KEY POINTS
- Wesfarmers (ASX: WES) shares jumped about 4.25% to A$83.39 after its 2026 Strategy Day.
- The main theme was using AI and data to lift profit, with Bunnings still the key engine.
- The business is strong, but the stock looks expensive, and the dividend yield is low (about 2.6%).
- Our view: a solid hold for now. New buyers may want to wait for a better price.
Wesfarmers (ASX:WES) jumped about 4.25% to A$83.39 on Wednesday after sharing its growth plans at its 2026 Strategy Day. The obvious question for investors is whether it is still a buy. Our short answer: It is a high-quality business worth holding, but the price already assumes a lot, so we would be patient with new money. Management’s message was simple. It wants faster growth, a mix of businesses that can handle tough times, and a strong balance sheet, with AI as the next big driver of profit.
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Wesfarmers Bets Its Next Growth Phase on AI, Data and Bunnings
Wesfarmers is best known for Bunnings and Kmart, but today’s focus was on technology. The group wants to use data and AI, helped by partnerships with Microsoft and Google Cloud, to run its business better. That may sound technical, but the idea is easy to grasp: stock the right products, set sharper prices, and keep costs down. If it works, the same level of sales can produce more profit.
Bunnings is still the engine, sticking to its promise of low prices, a wide range, and good service. From 1 July 2026, two of Wesfarmers’ industrial businesses, Blackwoods and Workwear Group, will move into Bunnings. The aim is to save costs and win more trade and small-business customers. We see this as a useful step rather than a game-changer.
Can Bunnings and Kmart Keep Growing if Shoppers Pull Back?
The recent numbers are reassuring. In the half year to December 2025, profit grew about 9% to A$1.6 billion, sales rose across Bunnings and Kmart, and the dividend was lifted. Cheaper, value-focused stores like these tend to hold up well when households are watching their money, and that is Wesfarmers’ real strength.
Here is the catch. Even after that strong result, the shares fell on the day in February. That tells you the market already expects a lot from the company. If shoppers tighten their belts further, even steady growth may not be enough to keep the price moving higher.
The Investor’s Takeaway for WES: Is It Still a Buy?
In our view, Wesfarmers is a hold at today’s price. It is one of the best-run companies on the ASX, with a strong balance sheet and a sensible plan, and brokers are constructive, with Morgans recently moving to an “accumulate”. But a great company is not always a great buy. The dividend yield is only about 2.6%, which is low, and that shows just how expensive the shares have become.
For income investors, that small yield is not very exciting. For growth investors, the AI push is promising but still unproven. The key date to watch is the full-year result in late August, when management needs to show that this spending is turning into real profit. Until then, current holders can sit tight, while new buyers may get a better entry if the price dips.
