmers, and with the group’s high occupancy costs will have a material impact on Kmart Group’s profitability. 

As such a previously announced review of Target’s profitability will be pulled forward, with a more detailed explanation to be revealed before the end of the financial year.

Conversely, Bunnings and Officeworks have seen a substantial increase in business. 

“In recent weeks, our retail businesses have … made significant process in further enhancing their respective digital offers while responding to the substantial increase in online sales,” said Wesfarmers managing director Rob Scott. 

“This includes the implementation of Drive and Collect by Bunnings and Officeworks, enabling contactless carpark by customers, and the conversion of three Kmart locations to ‘dark’ stores to support its growing online business.”

Scott added that COVID-19 has had a profound impact on the business’ operations, and it is taking actions by way of bolstering its balance sheet to mitigate this impact. 

Wesfarmers recently sold a portion of its interest in Coles Group for $1.06 billion following a similar sale in February for $1.05 billion to improve cash levels, while also extending debt facilities by $2 billion to $5.3 billion. 

“COVID-19 has had a profound impact on our way of life and business operations and the actions we are taking… are focused on sustaining performance in an uncertain future,” Scott said.