Low price strategy pays off for Kmart

Kmart says customers have responded to lower prices on everyday items. Photo / Steven McNicholl

Australian-owned Kmart says its customers are responding to its low price strategy, which it will continue.

Kmart reported total sales in Australia and New Zealand of A$956 million (NZ$1.2 billion) in the 13 weeks ending September 23, up 3.1 per cent on the previous year. Same-store sales rose 2.2 per cent.

"This is the eleventh period in succession of solid comparable growth in transactions and units for Kmart, as customers respond positively to its market leading pricing strategy and improved merchandise offer," said Richard Goyder, the managing director of owner Wesfarmers.

Kmart managing director Guy Russo said customers were responding to lower prices on everyday items.

"The Kmart team is fully committed to providing the lowest possible prices for Australian and New Zealand families," he said.

During the quarter it opened two stores across Australia and New Zealand and refurbished three stores.

Wesfarmers also owns home improvement chain Bunnings, which reported a 5.1 per cent increase in total sales in Australia and New Zealand in the first quarter.

On a same-store basis sales rose 2.5 per cent.

"Sales growth was recorded in both customer and commercial segments despite subdued housing market conditions," Goyder said.

Bunnings was investing in price, service quality and its store network, he said.