Omicron-related staff shortages take a toll on Kmart and Target, stock build-up strategy fails
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Omicron-related staff shortages take a toll on Kmart and Target, stock build-up strategy fails
The high absenteeism of workers being forced to isolate due to the surging infection cases of the Omicron Covid-19 variant has taken a toll on the performances of Wesfarmers’ Kmart and Target chains.
The Perth-based conglomerate reported in an update on Monday that the total sales for the two businesses plummeted 10.3 per cent in the six months to December 31 compared to the same period last year and 5.2 per cent against the first half of 2019-2020 — the onset of the global pandemic.
Wesfarmers said that staff shortages — which forced some of its stores to cut back on trading hours — slumping sales and rising costs account for the performance of its businesses.
It should also be noted that the conglomerate closed 14 underperforming Target stores and 48 Target Country stores permanently.
Customer traffic plummeted due to the surge of Omicron cases in multiple states. Credit: NCA NewsWire/Flavio Brancaleone.
Additionally, the company said that while customer traffic picked up in the final months of 2021 as Delta restrictions eased, the surging Omicron cases in multiple states — particularly during the critical holiday trading period — caused shoppers to cut down on their expenses and isolate in their homes instead of shopping.
The conglomerate also divulged that it spent extra cash to keep stock levels high as a countermeasure to the looming global supply chain disruptions.
However, staff shortages in key distribution centres in NSW and Victoria halted the delivery of supplies to stores to meet customer demand.
A Wesfarmers spokesperson said: “These issues are expected to persist while Covid-19 cases and the number of team members required to isolate remain elevated.”
High pandemic-related absenteeism prevented stocks to be delivered to stores in a bid to keep up with customer demand. Credit: news.com.au.
The company estimates a net profit between $1.18bn and $1.24bn for the trading period — compared to $1.39bn for the same period last year — in line with the current trading climate.
While the company is experiencing a relatively unsatisfactory performance, it has cleared its way to acquire Priceline owner Australian Pharmaceutical Industries after Woolworths stepped out from the bidding earlier this month.
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