Wesfarmers says budget-constrained consumers sought out value at Kmart and affordable home improvements at Bunnings, supporting the conglomerate's 3.7 per cent profit boost on the prior year.
The owner of the popular retail brands made a $2.55 billion net profit after tax in the full-year ending June 30, up from $2.46 billion for the same period in 2023.
The Western Australian company's revenue was up 1.5 per cent to $44.19 billion.
Managing director Rob Scott said a challenging year was expected given numerous headwinds, including cost of living pressures, rising costs of doing business, subdued activity in residential construction and significant volatility in key commodities.
However, he said retail divisions pivoted effectively to a cost-conscious consumer seeking value.
"Sales and earnings growth in the retail divisions was supported by everyday low price offerings and products with broad customer appeal," he said.
Kmart Group, which includes Target stores, grew earnings 24.6 per cent above the prior year to $958 million - a record for the business.
Total sales rose 6.3 per cent, with units sold, transaction volumes and customer numbers all growing, reflecting consumer interest in Kmart's house brand Anko and low-price positioning.
Target's total sales declined 4.5 per cent for the year, which the company said was impacted by a "disrupted period of sales with the changeover in Target's general merchandise range to Anko".
Bunnings earnings lifted 0.9 per cent to $2.25 billion, with total store sales lifting 2.6 per cent though growth moderated in the second half of the financial year, reflecting a slowdown in new construction.
On the consumer side, bulk-pack quantities, own-brand and entry-level ranges performed well, appealing to households seeking affordable options.
Earnings from its chemicals, energy and fertilisers division fell 34.2 per cent to $440 million, driven by lower global commodity prices, particularly for ammonia and associated products.