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Wesfarmers will merge K Mart and Target to reduce inflation losses.

TraderKnows
TraderKnows
04-30

Australian retail giant Wesfarmers announced on Tuesday that due to prolonged high inflation, it will merge its Kmart department store business with discount retailer Target (NYSE: TGT) to minimize losses.

Australian retail giant Wesfarmers announced on Tuesday that due to ongoing high inflation, the company will merge its department store Kmart and discount retailer Target (New York Stock Exchange ticker: TGT) business divisions in an effort to reduce losses.

As overall market conditions continue to deteriorate and customers face a rising cost of living crisis, Wesfarmers has decided to merge the two flagship brands into one entity.

Kmart Group managing director Ian Bailey said in an email to Reuters: "This announcement is about the restructuring of our internal support departments, and it will not affect Kmart or Target stores."

Wesfarmers' retail operations generate about AUD 9.6 billion (approximately USD 6.49 billion) in revenue annually across several entities, and the organizational restructuring is aimed at enhancing operational performance.

According to an interview with The Australian Financial Review, the two brands will continue to operate as separate consumer-facing businesses, with no impact on retail store sales staff, except for "a small number of redundancies." Bailey said in the interview: "Our business will be adding more jobs a year from now."

Wesfarmers owns brands such as Bunnings, Priceline, and Officeworks. The company announced this news to its employees on Monday and made the matter public through The Australian Financial Review later that day.

According to The Australian Financial Review, Kmart CEO John Gualtieri will be responsible for the daily operations of the merged Kmart and Target stores.

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Merger and Acquisition(M&A)

Mergers and Acquisitions (M&A) refer to the act of one company acquiring, merging with, or purchasing another company to achieve strategic objectives.

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