June 18, 2025 • 33 mins
Meet Wesfarmers, the Aussie conglomerate behind Kmart, Bunnings, and Target. Former Olympian turned CEO Rob Scott recounts their rise from WA farmer's co-op to global investment titan—and what comes next.
What makes their "loose-tight" management philosophy work? What’s the secret to Kmart's repositioning—including global demand for in-house brand Anko? How can Wesfarmers’ retail brands protect their supply chains against tariffs and unstable geopolitics?
In the wake of positive half-year results, hear about new ranges and markets for Bunnings and Kmart, and Rob’s high hopes for emerging divisions like healthcare and lithium.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
We genuinely have to be the best in the world,
like we are fighting tooth and nail with companies like Amazon,
with Costco, with Audi.
Speaker 2 (00:09):
The real secret source of Kmart is there.
Speaker 3 (00:12):
How seriously did you consider rebranding Bunnings to Hammer bun
I'm n New Williams, one of the co founders and
co CEOs at chers E's, and today we're in a
bit of a dreary Sydney about to chat with Rob Scott,
who's the CEO of Wiz Farmers.
Speaker 1 (00:31):
There came a point in time where it was very
clear that physically I was not going to be the
best in the world in sport anymore, but you know,
I wanted to be part of a team that shared
a similar sense of.
Speaker 3 (00:41):
Ambition with Farmers is one of Australia's biggest companies, and
as the name behind the brands that we know and
love like Camart, Bunnings and Target, We're going to learn
what it's like to be at the helm of one
of these big companies.
Speaker 1 (00:53):
The type of culture you need to be successful in
Bunnings will be a little bit different to what you
need to be successful in a refinery, which will be
different to what you need in a healthcare business.
Speaker 3 (01:04):
Before we get started, I want to pay my acknowledgments
to the traditional custodians of the land where we come
to you from today, the Gettigo people of the urination
and pay respects to olders, pats, prison and emerging.
Speaker 4 (01:16):
Investing involves the risk you might lose the money you
start with. We recommend talking to a licensed financial advisor.
We also recommend breeding product disclosure documents before deciding to invest.
Everything you're about to see and here is current at
the time of recording.
Speaker 3 (01:31):
Welcome Rob, Thanks thanks for joining us. Thank you so
Bunnings Group, Pamart Target all huge brands, all owned by
WIS Farmers.
Speaker 2 (01:40):
Can you tell us about WIZ Farmers sure?
Speaker 1 (01:42):
Well, West Farmers has been around for over one hundred
and ten years now. So we started off life in
nineteen fourteen as a farmer's cooperative and then in nineteen
eighty four they made a very important step to demutralize
so converted from being a cooperative structure to a listed company.
So we've been a listed company since nineteen eighty four
(02:03):
and since then we've continued to evolve, continue to buy
and sell businesses with the very singular focus of trying
to deliver a satisfactory return to our shareholders.
Speaker 3 (02:14):
You talk about the diversification and maybe the starting with
Farmers to now having Kmart and Bunnings. Is there a
thrid that hangs together around these portfolio how your portfolio
grows and changes.
Speaker 1 (02:27):
Our objective is to deliver a satisfactory return to shareholders,
and perhaps in a very true, understated farmer's style, we
define satisfactory as being in the top quarter of returns
for all Australian listed companies, so it is quite we
do set quite an ambitious target, but we also take
the view that it's only possible to deliver those superior
(02:50):
returns if we focus on the long term. So we
deliberately have a long term investment horizon, and we also
realize that in order to deliver sustain returns, we must
anticipate the needs of our customers, look after our team members,
treat our supplies fairly, take care of the environment, contribute
to the communities in which we operate, and act with
(03:12):
honesty and integrity. So although we have a very financially
focused objective, we realize that to do that over the
long term requires us to be a very sustainable company
and a good corporate citizen.
Speaker 3 (03:24):
How do you go about thinking about that type of thing. Then,
if it as really around spotting these incredible growth opportunities
or working out how to grow these companies, how do
you go about managing that well?
Speaker 1 (03:37):
As I said, because we are very long term focused,
We're not one of these investors that buys and sells
companies all the time. So we invest in companies that
we feel that we have the ability to manage, that
we feel are good quality businesses that we can invest
in over time and that will ultimately generate good returns.
So that long term focus very much guides us. We
(03:58):
also think about for broad strategies, and when you operate
across a diverse range of industries, it's hard to say
this is the one strategy that's going to work for
a retail business or a chemicals business. But our four
value creating strategies are quite simple. They are ensuring operational
excellence across all of our businesses to satisfy customer needs. Secondly,
(04:23):
finding growth opportunities through entrepreneurial initiative. The third strategy is
renewing the portfolio, and that's ensuring that our capital is
allocated into businesses, it will generate good returns and then
finally responsible long term management, so ensuring sustainability within our businesses.
Speaker 3 (04:42):
Yeah, Cole, do you want to talk a bit more
about how you see sustainability.
Speaker 2 (04:46):
Sure?
Speaker 1 (04:46):
Well, as I said earlier, we see sustainability as being
totally linked to delivering superior long term investment returns and
it's very much ingrained into all aspects of our operations
and strategy. In fact, before ESG and sustainability was even
a thing, we're one of the first companies in Australia
(05:08):
to launch a sustainability report that we've been publishing for
well over twenty years, and we also talked about those
really important aspects of engaging with communities, good corporate governance,
also taking care of the environment. So we take all
those things really seriously. We measure them and if your
(05:30):
investors were to look at our half year, full year
results or even our strategy days, you will see at
the very front of every results presentation we actually put
the proof points on our sustainability metrics. Financial results measure matter,
but also sustainability measures matter, so we talk about what's
happening with our carbon emission reductions we talk about what's
(05:53):
happening with our team member safety statistics. An area that
we are very proud of is the developments we've made
around indigenous employment and we are pleased to have employment
parity in Australia. And then a lot of issues around
ethical sourcing, community investments, other aspects of auditing our supply
(06:16):
chain are really important across.
Speaker 3 (06:17):
These different industries. I can only imagine it's like trying
to wrangle the legs of an octopus within the amount
of different industries that you're in. How do you how
do you keep across all the different industries and grow
these businesses well.
Speaker 1 (06:31):
One of the secrets to West Farmer's success over the years,
I think has been what we call our loose type
model of management. So the looseness is around divisional autonomy.
So what we do is we give a lot of
autonomy operating autonomy to our business leaders in each division.
So for example, the CEO of Bunnings is responsible for
(06:54):
Bunnings operations and Mike Schneider, CEO of Bunnings has a
really capable, world class team in Bunnings, so I don't
have to worry about the day to day issues in Bunnings,
I just worry about have we got the right people
running the business, which we do. And then I very
much focus at a group level on the capital allocation,
(07:15):
the governance, the balance sheet and providing the support that
Bunnings and our other divisions need. So divisional autonomy is
really critical. And then at a corporate office, we try
to have a lean, high caliber corporate office because that
enables us to not only add more value to the divisions,
but to keep our costs down and to be more
(07:35):
nimble and agile with decision making.
Speaker 2 (07:38):
But we are very focused.
Speaker 1 (07:39):
The areas that i'd say are around the tightness, very
tight and disciplined around capital allocation. So if our divisions
want to make an investment or they want to enter
into a long term contract of significance, they need the
approval of us at the corporate level. And we also
are very strict around a lot of our corporate policies
(08:01):
and procedures, so we want to ensure that we have
really strong corporate governance and reporting across the group.
Speaker 3 (08:07):
What are some of the challenges and opportunities you're facing
at the moment.
Speaker 1 (08:11):
Some of the challenges are that we live in a
very uncertain and volatile world at the moment. We're seeing
that play out internationally at the moment with the tariffs,
the US tariffs and some of the geopolitical issues that
have the potential to have a very significant impact on
trade orientated countries like Australia and New Zealand. And Whilst
(08:34):
our countries might not be directly impacted by the tariffs,
there are always the secondary impacts if it impacts our
trading partners or impacts global supply chains. So that's one
that we're looking to navigate. Some of the opportunities, i'd
say would be we have a lot of opportunities for
growth within our businesses. So we're really excited about the
(08:55):
opportunities to expand our range and addressable market in Bunnings
in Kmart. We're excited about the international growth opportunities for
our Anko kmart product.
Speaker 2 (09:06):
Internationally.
Speaker 1 (09:08):
We have some new and emerging businesses such as our
healthcare business and our lithium business that we've invested a
lot of capital in, but we're expecting them to deliver
good earnings growth in the years ahead. So they are
some of the exciting opportunities across the group.
Speaker 3 (09:24):
Yeah, So Liszt chat about tariffs for a little bit.
They how has that impected to do it? Or you
mentioned that you're navigating it, Has it changed things with
suppliers or yeah, tell us a bit about that.
Speaker 1 (09:35):
Well, there hasn't been any immediate changes because it's obviously
still quite early days and there's been a lot of change.
So I think everyone's still trying to understand where are
the final tariff situations going to land. At a time
when there was the talk of over one hundred percent
tariffs on China from the US, that could have had
(09:55):
very profound implications on global trade. And like I said,
although itouldn't necessarily have a direct impact on Australia or
New Zealand, if a lot of our major suppliers and
trading partners were being impacted in Asia.
Speaker 2 (10:09):
Then it would have impacts on us.
Speaker 1 (10:10):
So what we're really doing is continuing to monitor the situation.
We have over one thousand people in West Farmers based
across Asia in various countries in Asia, in various sourcing,
supply chain, buying and technology roles, so we have deep
connectivity across different countries. We have a very diversified supply
(10:33):
base across many countries, so our focus is just to
be ready to move if there are changes. We want
to be able to work with our key suppliers. If
there are opportunities to get better rates and better terms
for the benefit of our customers, we will do that.
And we also wear one of the largest users of
container shipping in the Southern hemisphere, so if there were
(10:55):
changes in container shipping internationally, then we have the ability
through our strategic partnerships to ensure that we retain supply
at a good price.
Speaker 3 (11:04):
Over the years, Kmart's gone through a bit of a
repositioning and it's actually like it's now known as a
really cool place to shop. Can you talk about how
that strategy has been playing out over the.
Speaker 2 (11:16):
Last few years.
Speaker 1 (11:17):
The kmart team have done an amazing job of transforming
that business. And the real secret source of kmart is
their product development capabilities. And because we design and we
source products directly at scale, we're able to do so
number one in a very sustainable way because we control
the supply chain, but we're also to bring very unique
(11:40):
products to market at unbelievable price points. And the great
thing about that is that is making on trend exciting
products more accessible to the community, and we've seen that
across many categories, not just.
Speaker 2 (11:52):
To paril or home or kitchen.
Speaker 1 (11:54):
Where also a lot of our own brand toys, tech accessories,
more recently health and beauty products, or exercise equipment or
pet accessories, and now eighty five percent of the products
we sell in kmart are our own, very unique and
exclusive products. So that's really resonating, and I guess the
(12:15):
public is now starting to see that they can expect
a lot of innovation in product design, they can expect
the best prices, and it's a really exciting place to shop.
Speaker 3 (12:25):
You've got the global stores like Ikea and New Zealand,
you've got Wearhouse Group. How do you compete?
Speaker 1 (12:31):
The retail market is just so incredibly competitive, and what
good looks like today is just not going to be
good enough in five years time. Customers have the choice
now to buy many of those brands online. They can
sit on their phone to find the lowest price for
that brand and get it delivered to their door, their
front door. So to be competitive and relevant for today's
(12:55):
consumers in retail, you need to have a point of difference,
And as I said earlier, Kmart's point of difference is
their unique products on trend, unique everyday products at amazing prices.
Speaker 3 (13:07):
Yeah. And so one of the other environmental things going
on at the moment is the cost of living crisis.
How is that affecting the came up brand or came
out superformance?
Speaker 1 (13:15):
I must admit we would much rather households had a
lot of money to spend. We don't like cost of
living crises, right, but when customers are doing it tough,
when households are really trying to manage their budgets titally,
we are very confident that businesses like cam Art, Bunnings
and indeed office works are really going to help families
(13:37):
families with their cost of living pressures. So we have
a philosophy in our businesses. It's called an everyday low
price philosophy, and that is that rather than rather than
confusing customers with high low pricing, so the price is
high one day and discounted the next. That leads to
a lot of mistrust in pricing. We try and have
(13:57):
an every day low price. If able to drive efficiencies
or cost savings through our growth or sourcing abilities, then
we want to share some of that benefit in lower prices.
And if you remember post COVID, Remember when inflation started
to kick in. And the secret is that many retailers
(14:19):
like inflation because inflation lets them put up their prices
and fractionalize their costs. Now, we made a very unpopular
comment for investors coming out of COVID when inflation started
to kick in, and many investors thought, wow, this is
a great thing for retailers. Well our businesses and we
as West Farmers, came out and said, no, we are
(14:40):
going to keep our prices low.
Speaker 2 (14:42):
We're going to.
Speaker 1 (14:43):
Do everything possible to avoid putting our prices up too much.
Speaker 2 (14:47):
But that has served us really well.
Speaker 1 (14:49):
It's also helped customers in their time of need, and
it's a very core philosophy of our retail businesses.
Speaker 3 (14:56):
So the Enco brand you touched a little bit about that,
but I'd love to more about it, especially the global
expansion or how you're expanding that.
Speaker 1 (15:03):
When you look at the Anco products in a particular range,
the way that the range is curated, the style, the colors,
the themes of the range is very attractive for many
other international retailers. And there are many international retailers that
are looking to simplify their businesses. They might not have
the ability to have very extensive sourcing and design capabilities.
(15:28):
They might not be able to invest in the same
level of factory auditing and sustainability.
Speaker 2 (15:33):
Oversight that we do.
Speaker 1 (15:35):
So we started to learn that there was a fair
bit of international interest, so we did set up a
separate team and we're now pursuing three strategies for international growth.
The first is we're opening some new ANCO stores in
the Philippines, and we're doing so in partnership with a
big Philippines group called a Yala that own a lot
of shopping malls there.
Speaker 2 (15:55):
So by the end of the year we'll have five.
Speaker 1 (15:57):
Or six stores open ANCO stores as they called, and
so far they're going really well. We also have wholesaling
arrangements where groups like Walmart into Walmart Canada, We have
some European retailers car for as an example, and a
few others where we're selling product to them for them
(16:17):
to use in their international stores. The final area is
a white labeling opportunity. So Mattel, the international toy company,
currently rely on Anko to provide them with their wooden
toys that.
Speaker 2 (16:30):
They white label under the Fisher Price brand.
Speaker 1 (16:35):
So if you're in the US and you're buying a
Fisher Price wooden toy that's coming from Anco.
Speaker 3 (16:41):
Well, I think I've got one of those little wooden
coffee machines at my house. Great. At the recent Ray
Morgan Pole showed that both Bunnings and Kmart were in
the top three of Australia's most trusted brands, with Bunnings
taking out the number one spot. What do you think
drives that trust?
Speaker 1 (16:58):
Look, it really starts with our teams. We have leaders
that are deep leaders and team members and those businesses
that are deeply committed to delivering on their objective of
everyday low prices, doing the right thing by their team members,
their customers and the communities in which they operate. And
I think that trust that customers and households can have
(17:21):
in our products really matters.
Speaker 2 (17:23):
And then I think there's a lot of the other stuff.
Speaker 1 (17:24):
Over and above that, a lot of the contribution that
Bunnings and make to the community, like across across the
Broader West Farmers Group. Just in the last half in
six months, we made contributions of I think it was
fifty five million dollars of direct and indirect contributions to
over eight thousand community organizations in Australia and New Zealand.
Speaker 2 (17:47):
And that is happening.
Speaker 1 (17:49):
While we do a bit at West Farmers corporately, most
of that is happening on the ground in local communities
with businesses like Bunnings and Kmart, So all of those
things really matter, and I think having I'd like to
think that our divisions feel that having a supportive owner
like West Farmers that is very focused on the long
term and will make capital available to invest for the
(18:12):
long term, it really gives them the ability to make
the types of decisions that are going to pay back
over the long term.
Speaker 3 (18:20):
Coming back to the return that you talked about, you've
done the half year results recently. Do you want to
touch on a few of the headlines around the recent announcements.
Speaker 2 (18:30):
Sure? Well.
Speaker 1 (18:32):
Look, in some ways it was a fairly challenging six
month period because economically, both in Australia and New Zealand,
consumers in both households in both countries were doing it
pretty tough. They were facing higher interest rates, cost of
living pressures, so we were having to navigate that. So
our businesses we're having to work really hard to find
(18:54):
new and different ways to grow and I think what
helped us is because we continue to expand our offer
and expand our range and grow our businesses, that certainly helps.
So we're pleased to get a few percent revenue growth
across the group.
Speaker 2 (19:09):
And importantly, we were.
Speaker 1 (19:10):
Able to do that without putting our prices up too much,
so essentially our prices went up less than inflation, so
I think that's really important to note. We were also
able to slightly grow our earnings. We were able to
generate really good cash generation as well, and our return
(19:31):
on equity is very strong. So at a group level,
our return on equity is about thirty percent. So they
were all the key measures. The other very important measure
for our shareholders was that we were able to increase
our interim dividend, and in the current environment, there's not
many companies that are increasing their dividends, so that was
received really well.
Speaker 3 (19:52):
You talked about it before around that it's not just
the financial metrics that are important that well that you follow.
You talked about sustainability, any others that you want to
that you track or keep an eye on.
Speaker 1 (20:03):
So some of the measures that probably a lot of
investors wouldn't follow, that we follow closely. We really look
at our team member engagement scores. So we every year
and sometimes more frequently, we do pulse checks within our team,
and you know, I think team member engagement gives you
a sense of the cultural health of a business. Secondly,
(20:25):
we look at things like unplanned ads and absenteeism. So
you know, some might say how often are.
Speaker 2 (20:31):
People taking sickies?
Speaker 1 (20:33):
There is a very strong correlation between companies that are
struggling culturally or performance wise, and you know the desire of.
Speaker 2 (20:41):
People to take more time off.
Speaker 1 (20:43):
Now, sometimes people get sick, but if you sometimes see
unplanned absenteeism tick up, that's a sign that something's not
quite right. The other really important metric that we focus
on very closely is team member safety, and we measure
what we called TRIFFA, which is recordable safety incidents. We
(21:05):
also monitor any safety incidents that require our teams to
take time off that are more severe, and we also
monitor near misses. So these are some of the measures
that you'll find most professional good companies do focus on.
They don't necessarily show up directly in the P and L,
but there really important measures.
Speaker 3 (21:25):
So how would you describe the culture it with farmers?
Speaker 1 (21:28):
Every one of our businesses has their own unique culture
and we encourage that because the type of culture you
need to be successful in Bunnings will be a little
bit different to what you need to be successful in
a lithium refinery, which will be different to what you
need in a healthcare business.
Speaker 2 (21:44):
But first of all, there are four values that we expect.
First of all, the.
Speaker 1 (21:50):
Value of accountability is really important. Also, integrity is fundamental.
Openness is something that's a little bit n I think
to the West farmers culture. The value of openness, which
does go to our ways of working, is that we
say bad news should flow faster than good news. Where
(22:10):
really an organization that doesn't like people trying to manage
upwards like only sharing the good news. And openness is
also being very open with ourselves and each other on
what we can do better, what can we do better
to improve because as I said earlier, what good looks
like today will not be good enough in five years time.
So I need to make sure that I'm individually getting better,
(22:33):
our team needs to be getting better, and our businesses
need to be getting better. So that sense of aspiration
and openness, together with I guess a degree of humility
I think is a really important part of our culture.
Speaker 3 (22:47):
The Bunnings group is dominating Australia and New Zealand hardware
sector and is considered a gym.
Speaker 2 (22:52):
How are the.
Speaker 3 (22:54):
Results going for Bunnings and how much does that make
up of the Wiz Farmer's portfolio.
Speaker 1 (22:57):
Well, Bunnings is our largest business by well buy both
sales and by profit, so it's very important. Bunnings represents
over fifty percent of our earnings and there's still good
growth prospects there. I know that Kmart has been growing
their sales and profit arguably at a faster rate than Bunning,
so he's catching up a bit, but Bunning still has
(23:20):
a good lead.
Speaker 3 (23:21):
How did you have to adapt the business to compete
in New Zealand.
Speaker 2 (23:24):
I think there are some things that are the same.
Speaker 1 (23:26):
Number one, bunnings commitment to lowest prices, Bunning's commitment to
delivering better outcomes for their team in terms of higher wages,
a really positive culture, the deep engagement the Bunnings has
with community in New Zealand.
Speaker 2 (23:42):
All those things are the same.
Speaker 1 (23:43):
Interestingly, if you compare the New Zealand market to the
Australian market in Bunnings, we would have a higher proportion
of trades, like trades relative to diis a little bit
a little bit larger. That would be one difference. We
want to make sure as well that our offer in
New Zealand.
Speaker 2 (24:03):
Really works for the different communities.
Speaker 1 (24:06):
And as is the case in Australia, a store, the
Bunning store that you might find inner city Sydney is
fundamentally different to a store you might find in rural
New South Wales.
Speaker 2 (24:19):
So the same applies for Bunnings.
Speaker 1 (24:21):
So the stores you'll see, the warehouses you'll see in
Auckland are quite different to the ones that you'll see in.
Speaker 2 (24:29):
Other regional areas.
Speaker 1 (24:30):
But what you can rely on is that same consistency
about everyday low pricing, hopefully really great service from our
team members and good engagement with community.
Speaker 3 (24:41):
How seriously did you consider rebranding Bunnings to Hammerbun Well.
Speaker 1 (24:46):
I know that I think there's a generation of future
shoppers that probably would resonate the Hammer Bun would resonate
a lot more strongly than the Bunnings brand. But look,
the Bunnings brand has been around even longer than the
West Farmer's brand, so it would be a pretty big
move to.
Speaker 3 (25:04):
Change I've got a two and a half year old
who just watched Bloey the whole way over here? Can
you tell us a bit more about that campaign and
how that came about.
Speaker 1 (25:13):
When I heard that Bunnings were going to do this,
I had to ask the question of who Bluey was
because my kids.
Speaker 2 (25:22):
Are now growing up and have left home. They're at university.
Speaker 1 (25:25):
So yeah, for me, it was the Wiggles and all
of that where my kids were growing up. But anyway,
it was so it came about as a result of
the Bunnings team thinking creatively how to not only not
only market the brand and promote what they do, but
also to be really deeply engaged with the community and Bunnings.
(25:45):
Over the years they run a lot of they run
a lot of sessions for kids and that was really popular.
So this was in many ways a really logical, logical
next step.
Speaker 2 (25:57):
So it was fantastic to see the success of it.
Speaker 1 (26:00):
Team did a great job and as I said, hopefully
it brings a new generation of shoppers into Bunnings.
Speaker 3 (26:06):
You talked about that you don't think with Farmers will
look the same in five years, so talk a bit
about the future.
Speaker 1 (26:11):
Look, the first thing with industry trends. We have made
some pretty big bets. We've allocated a lot of capital
to the healthcare sector and to lithium, both areas where
there are some pretty strong tailwinds around demand. So in
the next month and a half we'll be hopefully producing
(26:31):
our first product, which is a lithium hydroxide product in
Quinana in Western Australia through our Chemicals, Energy and Fertilizers division,
and that will be a world class lithium hydroxide refinery
operating on very sustainable standards and that will be able
to service the international market for electric vehicles over the
(26:55):
next decade. So that is one of those examples. And
it's interesting. We used to own coal mines, but we
realized that although we generated good returns, that wasn't necessarily
going to be the future for West Farmers, so we
sold our coal mine and invested in lithium. So that's
one of those new trends that were hoping to tap into.
(27:16):
The other one with healthcare is we own a chain
of pharmacies and we partner with the pharmacists franchisees within
that network. We also own the largest telehealth business in
Australia called instance, scripts. We own a mediesthetic skincare business
called Silk, and we also run a very large pharmaceutical
(27:37):
wholesale business that is able to get any prescriptions pharmaceuticals
you need to every pharmacy in the country within twenty
four hours. So what excites us about this is that
healthcare costs and demands are increasing, especially with the aging
of the population. Believe that community pharmacies can play a
(28:04):
really important role in community health.
Speaker 2 (28:06):
We also believe in the future of telehealth.
Speaker 1 (28:09):
We do work with obviously licensed gps that support our
telehealth business. So our vision is to try and make
healthcare more accessible and more affordable through our network. So
that's the opportunity, so that two big trends that we're
hoping to tap into. We currently have a number of
(28:30):
live use cases using generative AI to improve customer service,
so through chatbots, but also importantly conversational commerce, which could
transform search as we.
Speaker 2 (28:42):
Know it at the moment.
Speaker 1 (28:43):
Also team member tools, so Bunnings and Office Works have
voice enabled generative AI tools to give technical information on
products that can help them service customers. And then in
a lot of other productivity tools just to help our
teams do their work. Area that I'm really excited about.
We're not going to go out and invest in large
(29:04):
language models or build our own software, but we can
be really a really sophisticated user of these technologies for
the betterment of our customers and our shareholders.
Speaker 3 (29:14):
Let's chat about you. You're a dual Olympians, Silver mid
middle eist investment banker and now CEO. I want to
Australian's largest companies. What's your secret to thriving under these
pressure cooker environments.
Speaker 1 (29:26):
The first thing you learned very quickly as a CEO
is really it's not about you, It's about everyone else
around you, right, So I think it's ensuring that you
have phenomenal people working with you. And I don't mean
good people, I mean phenomenal people. And you come back
to where we started, which is we want to deliver a.
Speaker 2 (29:46):
Top quartile total shareholder a term.
Speaker 1 (29:49):
We want to be in the best twenty five percent
of companies over the long term. And if you have
great people, then they are going to be very capable
of making the right decisions. So as a leader need
to create the settings, the culture of the environment and
the support for them to ultimately get on and make
the right decisions.
Speaker 3 (30:08):
As there any listens that you've brought over from sporting
into business.
Speaker 1 (30:11):
When you're training with a group of people that every
day you get up and you're trying to be the
best in the world, and every single thing you do,
from what you eat for breakfast and your training session
to the stretching and the recovery and the planning and
all of that is about being the best in the world.
There came a point in time where it was very
(30:32):
clear that physically I was not going to be the
best in the world in sport anymore. But you know,
I wanted to be part of a team that shared
a similar sense of ambition. And that's what I love
about West Farmers. And for a business like Bunnings to
be successful or came out to be successful, we genuinely
have to be the best in the world. Like we
are fighting tooth and nail with companies like Amazon, with Costco,
(30:56):
with Audi that are really large international companies, best in
their class. So, you know, that sense of trying to
be the best in the world, I think translates really
well from sport to business.
Speaker 3 (31:10):
You've got almost five hundred thousand shareholders. What's one thing
you'd love for them to take away from this conversation.
Speaker 1 (31:16):
Hopefully they can get some comfort from the fact that
I'm also a significant shareholder in West Farmers, so our
interests are very much aligned. I'm only the eighth CEO
in West Farmers over one hundred and eleven or twelve years,
and I know, as my predecessors have that our job
as CEOs is to make sure that we're delivering on
(31:39):
that top quarter total shareholder return over time. So the
message to our shareholders is that I am very focused
on delivering on that.
Speaker 2 (31:49):
I'm also very focused on delivering on that in the
right way.
Speaker 1 (31:52):
Right We're not a business that makes compromises ethically or
morally just to try and improve short term performance. Sometimes
holders have been shareholders for many years, going back to
the IPO, and that those shareholders that may have taken
one thousand dollars of shares in the IPO and reinvested
their dividends that's now worth over a million dollars, and
(32:14):
those shares have helped them, you know, send their kids
to school, it's set them up for their retirement.
Speaker 2 (32:21):
That makes us really really happy to hear those stories.
Speaker 3 (32:24):
So before we reap, do you have a favorite quote
or piece of advice that you've picked up along the way.
Speaker 1 (32:30):
One of my favorite quotes is when the horse is dead,
get off, And I think that actually has a lot
of relevance in investing. So for your investors out there,
sometimes you need to know when to you know when
to get out right. Hopefully that won't be the case
with West Farmers right. But look, if there is a
quote that I think is very inspiring and relevant, it's
(32:52):
that old Roosevelt quote the critic. It just talks about
how easy it is to be the critic. But really
what matters in life, it's the person in the arena
that's trying that failing, they're getting up, they're having another go.
And you know, in history, in life, in business, in sport,
(33:14):
it is those people that ultimately create value, create change,
do special things. And i'd like to think that, you know,
in the West Farmers group, we have far more people
in the arena having a go than we do critics
sitting on the sideline commenting on things.
Speaker 3 (33:30):
Well, thanks hats for joining us wrong, Thank you very much.
Speaker 2 (33:32):
It's a pleasure
We genuinely have to be the best in the world,
like we are fighting tooth and nail with companies like Amazon,
with Costco, with Audi.
Speaker 2 (00:09):
The real secret source of Kmart is there.
Speaker 3 (00:12):
How seriously did you consider rebranding Bunnings to Hammer bun
I'm n New Williams, one of the co founders and
co CEOs at chers E's, and today we're in a
bit of a dreary Sydney about to chat with Rob Scott,
who's the CEO of Wiz Farmers.
Speaker 1 (00:31):
There came a point in time where it was very
clear that physically I was not going to be the
best in the world in sport anymore, but you know,
I wanted to be part of a team that shared
a similar sense of.
Speaker 3 (00:41):
Ambition with Farmers is one of Australia's biggest companies, and
as the name behind the brands that we know and
love like Camart, Bunnings and Target, We're going to learn
what it's like to be at the helm of one
of these big companies.
Speaker 1 (00:53):
The type of culture you need to be successful in
Bunnings will be a little bit different to what you
need to be successful in a refinery, which will be
different to what you need in a healthcare business.
Speaker 3 (01:04):
Before we get started, I want to pay my acknowledgments
to the traditional custodians of the land where we come
to you from today, the Gettigo people of the urination
and pay respects to olders, pats, prison and emerging.
Speaker 4 (01:16):
Investing involves the risk you might lose the money you
start with. We recommend talking to a licensed financial advisor.
We also recommend breeding product disclosure documents before deciding to invest.
Everything you're about to see and here is current at
the time of recording.
Speaker 3 (01:31):
Welcome Rob, Thanks thanks for joining us. Thank you so
Bunnings Group, Pamart Target all huge brands, all owned by
WIS Farmers.
Speaker 2 (01:40):
Can you tell us about WIZ Farmers sure?
Speaker 1 (01:42):
Well, West Farmers has been around for over one hundred
and ten years now. So we started off life in
nineteen fourteen as a farmer's cooperative and then in nineteen
eighty four they made a very important step to demutralize
so converted from being a cooperative structure to a listed company.
So we've been a listed company since nineteen eighty four
(02:03):
and since then we've continued to evolve, continue to buy
and sell businesses with the very singular focus of trying
to deliver a satisfactory return to our shareholders.
Speaker 3 (02:14):
You talk about the diversification and maybe the starting with
Farmers to now having Kmart and Bunnings. Is there a
thrid that hangs together around these portfolio how your portfolio
grows and changes.
Speaker 1 (02:27):
Our objective is to deliver a satisfactory return to shareholders,
and perhaps in a very true, understated farmer's style, we
define satisfactory as being in the top quarter of returns
for all Australian listed companies, so it is quite we
do set quite an ambitious target, but we also take
the view that it's only possible to deliver those superior
(02:50):
returns if we focus on the long term. So we
deliberately have a long term investment horizon, and we also
realize that in order to deliver sustain returns, we must
anticipate the needs of our customers, look after our team members,
treat our supplies fairly, take care of the environment, contribute
to the communities in which we operate, and act with
(03:12):
honesty and integrity. So although we have a very financially
focused objective, we realize that to do that over the
long term requires us to be a very sustainable company
and a good corporate citizen.
Speaker 3 (03:24):
How do you go about thinking about that type of thing. Then,
if it as really around spotting these incredible growth opportunities
or working out how to grow these companies, how do
you go about managing that well?
Speaker 1 (03:37):
As I said, because we are very long term focused,
We're not one of these investors that buys and sells
companies all the time. So we invest in companies that
we feel that we have the ability to manage, that
we feel are good quality businesses that we can invest
in over time and that will ultimately generate good returns.
So that long term focus very much guides us. We
(03:58):
also think about for broad strategies, and when you operate
across a diverse range of industries, it's hard to say
this is the one strategy that's going to work for
a retail business or a chemicals business. But our four
value creating strategies are quite simple. They are ensuring operational
excellence across all of our businesses to satisfy customer needs. Secondly,
(04:23):
finding growth opportunities through entrepreneurial initiative. The third strategy is
renewing the portfolio, and that's ensuring that our capital is
allocated into businesses, it will generate good returns and then
finally responsible long term management, so ensuring sustainability within our businesses.
Speaker 3 (04:42):
Yeah, Cole, do you want to talk a bit more
about how you see sustainability.
Speaker 2 (04:46):
Sure?
Speaker 1 (04:46):
Well, as I said earlier, we see sustainability as being
totally linked to delivering superior long term investment returns and
it's very much ingrained into all aspects of our operations
and strategy. In fact, before ESG and sustainability was even
a thing, we're one of the first companies in Australia
(05:08):
to launch a sustainability report that we've been publishing for
well over twenty years, and we also talked about those
really important aspects of engaging with communities, good corporate governance,
also taking care of the environment. So we take all
those things really seriously. We measure them and if your
(05:30):
investors were to look at our half year, full year
results or even our strategy days, you will see at
the very front of every results presentation we actually put
the proof points on our sustainability metrics. Financial results measure matter,
but also sustainability measures matter, so we talk about what's
happening with our carbon emission reductions we talk about what's
(05:53):
happening with our team member safety statistics. An area that
we are very proud of is the developments we've made
around indigenous employment and we are pleased to have employment
parity in Australia. And then a lot of issues around
ethical sourcing, community investments, other aspects of auditing our supply
(06:16):
chain are really important across.
Speaker 3 (06:17):
These different industries. I can only imagine it's like trying
to wrangle the legs of an octopus within the amount
of different industries that you're in. How do you how
do you keep across all the different industries and grow
these businesses well.
Speaker 1 (06:31):
One of the secrets to West Farmer's success over the years,
I think has been what we call our loose type
model of management. So the looseness is around divisional autonomy.
So what we do is we give a lot of
autonomy operating autonomy to our business leaders in each division.
So for example, the CEO of Bunnings is responsible for
(06:54):
Bunnings operations and Mike Schneider, CEO of Bunnings has a
really capable, world class team in Bunnings, so I don't
have to worry about the day to day issues in Bunnings,
I just worry about have we got the right people
running the business, which we do. And then I very
much focus at a group level on the capital allocation,
(07:15):
the governance, the balance sheet and providing the support that
Bunnings and our other divisions need. So divisional autonomy is
really critical. And then at a corporate office, we try
to have a lean, high caliber corporate office because that
enables us to not only add more value to the divisions,
but to keep our costs down and to be more
(07:35):
nimble and agile with decision making.
Speaker 2 (07:38):
But we are very focused.
Speaker 1 (07:39):
The areas that i'd say are around the tightness, very
tight and disciplined around capital allocation. So if our divisions
want to make an investment or they want to enter
into a long term contract of significance, they need the
approval of us at the corporate level. And we also
are very strict around a lot of our corporate policies
(08:01):
and procedures, so we want to ensure that we have
really strong corporate governance and reporting across the group.
Speaker 3 (08:07):
What are some of the challenges and opportunities you're facing
at the moment.
Speaker 1 (08:11):
Some of the challenges are that we live in a
very uncertain and volatile world at the moment. We're seeing
that play out internationally at the moment with the tariffs,
the US tariffs and some of the geopolitical issues that
have the potential to have a very significant impact on
trade orientated countries like Australia and New Zealand. And Whilst
(08:34):
our countries might not be directly impacted by the tariffs,
there are always the secondary impacts if it impacts our
trading partners or impacts global supply chains. So that's one
that we're looking to navigate. Some of the opportunities, i'd
say would be we have a lot of opportunities for
growth within our businesses. So we're really excited about the
(08:55):
opportunities to expand our range and addressable market in Bunnings
in Kmart. We're excited about the international growth opportunities for
our Anko kmart product.
Speaker 2 (09:06):
Internationally.
Speaker 1 (09:08):
We have some new and emerging businesses such as our
healthcare business and our lithium business that we've invested a
lot of capital in, but we're expecting them to deliver
good earnings growth in the years ahead. So they are
some of the exciting opportunities across the group.
Speaker 3 (09:24):
Yeah, So Liszt chat about tariffs for a little bit.
They how has that impected to do it? Or you
mentioned that you're navigating it, Has it changed things with
suppliers or yeah, tell us a bit about that.
Speaker 1 (09:35):
Well, there hasn't been any immediate changes because it's obviously
still quite early days and there's been a lot of change.
So I think everyone's still trying to understand where are
the final tariff situations going to land. At a time
when there was the talk of over one hundred percent
tariffs on China from the US, that could have had
(09:55):
very profound implications on global trade. And like I said,
although itouldn't necessarily have a direct impact on Australia or
New Zealand, if a lot of our major suppliers and
trading partners were being impacted in Asia.
Speaker 2 (10:09):
Then it would have impacts on us.
Speaker 1 (10:10):
So what we're really doing is continuing to monitor the situation.
We have over one thousand people in West Farmers based
across Asia in various countries in Asia, in various sourcing,
supply chain, buying and technology roles, so we have deep
connectivity across different countries. We have a very diversified supply
(10:33):
base across many countries, so our focus is just to
be ready to move if there are changes. We want
to be able to work with our key suppliers. If
there are opportunities to get better rates and better terms
for the benefit of our customers, we will do that.
And we also wear one of the largest users of
container shipping in the Southern hemisphere, so if there were
(10:55):
changes in container shipping internationally, then we have the ability
through our strategic partnerships to ensure that we retain supply
at a good price.
Speaker 3 (11:04):
Over the years, Kmart's gone through a bit of a
repositioning and it's actually like it's now known as a
really cool place to shop. Can you talk about how
that strategy has been playing out over the.
Speaker 2 (11:16):
Last few years.
Speaker 1 (11:17):
The kmart team have done an amazing job of transforming
that business. And the real secret source of kmart is
their product development capabilities. And because we design and we
source products directly at scale, we're able to do so
number one in a very sustainable way because we control
the supply chain, but we're also to bring very unique
(11:40):
products to market at unbelievable price points. And the great
thing about that is that is making on trend exciting
products more accessible to the community, and we've seen that
across many categories, not just.
Speaker 2 (11:52):
To paril or home or kitchen.
Speaker 1 (11:54):
Where also a lot of our own brand toys, tech accessories,
more recently health and beauty products, or exercise equipment or
pet accessories, and now eighty five percent of the products
we sell in kmart are our own, very unique and
exclusive products. So that's really resonating, and I guess the
(12:15):
public is now starting to see that they can expect
a lot of innovation in product design, they can expect
the best prices, and it's a really exciting place to shop.
Speaker 3 (12:25):
You've got the global stores like Ikea and New Zealand,
you've got Wearhouse Group. How do you compete?
Speaker 1 (12:31):
The retail market is just so incredibly competitive, and what
good looks like today is just not going to be
good enough in five years time. Customers have the choice
now to buy many of those brands online. They can
sit on their phone to find the lowest price for
that brand and get it delivered to their door, their
front door. So to be competitive and relevant for today's
(12:55):
consumers in retail, you need to have a point of difference,
And as I said earlier, Kmart's point of difference is
their unique products on trend, unique everyday products at amazing prices.
Speaker 3 (13:07):
Yeah. And so one of the other environmental things going
on at the moment is the cost of living crisis.
How is that affecting the came up brand or came
out superformance?
Speaker 1 (13:15):
I must admit we would much rather households had a
lot of money to spend. We don't like cost of
living crises, right, but when customers are doing it tough,
when households are really trying to manage their budgets titally,
we are very confident that businesses like cam Art, Bunnings
and indeed office works are really going to help families
(13:37):
families with their cost of living pressures. So we have
a philosophy in our businesses. It's called an everyday low
price philosophy, and that is that rather than rather than
confusing customers with high low pricing, so the price is
high one day and discounted the next. That leads to
a lot of mistrust in pricing. We try and have
(13:57):
an every day low price. If able to drive efficiencies
or cost savings through our growth or sourcing abilities, then
we want to share some of that benefit in lower prices.
And if you remember post COVID, Remember when inflation started
to kick in. And the secret is that many retailers
(14:19):
like inflation because inflation lets them put up their prices
and fractionalize their costs. Now, we made a very unpopular
comment for investors coming out of COVID when inflation started
to kick in, and many investors thought, wow, this is
a great thing for retailers. Well our businesses and we
as West Farmers, came out and said, no, we are
(14:40):
going to keep our prices low.
Speaker 2 (14:42):
We're going to.
Speaker 1 (14:43):
Do everything possible to avoid putting our prices up too much.
Speaker 2 (14:47):
But that has served us really well.
Speaker 1 (14:49):
It's also helped customers in their time of need, and
it's a very core philosophy of our retail businesses.
Speaker 3 (14:56):
So the Enco brand you touched a little bit about that,
but I'd love to more about it, especially the global
expansion or how you're expanding that.
Speaker 1 (15:03):
When you look at the Anco products in a particular range,
the way that the range is curated, the style, the colors,
the themes of the range is very attractive for many
other international retailers. And there are many international retailers that
are looking to simplify their businesses. They might not have
the ability to have very extensive sourcing and design capabilities.
(15:28):
They might not be able to invest in the same
level of factory auditing and sustainability.
Speaker 2 (15:33):
Oversight that we do.
Speaker 1 (15:35):
So we started to learn that there was a fair
bit of international interest, so we did set up a
separate team and we're now pursuing three strategies for international growth.
The first is we're opening some new ANCO stores in
the Philippines, and we're doing so in partnership with a
big Philippines group called a Yala that own a lot
of shopping malls there.
Speaker 2 (15:55):
So by the end of the year we'll have five.
Speaker 1 (15:57):
Or six stores open ANCO stores as they called, and
so far they're going really well. We also have wholesaling
arrangements where groups like Walmart into Walmart Canada, We have
some European retailers car for as an example, and a
few others where we're selling product to them for them
(16:17):
to use in their international stores. The final area is
a white labeling opportunity. So Mattel, the international toy company,
currently rely on Anko to provide them with their wooden
toys that.
Speaker 2 (16:30):
They white label under the Fisher Price brand.
Speaker 1 (16:35):
So if you're in the US and you're buying a
Fisher Price wooden toy that's coming from Anco.
Speaker 3 (16:41):
Well, I think I've got one of those little wooden
coffee machines at my house. Great. At the recent Ray
Morgan Pole showed that both Bunnings and Kmart were in
the top three of Australia's most trusted brands, with Bunnings
taking out the number one spot. What do you think
drives that trust?
Speaker 1 (16:58):
Look, it really starts with our teams. We have leaders
that are deep leaders and team members and those businesses
that are deeply committed to delivering on their objective of
everyday low prices, doing the right thing by their team members,
their customers and the communities in which they operate. And
I think that trust that customers and households can have
(17:21):
in our products really matters.
Speaker 2 (17:23):
And then I think there's a lot of the other stuff.
Speaker 1 (17:24):
Over and above that, a lot of the contribution that
Bunnings and make to the community, like across across the
Broader West Farmers Group. Just in the last half in
six months, we made contributions of I think it was
fifty five million dollars of direct and indirect contributions to
over eight thousand community organizations in Australia and New Zealand.
Speaker 2 (17:47):
And that is happening.
Speaker 1 (17:49):
While we do a bit at West Farmers corporately, most
of that is happening on the ground in local communities
with businesses like Bunnings and Kmart, So all of those
things really matter, and I think having I'd like to
think that our divisions feel that having a supportive owner
like West Farmers that is very focused on the long
term and will make capital available to invest for the
(18:12):
long term, it really gives them the ability to make
the types of decisions that are going to pay back
over the long term.
Speaker 3 (18:20):
Coming back to the return that you talked about, you've
done the half year results recently. Do you want to
touch on a few of the headlines around the recent announcements.
Speaker 2 (18:30):
Sure? Well.
Speaker 1 (18:32):
Look, in some ways it was a fairly challenging six
month period because economically, both in Australia and New Zealand,
consumers in both households in both countries were doing it
pretty tough. They were facing higher interest rates, cost of
living pressures, so we were having to navigate that. So
our businesses we're having to work really hard to find
(18:54):
new and different ways to grow and I think what
helped us is because we continue to expand our offer
and expand our range and grow our businesses, that certainly helps.
So we're pleased to get a few percent revenue growth
across the group.
Speaker 2 (19:09):
And importantly, we were.
Speaker 1 (19:10):
Able to do that without putting our prices up too much,
so essentially our prices went up less than inflation, so
I think that's really important to note. We were also
able to slightly grow our earnings. We were able to
generate really good cash generation as well, and our return
(19:31):
on equity is very strong. So at a group level,
our return on equity is about thirty percent. So they
were all the key measures. The other very important measure
for our shareholders was that we were able to increase
our interim dividend, and in the current environment, there's not
many companies that are increasing their dividends, so that was
received really well.
Speaker 3 (19:52):
You talked about it before around that it's not just
the financial metrics that are important that well that you follow.
You talked about sustainability, any others that you want to
that you track or keep an eye on.
Speaker 1 (20:03):
So some of the measures that probably a lot of
investors wouldn't follow, that we follow closely. We really look
at our team member engagement scores. So we every year
and sometimes more frequently, we do pulse checks within our team,
and you know, I think team member engagement gives you
a sense of the cultural health of a business. Secondly,
(20:25):
we look at things like unplanned ads and absenteeism. So
you know, some might say how often are.
Speaker 2 (20:31):
People taking sickies?
Speaker 1 (20:33):
There is a very strong correlation between companies that are
struggling culturally or performance wise, and you know the desire of.
Speaker 2 (20:41):
People to take more time off.
Speaker 1 (20:43):
Now, sometimes people get sick, but if you sometimes see
unplanned absenteeism tick up, that's a sign that something's not
quite right. The other really important metric that we focus
on very closely is team member safety, and we measure
what we called TRIFFA, which is recordable safety incidents. We
(21:05):
also monitor any safety incidents that require our teams to
take time off that are more severe, and we also
monitor near misses. So these are some of the measures
that you'll find most professional good companies do focus on.
They don't necessarily show up directly in the P and L,
but there really important measures.
Speaker 3 (21:25):
So how would you describe the culture it with farmers?
Speaker 1 (21:28):
Every one of our businesses has their own unique culture
and we encourage that because the type of culture you
need to be successful in Bunnings will be a little
bit different to what you need to be successful in
a lithium refinery, which will be different to what you
need in a healthcare business.
Speaker 2 (21:44):
But first of all, there are four values that we expect.
First of all, the.
Speaker 1 (21:50):
Value of accountability is really important. Also, integrity is fundamental.
Openness is something that's a little bit n I think
to the West farmers culture. The value of openness, which
does go to our ways of working, is that we
say bad news should flow faster than good news. Where
(22:10):
really an organization that doesn't like people trying to manage
upwards like only sharing the good news. And openness is
also being very open with ourselves and each other on
what we can do better, what can we do better
to improve because as I said earlier, what good looks
like today will not be good enough in five years time.
So I need to make sure that I'm individually getting better,
(22:33):
our team needs to be getting better, and our businesses
need to be getting better. So that sense of aspiration
and openness, together with I guess a degree of humility
I think is a really important part of our culture.
Speaker 3 (22:47):
The Bunnings group is dominating Australia and New Zealand hardware
sector and is considered a gym.
Speaker 2 (22:52):
How are the.
Speaker 3 (22:54):
Results going for Bunnings and how much does that make
up of the Wiz Farmer's portfolio.
Speaker 1 (22:57):
Well, Bunnings is our largest business by well buy both
sales and by profit, so it's very important. Bunnings represents
over fifty percent of our earnings and there's still good
growth prospects there. I know that Kmart has been growing
their sales and profit arguably at a faster rate than Bunning,
so he's catching up a bit, but Bunning still has
(23:20):
a good lead.
Speaker 3 (23:21):
How did you have to adapt the business to compete
in New Zealand.
Speaker 2 (23:24):
I think there are some things that are the same.
Speaker 1 (23:26):
Number one, bunnings commitment to lowest prices, Bunning's commitment to
delivering better outcomes for their team in terms of higher wages,
a really positive culture, the deep engagement the Bunnings has
with community in New Zealand.
Speaker 2 (23:42):
All those things are the same.
Speaker 1 (23:43):
Interestingly, if you compare the New Zealand market to the
Australian market in Bunnings, we would have a higher proportion
of trades, like trades relative to diis a little bit
a little bit larger. That would be one difference. We
want to make sure as well that our offer in
New Zealand.
Speaker 2 (24:03):
Really works for the different communities.
Speaker 1 (24:06):
And as is the case in Australia, a store, the
Bunning store that you might find inner city Sydney is
fundamentally different to a store you might find in rural
New South Wales.
Speaker 2 (24:19):
So the same applies for Bunnings.
Speaker 1 (24:21):
So the stores you'll see, the warehouses you'll see in
Auckland are quite different to the ones that you'll see in.
Speaker 2 (24:29):
Other regional areas.
Speaker 1 (24:30):
But what you can rely on is that same consistency
about everyday low pricing, hopefully really great service from our
team members and good engagement with community.
Speaker 3 (24:41):
How seriously did you consider rebranding Bunnings to Hammerbun Well.
Speaker 1 (24:46):
I know that I think there's a generation of future
shoppers that probably would resonate the Hammer Bun would resonate
a lot more strongly than the Bunnings brand. But look,
the Bunnings brand has been around even longer than the
West Farmer's brand, so it would be a pretty big
move to.
Speaker 3 (25:04):
Change I've got a two and a half year old
who just watched Bloey the whole way over here? Can
you tell us a bit more about that campaign and
how that came about.
Speaker 1 (25:13):
When I heard that Bunnings were going to do this,
I had to ask the question of who Bluey was
because my kids.
Speaker 2 (25:22):
Are now growing up and have left home. They're at university.
Speaker 1 (25:25):
So yeah, for me, it was the Wiggles and all
of that where my kids were growing up. But anyway,
it was so it came about as a result of
the Bunnings team thinking creatively how to not only not
only market the brand and promote what they do, but
also to be really deeply engaged with the community and Bunnings.
(25:45):
Over the years they run a lot of they run
a lot of sessions for kids and that was really popular.
So this was in many ways a really logical, logical
next step.
Speaker 2 (25:57):
So it was fantastic to see the success of it.
Speaker 1 (26:00):
Team did a great job and as I said, hopefully
it brings a new generation of shoppers into Bunnings.
Speaker 3 (26:06):
You talked about that you don't think with Farmers will
look the same in five years, so talk a bit
about the future.
Speaker 1 (26:11):
Look, the first thing with industry trends. We have made
some pretty big bets. We've allocated a lot of capital
to the healthcare sector and to lithium, both areas where
there are some pretty strong tailwinds around demand. So in
the next month and a half we'll be hopefully producing
(26:31):
our first product, which is a lithium hydroxide product in
Quinana in Western Australia through our Chemicals, Energy and Fertilizers division,
and that will be a world class lithium hydroxide refinery
operating on very sustainable standards and that will be able
to service the international market for electric vehicles over the
(26:55):
next decade. So that is one of those examples. And
it's interesting. We used to own coal mines, but we
realized that although we generated good returns, that wasn't necessarily
going to be the future for West Farmers, so we
sold our coal mine and invested in lithium. So that's
one of those new trends that were hoping to tap into.
(27:16):
The other one with healthcare is we own a chain
of pharmacies and we partner with the pharmacists franchisees within
that network. We also own the largest telehealth business in
Australia called instance, scripts. We own a mediesthetic skincare business
called Silk, and we also run a very large pharmaceutical
(27:37):
wholesale business that is able to get any prescriptions pharmaceuticals
you need to every pharmacy in the country within twenty
four hours. So what excites us about this is that
healthcare costs and demands are increasing, especially with the aging
of the population. Believe that community pharmacies can play a
(28:04):
really important role in community health.
Speaker 2 (28:06):
We also believe in the future of telehealth.
Speaker 1 (28:09):
We do work with obviously licensed gps that support our
telehealth business. So our vision is to try and make
healthcare more accessible and more affordable through our network. So
that's the opportunity, so that two big trends that we're
hoping to tap into. We currently have a number of
(28:30):
live use cases using generative AI to improve customer service,
so through chatbots, but also importantly conversational commerce, which could
transform search as we.
Speaker 2 (28:42):
Know it at the moment.
Speaker 1 (28:43):
Also team member tools, so Bunnings and Office Works have
voice enabled generative AI tools to give technical information on
products that can help them service customers. And then in
a lot of other productivity tools just to help our
teams do their work. Area that I'm really excited about.
We're not going to go out and invest in large
(29:04):
language models or build our own software, but we can
be really a really sophisticated user of these technologies for
the betterment of our customers and our shareholders.
Speaker 3 (29:14):
Let's chat about you. You're a dual Olympians, Silver mid
middle eist investment banker and now CEO. I want to
Australian's largest companies. What's your secret to thriving under these
pressure cooker environments.
Speaker 1 (29:26):
The first thing you learned very quickly as a CEO
is really it's not about you, It's about everyone else
around you, right, So I think it's ensuring that you
have phenomenal people working with you. And I don't mean
good people, I mean phenomenal people. And you come back
to where we started, which is we want to deliver a.
Speaker 2 (29:46):
Top quartile total shareholder a term.
Speaker 1 (29:49):
We want to be in the best twenty five percent
of companies over the long term. And if you have
great people, then they are going to be very capable
of making the right decisions. So as a leader need
to create the settings, the culture of the environment and
the support for them to ultimately get on and make
the right decisions.
Speaker 3 (30:08):
As there any listens that you've brought over from sporting
into business.
Speaker 1 (30:11):
When you're training with a group of people that every
day you get up and you're trying to be the
best in the world, and every single thing you do,
from what you eat for breakfast and your training session
to the stretching and the recovery and the planning and
all of that is about being the best in the world.
There came a point in time where it was very
(30:32):
clear that physically I was not going to be the
best in the world in sport anymore. But you know,
I wanted to be part of a team that shared
a similar sense of ambition. And that's what I love
about West Farmers. And for a business like Bunnings to
be successful or came out to be successful, we genuinely
have to be the best in the world. Like we
are fighting tooth and nail with companies like Amazon, with Costco,
(30:56):
with Audi that are really large international companies, best in
their class. So, you know, that sense of trying to
be the best in the world, I think translates really
well from sport to business.
Speaker 3 (31:10):
You've got almost five hundred thousand shareholders. What's one thing
you'd love for them to take away from this conversation.
Speaker 1 (31:16):
Hopefully they can get some comfort from the fact that
I'm also a significant shareholder in West Farmers, so our
interests are very much aligned. I'm only the eighth CEO
in West Farmers over one hundred and eleven or twelve years,
and I know, as my predecessors have that our job
as CEOs is to make sure that we're delivering on
(31:39):
that top quarter total shareholder return over time. So the
message to our shareholders is that I am very focused
on delivering on that.
Speaker 2 (31:49):
I'm also very focused on delivering on that in the
right way.
Speaker 1 (31:52):
Right We're not a business that makes compromises ethically or
morally just to try and improve short term performance. Sometimes
holders have been shareholders for many years, going back to
the IPO, and that those shareholders that may have taken
one thousand dollars of shares in the IPO and reinvested
their dividends that's now worth over a million dollars, and
(32:14):
those shares have helped them, you know, send their kids
to school, it's set them up for their retirement.
Speaker 2 (32:21):
That makes us really really happy to hear those stories.
Speaker 3 (32:24):
So before we reap, do you have a favorite quote
or piece of advice that you've picked up along the way.
Speaker 1 (32:30):
One of my favorite quotes is when the horse is dead,
get off, And I think that actually has a lot
of relevance in investing. So for your investors out there,
sometimes you need to know when to you know when
to get out right. Hopefully that won't be the case
with West Farmers right. But look, if there is a
quote that I think is very inspiring and relevant, it's
(32:52):
that old Roosevelt quote the critic. It just talks about
how easy it is to be the critic. But really
what matters in life, it's the person in the arena
that's trying that failing, they're getting up, they're having another go.
And you know, in history, in life, in business, in sport,
(33:14):
it is those people that ultimately create value, create change,
do special things. And i'd like to think that, you know,
in the West Farmers group, we have far more people
in the arena having a go than we do critics
sitting on the sideline commenting on things.
Speaker 3 (33:30):
Well, thanks hats for joining us wrong, Thank you very much.
Speaker 2 (33:32):
It's a pleasure
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