Wesfarmers reports positive results but gloomy outlook: Midday Roundup

Wesfarmers has recorded positive sales growth for the 2011 financial year, with food and liquor sales up by 6.3% to $25 billion, along with increases of 5.7% and 4.4% for home improvement and office supplies sales respectively.

However, the company has still said it expects trading to remain weak over the rest of the year, with sales in its Target and Kmart divisions remaining flat or falling.

Managing director Richard Goyder said the response was solid “especially given the backdrop of declining consumer confidence”.

“Target experienced difficult trading conditions throughout the year, with total sales declining by 1.2%, as price deflation across the store constrained sales despite solid underlying transaction growth”.

“Kmart’s total sales were broadly flat for the year, as investment in everyday low prices offset significant increased volumes, particularly in Apparel and Home categories.”

The company said it expects conditions to remain difficult into the New Year.

Local shares fall on negative US lead

The Australian sharemarket has opened over 1% lower this morning, following a weak night in the United States where investors grow more nervous over the prospect of the US defaulting on its debt obligations.

The benchmark S&P/ASX200 index was down 50 points or 1.12% to 4486.5 at 12.10 AEST, while the Australian dollar has remained at $US1.10.

AMP shares lost 1.17% to $4.63, while Commonwealth Bank shares also falling 0.64% to $49.50. NAB shares lost 0.94% to $24.22 as Westpac fell 1.14% to $20.78.

In the United States, the Dow Jones Industrial Average fell to a two-month low of 12,303, having fallen 197 points or 1.58%.

US lawmakers struggle over debt deal

American legislators have continued to struggle over a deal to avoid a default, with Republicans and Democrats at a stand-off.

However, a new deal is apparently being worked out between Republicans and Democrats in Congress. Senate majority leader Harry Reid and speaker John Boehner have been in talks regarding how to send a piece of legislation to the White House.

“There will be sufficient cooperation so a bill will pass that allows the debt limit to be lifted, with deficit reduction,” democratic senator Max Baucus told reporters yesterday.

Reid has said his version of the bill could be amended to win Republican support.

Tiger Airways to remain grounded over weekend

Tiger Airways Australia will remain grounded over the weekend, after the airline succeeded in adjourning a hearing until next week.

According to reports, the Singapore-backed low-cost airline is expected to receive conditional approval to restart flying shortly, with changes in its schedule expected.

Tiger has told the Singapore Stock Exchange that discussions with the aviation regulator were continuing.