Wesfarmers Limited (WFAFF)

How it makes money

Revenue is largely ordinary retail sales — customers paying at the checkout in thousands of Bunnings, Kmart, Target and Officeworks stores and online across Australia and New Zealand — plus industrial sales of chemicals, explosives and fertiliser to mining and farming customers. Bunnings and Kmart Group are by far the largest contributors, each generating tens of billions of Australian dollars a year; Officeworks and WesCEF are considerably smaller. Profit depends mainly on how well each division executes in its own market, not a single group-wide driver.

Bunnings, by far the group's largest earner, is Australia's dominant home-improvement retailer, with a scale of stores and supplier relationships that a new entrant would take years to match, and a brand many Australian households default to without comparison shopping. That advantage is real for Bunnings but does not automatically extend to Wesfarmers' other, less dominant retail chains.

The group mixes defensive and discretionary demand: home-improvement and pharmacy spending tend to hold up reasonably well in a downturn, while discount department store sales at Kmart and Target and office-supplies sales at Officeworks are more sensitive to household budgets. WesCEF's chemicals and fertiliser business adds exposure to commodity prices and agricultural cycles that have little to do with Australian consumer spending at all.