Bunnings has analysts excited as the $100bn+ Wesfarmers cements its big FY27 move. Picture: Paul Kane/Getty Images.
The playbook a $100bn firm used to turn a dying Kmart into one of Australia’s most profitable retailers is days into being applied to its bigger sibling Bunnings – with a 25pc spike already.
When Wesfarmers announced it would fold two of its industrial businesses – workplace supplies giant Blackwoods and Work Wear Group – under the Bunnings umbrella from July, most shoppers barely noticed.
But analysts did – and one says what’s coming next is bigger than the market realises.
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Wesfarmers took on a dying Kmart when it acquired the Coles package, and turned it around to one of the country’s top retailers. Picture: NCA NewsWire / Dean Martin
Bunnings has expanded its operations into the Pacific now via direct online supplies. Source: Bunnings
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Filip Tortevski, Senior Analyst at Wealth Within, told The Courier-Mail it’s a near-identical move to the strategy that transformed Kmart after the GFC, describing it as “a very good playbook that they rinse and repeat”.
He said the logic mirrors Wesfarmers’ acquisition of Coles Group in 2007 – a deal widely mocked at the time but which resulted in Kmart’s Anko brand whose $12 lamps sell a million units – generating more revenue than some of Australia’s largest standalone retailers.
“When they picked it up in ‘07, it was just around the GFC – people thought, what are you doing – and they’ve managed to, through good work with simplifying supply chains, focus on how they can get more out of customer wallets. They’re not necessarily merging businesses, but they’re merging the customer wallet in one venue.”
The proof of concept is already in the numbers, he said. “Kmart is now their second most profitable, following Bunnings,” Mr Tortevski said. “It’s something that slips through the cracks, because it’s not obvious unless you really dive and dig into the playbook that Wesfarmers is using.”
Filip Tortevski, Senior Analyst at Wealth Within.
Now the same approach is targeting the hardware giant’s next frontier – the industrial and government sector, which will pull in revenue streams far beyond the weekend DIY crowd, Mr Tortevski said.
“You’re bringing in government contracts, mining, construction, manufacturing. It’s not just your standard mum and dad looking for a new pot plant, or a tradie looking for new tools.”
The endgame, he said, was total market dominance.
“If I was to guess, that’s probably where the end goal is – to become completely dominant and take away all other options. Because if you weren’t thinking that way, then why start the process?”
“Bunnings wants to be the Kmart of hardware, but then it also wants to be everything of hardware. And that’s why the share price is the way it is.”
Bunnings has expanded its operations into the Pacific now. Source: Bunnings
The market has certainly taken notice, he said. “Since around May 18 – about a month – the share price (was) up almost 20 per cent. People are liking what they see,” Mr Tortevski said.
“The buying started before the announcement came, which is an interesting sign, and it’s continued on following the announcement. That tells you this situation has legs.”
According to ASX, shares were trading at $89.04 at the time of publication – up approximately 25 per cent from their confirmed correction low of $70.80 on May 13 to 14.
For those who missed the trough, Wesfarmers has a long history of offering re-entry points at consistent levels, he said.
“Throughout history, 25 to 30 per cent is generally when buyers come and pick Wesfarmers up,” Mr Tortevski said. “We recently saw that at $72 for Wesfarmers – that was probably a really good area to be looking at. Now that has shot away quite a bit.”
His price target sits firmly above current levels, believing $86 “could be the precursor to take out $98 and $100. That’s definitely an easy target. It’s in their future”.
Shares have since cleared $86 to now sit at $89.04 at time of publication.
Since its ASX listing in 1984, Wesfarmers has delivered total shareholder returns of 19 per cent a year – compared to the broader index’s 10.4 per cent over the same period, according to the company’s June 2026 Strategy Briefing Day presentation.
More than $42 billion has been distributed to shareholders since listing.
“It’s not an easy feat to be on an uptrend for 40 years. That’s a testament to their model,” Mr Tortevski said.
Wesfarmers closing price on Monday. Source: ASX
“I’ve heard this so many times in the market – ‘this time is different’ – and it’s never really different. You’re far better off over time sticking to the situations that have consistently repeated and proven themselves. For Wesfarmers, it has more than enough proven itself over the last 40 years.”
He cautioned “when you step into the arena of the stock market, there is risk, and that’s a real factor”.
“At what point, if Wesfarmers does turn the other way, do you protect your capital? Make sure there is a thought for risk.”
But Tortevski said “out of all the stocks on the stock market, this is one of the more stable ones. In this environment, it’s hard to say that for a lot of others”.
“If you were someone who wanted to be really passive, have something for the long term, not have to watch it too much – this is a very compelling story.”
Disclaimer:
The information in this article is general in nature and does not constitute financial advice. Wesfarmers Limited (ASX: WES) is a publicly listed company. Past performance is not a reliable indicator of future performance. Anyone considering an investment should seek independent financial advice from a licensed adviser and consider their own personal financial circumstances before acting on any information contained in this article.