Discount department store, Kmart, is not happy with the financial report for the first half of the fiscal year. There is a decline in the profit and many are blaming it on the decision made by Kmart which is to stop selling one of their popular items – DVDs. This might not have been a smart move considering there are still those who are converting VHS to DVD in Perth yet the company went on ahead and ditched DVDs altogether.
Ever since the demerger which happened between Kmart and Coles in 2018, the company has been earning well among the Wesfarmers businesses. Many shoppers were disappointed though because the company stopped selling their bargain DVDs as well as CDs which is one of their most popular discounted items.
According to a trading update from the company, there is a 0.6 per cent decline from the sales of Kmart in the first half of the fiscal year. This impacted the profit of the group bringing it to $385 million to $400 million only with deductions expected from tax and interest.
For the same period in 2017, the company was able to earn a profit of $415 million.
Based on the press release from the Wesfarmers, the decline was the result of the decision to stop the DVD category of the department store since it is earning only a very low margin and is only responsible for 1 per cent of Kmart’s total sales.
Another contributing factor is the weak sales coming from the women’s clothing department which also affected the sales of the department store. The consumers’ demand for everyday product during the Christmas season has also lowered because of the large discounting that was offered in 2017.
When Kmart decided to stop selling DVDs, they have proposed to put their own range for sale instead. These are products which are going to be manufactured in-house thus they need space for these new products. In the end, they have decided to let go of their DVDs, Blu-ray as well as CDs to make space for their new line. Customers that are fan of VHS to DVD in Perth are not happy and they just have to find other places to shop for their DVD cravings.