Welcome to the Fear and Greed Business Interview. I'm Sean Almam. West Farmers is one of the most interesting companies in the country, one of the few remaining conglomerates, best known though for its retail brands Kmart and Bunnings. Last week, West Farmers announced a jump in revenue and sales, largely thanks to those two retailers. Net profit came in at one point five billion dollars, much higher than analysts expected, with an increased dividend. Also, today's interview with Rob Scott, Managing Director of West Farmers, delves into all of it, from the extraordinary growth of Kmart's Ancho brand and Bunnings pushing into pet care, right through to what went wrong with online retailer catch and what the arrival of Chemist Warehouse on the ASX means for West Farmers price line pharmacies. This reporting season, we're partnering with the team at osbiz to bring you interviews with some of Australia's top business leaders. Oz biz is the country's leading provider of live and on demand video of the latest news in Australian business, markets, economy and startups. Sign up for free at Osby's dot com Au. Rob Scott Weishama's MD, speak with Juliet Sali.

Welcome to the Fear and Greed Business Interview. I'm Sean Almam. West Farmers is one of the most interesting companies in the country, one of the few remaining conglomerates, best known though for its retail brands Kmart and Bunnings. Last week, West Farmers announced a jump in revenue and sales, largely thanks to those two retailers. Net profit came in at one point five billion dollars, much higher than analysts expected, with an increased dividend. Also, today's interview with Rob Scott, Managing Director of West Farmers, delves into all of it, from the extraordinary growth of Kmart's Ancho brand and Bunnings pushing into pet care, right through to what went wrong with online retailer catch and what the arrival of Chemist Warehouse on the ASX means for West Farmers price line pharmacies. This reporting season, we're partnering with the team at osbiz to bring you interviews with some of Australia's top business leaders. Oz biz is the country's leading provider of live and on demand video of the latest news in Australian business, markets, economy and startups. Sign up for free at Osby's dot com Au. Rob Scott Weishama's MD, speak with Juliet Sali.

Rob, great to have you with us. I mean, first off, I guess in your words some of the highlights from the healf well, I'd.

Rob, great to have you with us. I mean, first off, I guess in your words some of the highlights from the healf well, I'd.

Say the highlight for us was recognizing that last year was a really difficult year economically in Australia, especially for many households and consumers. To be able to deliver growth in revenues, in profit and be able to increase our dividends in that environment, it's a real credit to the team and that was really possible through the strong performances of our larger business.

Say the highlight for us was recognizing that last year was a really difficult year economically in Australia, especially for many households and consumers. To be able to deliver growth in revenues, in profit and be able to increase our dividends in that environment, it's a real credit to the team and that was really possible through the strong performances of our larger business.

Bunnings came out in our Chemictenergy first business and we really had to go above and beyond around productivity initiatives in order to manage those cost pressures to keep our prices low at a time when consumers were really.

Bunnings came out in our Chemictenergy first business and we really had to go above and beyond around productivity initiatives in order to manage those cost pressures to keep our prices low at a time when consumers were really.

Looking a value.

Looking a value.

You mentioned though, that you don't think that the rate cut that this we got this week is enough to really entice shoppers, and I've flagged that to an analyst earlier who said, look, if West Farmers is worried, all retailers should be worried. What do you see in terms of I guess the outlook and consumers parting with their cash.

You mentioned though, that you don't think that the rate cut that this we got this week is enough to really entice shoppers, and I've flagged that to an analyst earlier who said, look, if West Farmers is worried, all retailers should be worried. What do you see in terms of I guess the outlook and consumers parting with their cash.

Well, look a couple of things. Firstly, if you look around the world at what's happened when different countries have gone through a easing cycle, it often takes more than just one twenty five based point cut. And remembering as well that interest rates are not the only thing that that is the economy. Inflation is caused by a range of other factors as well, and in Australia we are facing some cost pressures on energy. Building costs are still under pressure. Supply chain costs are some of those examples. So I think the Reserve Bank governor said it very well the other day where she said there was a case to lower interest rates, but she was very mindful of the inflationary pressures that still exist.

Well, look a couple of things. Firstly, if you look around the world at what's happened when different countries have gone through a easing cycle, it often takes more than just one twenty five based point cut. And remembering as well that interest rates are not the only thing that that is the economy. Inflation is caused by a range of other factors as well, and in Australia we are facing some cost pressures on energy. Building costs are still under pressure. Supply chain costs are some of those examples. So I think the Reserve Bank governor said it very well the other day where she said there was a case to lower interest rates, but she was very mindful of the inflationary pressures that still exist.

How much is the weak Australian dollar hurting west farmers and is it likely to cause higher prices at some of your areas the likes of Ancho Kmart Bunning's office works well.

How much is the weak Australian dollar hurting west farmers and is it likely to cause higher prices at some of your areas the likes of Ancho Kmart Bunning's office works well.

We called out the lower Australian dollar as having potentially a bit of an inflationary impact on many of the important products that Australian households and businesses buy. But that is unlikely to flow through until later this year because it takes time for it's really the products that that companies are purchasing today that consumers will be buying the next six months that will flow through in higher prices. Now in West Farmers, we've demonstrated through Kmart Bunning's office works that we can find ways to try and mitigate some of these cost pressure because what we will be doing is doing everything we can to keep our prices low because of our everyday low price strad But I think we do need to be mindful that the lower Australian dollar, although it's good for a lot of our exports, will potentially create some inflationary pressure.

We called out the lower Australian dollar as having potentially a bit of an inflationary impact on many of the important products that Australian households and businesses buy. But that is unlikely to flow through until later this year because it takes time for it's really the products that that companies are purchasing today that consumers will be buying the next six months that will flow through in higher prices. Now in West Farmers, we've demonstrated through Kmart Bunning's office works that we can find ways to try and mitigate some of these cost pressure because what we will be doing is doing everything we can to keep our prices low because of our everyday low price strad But I think we do need to be mindful that the lower Australian dollar, although it's good for a lot of our exports, will potentially create some inflationary pressure.

So we touched there on Camart on Ancho. What's the trajectory for Anco? How big do you see this part of your business becoming?

So we touched there on Camart on Ancho. What's the trajectory for Anco? How big do you see this part of your business becoming?

Well, First and foremost, we are folks. We're continuing to focus on bringing more amazing Ancho products to life in Australia and New Zealand. They are our core markets and we want Australians New Zealanders to benefit from the amazing value the product innovation that comes from Anco. But we are starting to look at ways in which we can export some of that internationally, so we've recently opened a trial store in the Philippines in partnership with the local groups. We have partnerships with Walmart Canada, with Mattel Fisher Price, with car four in France, and also issuing some other opportunities. So we would like to see some growth internationally leveraging that ancho product and capability, but that will be a longer term growth opportunity.

Well, First and foremost, we are folks. We're continuing to focus on bringing more amazing Ancho products to life in Australia and New Zealand. They are our core markets and we want Australians New Zealanders to benefit from the amazing value the product innovation that comes from Anco. But we are starting to look at ways in which we can export some of that internationally, so we've recently opened a trial store in the Philippines in partnership with the local groups. We have partnerships with Walmart Canada, with Mattel Fisher Price, with car four in France, and also issuing some other opportunities. So we would like to see some growth internationally leveraging that ancho product and capability, but that will be a longer term growth opportunity.

Rob what went wrong with Cats?

Rob what went wrong with Cats?

Well, look, Catch was one of a number of investments we've made as we've tried to embark on our own digital disruption and digital transformation. In addition to Catch, we've invested over two billion dollars in the last five years on improving our data and digital capabilities, and whilst overwhelmingly that investment has been successful and is helping to deliver the strong results we're delivering today, the world has changed a lot since we bought Catch. The competitive environment has shifted, and it was clear that having a pure play marketplace was probably not the ideal structure for our businesses. So we have lost a bit of money, a bit more money than we would have liked, but we have built some very valuable capabilities that will continue to be utilized by our groups, such as the next day delivery fulfillment centers we will be moving over to came Out and came Out and target in the next few months.

Well, look, Catch was one of a number of investments we've made as we've tried to embark on our own digital disruption and digital transformation. In addition to Catch, we've invested over two billion dollars in the last five years on improving our data and digital capabilities, and whilst overwhelmingly that investment has been successful and is helping to deliver the strong results we're delivering today, the world has changed a lot since we bought Catch. The competitive environment has shifted, and it was clear that having a pure play marketplace was probably not the ideal structure for our businesses. So we have lost a bit of money, a bit more money than we would have liked, but we have built some very valuable capabilities that will continue to be utilized by our groups, such as the next day delivery fulfillment centers we will be moving over to came Out and came Out and target in the next few months.

And speaking of online marketplace, I mean you're really ramping that up with the likes of Bunnings. Tell us what you hope to achieve here and whether or not Bunnings might have met already some peak growth aspirations.

And speaking of online marketplace, I mean you're really ramping that up with the likes of Bunnings. Tell us what you hope to achieve here and whether or not Bunnings might have met already some peak growth aspirations.

Yes, well, I think the example within Bunnings and the marketplace and Bunnings is a great example of just how the retail world's changed. When we bought Catch, we thought that having a pure play, broad based marketplace could be a very strategically powerful opportunity for us. But what we're now finding is that we have some of the most trusted and visited e commerce platforms in the country within our existing retail brands, so leveraging them as we are in Bunnings is proving to be very very good for customers and more financially attractive for us. But we still see a lot of growth head in Bunnings. We're seeing new ranges coming into Bunnings, We're seeing for the innovation, we're seeing very strong growth through the digital channels, and the other thing that we are hopeful for that we will start to see a pick up in residential construction and development over the next year because over the last year or two that market has been really flat for Bunny, so there is a bit of upside should that market start to turn.

Yes, well, I think the example within Bunnings and the marketplace and Bunnings is a great example of just how the retail world's changed. When we bought Catch, we thought that having a pure play, broad based marketplace could be a very strategically powerful opportunity for us. But what we're now finding is that we have some of the most trusted and visited e commerce platforms in the country within our existing retail brands, so leveraging them as we are in Bunnings is proving to be very very good for customers and more financially attractive for us. But we still see a lot of growth head in Bunnings. We're seeing new ranges coming into Bunnings, We're seeing for the innovation, we're seeing very strong growth through the digital channels, and the other thing that we are hopeful for that we will start to see a pick up in residential construction and development over the next year because over the last year or two that market has been really flat for Bunny, so there is a bit of upside should that market start to turn.

And one of the ways that you are diversifying as well as in pet care, do you think that could be a potential category killer here?

And one of the ways that you are diversifying as well as in pet care, do you think that could be a potential category killer here?

Well, a number of our businesses offer pet accessories products. Obviously, Bunnings is selling a range of products and because we're offering a very unique offer with fantastic value, different pack sizes, more bulk solutions, customers seem to be loving it, so we're pleased with that. Camart also is a major retailer of pet accessories, has an amazing offer and in fact it's those products that we're actually selling in France through some of the car for hyper markets. So it's a growing category and we feel that there's a role for some of our brands to play in that category by delivering great value and great products.

Well, a number of our businesses offer pet accessories products. Obviously, Bunnings is selling a range of products and because we're offering a very unique offer with fantastic value, different pack sizes, more bulk solutions, customers seem to be loving it, so we're pleased with that. Camart also is a major retailer of pet accessories, has an amazing offer and in fact it's those products that we're actually selling in France through some of the car for hyper markets. So it's a growing category and we feel that there's a role for some of our brands to play in that category by delivering great value and great products.

Rob let's talk about competition. You own the price line pharmacies. What does a tie up between Sigma and chemist Warehouse mean for you.

Rob let's talk about competition. You own the price line pharmacies. What does a tie up between Sigma and chemist Warehouse mean for you.

Well, probably the main impact of that is that it really shines a light on the pharmacy sector from a capital markets Quite many of these businesses flew a bit under the radar. Certainly Chemist's Warehouse did for many years under private ownership, and certainly there's a lot more focus on the opportunities and the competitiveness of this sector. Obviously, Chemists Warehouse is a very formidable retailer, you know, and I would say that pharmacis generally are phenomenal healthcare practitioners, but generally not very good retailers. So the fantastic opportunity that we see in Priceline to support our pharmacist franchisees to really deliver a fantastic retail offer and a more integrated healthcare service solution to really differentiate the Priceline brand. And we've had some really good traction there. The sales growth has been really encouraging. We're investing heavily, and that high level of investment we're making is holding back our earnings a bit at the moment, but we are confident that we'll see an improvement in that earning trajectory as we continue to win more customers into the priceline business.

Well, probably the main impact of that is that it really shines a light on the pharmacy sector from a capital markets Quite many of these businesses flew a bit under the radar. Certainly Chemist's Warehouse did for many years under private ownership, and certainly there's a lot more focus on the opportunities and the competitiveness of this sector. Obviously, Chemists Warehouse is a very formidable retailer, you know, and I would say that pharmacis generally are phenomenal healthcare practitioners, but generally not very good retailers. So the fantastic opportunity that we see in Priceline to support our pharmacist franchisees to really deliver a fantastic retail offer and a more integrated healthcare service solution to really differentiate the Priceline brand. And we've had some really good traction there. The sales growth has been really encouraging. We're investing heavily, and that high level of investment we're making is holding back our earnings a bit at the moment, but we are confident that we'll see an improvement in that earning trajectory as we continue to win more customers into the priceline business.

So a solid result and most analysts have said so, but a lot of concern that you're overvalued your share price. And I know you can't control the market here, but I heard one analyst say, great company, great management, very overvalued. City has come through with a CELL rating and they have a price target of fifty nine dollars, suggesting that your share price could full twenty four percent. What do you say to analysts who say investors should be selling West Farmers.

So a solid result and most analysts have said so, but a lot of concern that you're overvalued your share price. And I know you can't control the market here, but I heard one analyst say, great company, great management, very overvalued. City has come through with a CELL rating and they have a price target of fifty nine dollars, suggesting that your share price could full twenty four percent. What do you say to analysts who say investors should be selling West Farmers.

Well, look, I when you look at the West Farmer's portfolio, I think we have some of the most amazing businesses, not just in Australia but in the world. Businesses like Bunnings and kmart, our chemicals, energy and fertilizers business are truly world class and they deserve to be valued well. I think we've also demonstrated that we have a very unique mix of resilience within our portfolio, combined with numerous growth platforms. If I look around the world and I look at businesses like Bomart, I would say that we're under value given that they are trading in as significant multiple premium to ours. But look at the end of the day. We don't get too too fast about what the share prices do today. We just want to keep delivering on our strategy, delivering long term value for our shareholders, and if we keep doing that then I think the value will take care of itself.

Well, look, I when you look at the West Farmer's portfolio, I think we have some of the most amazing businesses, not just in Australia but in the world. Businesses like Bunnings and kmart, our chemicals, energy and fertilizers business are truly world class and they deserve to be valued well. I think we've also demonstrated that we have a very unique mix of resilience within our portfolio, combined with numerous growth platforms. If I look around the world and I look at businesses like Bomart, I would say that we're under value given that they are trading in as significant multiple premium to ours. But look at the end of the day. We don't get too too fast about what the share prices do today. We just want to keep delivering on our strategy, delivering long term value for our shareholders, and if we keep doing that then I think the value will take care of itself.

And Rob just a word as well in an election year on how you're seeing the overall environment, and I guess in terms of workers too, given that we had jobs at data really just showing how tight the labor market is.

And Rob just a word as well in an election year on how you're seeing the overall environment, and I guess in terms of workers too, given that we had jobs at data really just showing how tight the labor market is.

Well, you're right. I think it's a great thing is that there is pretty close to full employment in Australia. That is a great thing. But there are some areas of real tightness within the labor market. We're still seeing that in some of the trades, areas in construction. They would probably be some of the areas I would call out, So I think we need to be very mindful of that. It's going to be those supply constraints, those skill shortages that will hold Australia back from a lot of the investment and progress and productivity work that we need to get on with. So we need to be mindful of that across our business. What we're demonstrating is that as our businesses become more successful, more profitable, our team members benefit meant over fifty thousand team members in West Farmers also have West Farmers shares. So when West Farmers delivers good results, our team members and our share hold is both benefit and will continue to focus on that you know, win win relationship between West Farmers and our team.

Well, you're right. I think it's a great thing is that there is pretty close to full employment in Australia. That is a great thing. But there are some areas of real tightness within the labor market. We're still seeing that in some of the trades, areas in construction. They would probably be some of the areas I would call out, So I think we need to be very mindful of that. It's going to be those supply constraints, those skill shortages that will hold Australia back from a lot of the investment and progress and productivity work that we need to get on with. So we need to be mindful of that across our business. What we're demonstrating is that as our businesses become more successful, more profitable, our team members benefit meant over fifty thousand team members in West Farmers also have West Farmers shares. So when West Farmers delivers good results, our team members and our share hold is both benefit and will continue to focus on that you know, win win relationship between West Farmers and our team.

That was Rob Scott, Managing Director of West Farmers, speaking with Juliet Sally on Osby's, Australia's leading provider of live and on demand video of the latest news in Australian business markets, economy and startups. Sign up at Osby's dot com dot au. It's free. This is the Fear and Greed Daily Interview. Join us every morning for the full episode of Fear and Greed daily business news for people who make their own decisions. I'm seanae Elma. I'm enjoying your day.

That was Rob Scott, Managing Director of West Farmers, speaking with Juliet Sally on Osby's, Australia's leading provider of live and on demand video of the latest news in Australian business markets, economy and startups. Sign up at Osby's dot com dot au. It's free. This is the Fear and Greed Daily Interview. Join us every morning for the full episode of Fear and Greed daily business news for people who make their own decisions. I'm seanae Elma. I'm enjoying your day.