Price reset program impacts on half-year profits.

 

Officeworks has taken a hit to its bottom line as it undertakes a major “transformation programme"  to transition to a low-cost operating model.

 

In a half-year results presentation the retailer said that transitioning to a low-cost operating model to support low prices and sustainable earnings growth will weigh on short-term earnings, but successful execution of the program is expected to improve performance over the long term.

 

As part of the transformation, Officeworks will focus on optimising the instore and online range, which will enable the introduction of new and innovative ranges, and increasing own-brand penetration.

 

In an earnings investor conference call, Rob Scott, CEO of parent company Wesfarmers, said Officeworks had “performed OK” for the past six years but had lagged behind some of the group’s other retail operations. He added that new CEO John Gualtieri had been given the licence “to go hard” and not be overly focused on short-term earnings.

 

Earnings declined 21.8 per cent to $68 million in HY26, in line with prior guidance, impacted by $15 million in transformation program costs, largely reflecting restructuring activities to reset the cost base and ERP-related costs.

 

Revenue increased 4.7 per cent to $1.8 billion with growth across key categories including technology and Print & Create, partially offset by lower furniture sales.

 

Sales growth in technology was underpinned by strong demand for computer products and expanded ranges of AI-enabled computers, gaming and TVs. 

 

During the period, Officeworks expanded channels to market through the launch of Officeworks on Kmart Marketplace and a partnership with Uber Eats.