Kmart will open its second furniture and homewares-only store in November this year as it attempts to entice customers from the Philippines to buy low-cost products from its popular in-house brand Anko.

Retail giant and Kmart owner Wesfarmers’ chief executive Rob Scott said landlords and property owners had expressed strong interest in K Home, the chain’s furniture and homewares showroom that opened in Melbourne in June, which has been performing strongly.

“We want to test how the offer goes in different regional areas, so we’re going to open a second store in a regional shopping centre in Queensland,” Scott said on Thursday. “We are looking forward to opening more stores.”

Customers are not only buying furniture in the physical stores, but adding more home accessories to their shopping baskets, he said. But he added there was more work to do to the store layout to make it more inviting and increase profits.

“Whenever you launch a new store, you want to make sure you really get the model right, that you get it optimised before you ramp it up. So [Kmart managing director] Aleks [Spaseska] and the team still have a bit of work to do there,” Scott said.

“We find within the Box Hill store, it lends itself to a very high degree of trading intensity over the weekends, which is not uncommon for furniture. In other locations, we would expect more constant trade through the week,” he added. “Monitoring the trading patterns will be another important component.”

The chief executive made the comments after unveiling Wesfarmers’ full-year results on Thursday. Kmart’s sales rose 2.8 per cent to $11.8 billion and profits grew 6 per cent to $1.1 billion in what Scott described as a “standout, exceptional result”, although warmer-than-expected weather meant clothing sales came in slightly below expectations.

Meanwhile, sister chain Target’s apparel range is “starting to resonate”, attracting new customers and selling less stock on discount, he said.

Elsewhere, Anko Global, the international spin-off of Kmart’s popular private-label brand that constitutes about 85 per cent of all Kmart products, had “started to slow down” as a result of retailer anxiety around impending tariffs.

“It [was] quite challenging to actually get a lot of foreign retailers to commit when there was so much volatility around the tariff situation, so we’ve really just doubled down on our activities in the Philippines,” said Scott. Anko has opened six stores in the Philippines. “Subject to the performance of those, we will consider ramping it up over the coming years.”

Revenue across the Wesfarmers conglomerate rose 3.4 per cent to $47.3 billion in the year to June, and net profits excluding significant items lifted 8.3 per cent to $2.9 billion. The company also owns the Bunnings, Officeworks and Priceline chains, a chemicals, energy and fertiliser business, a health and pharmaceutical division, and an industrial supplies business.

Over the year, Officeworks’ sales lifted 3.7 per cent to $3.7 billion, with profits down 22.2 per cent to $165 million due to one-off costs incurred by moving its private label supply chain to Anko’s team in Asia to source directly from manufacturers, which Scott said would lower shelf prices.

About 10 to 20 per cent of Officeworks’ total range is unbranded private-label items such as tech accessories, stationery, arts and crafts sold under brands like J. Burrows, Studymate and Keji.

“We’re now using the Anko sourcing team in Kmart to help us procure those products direct from suppliers,” Scott said. “Officeworks are able to generate a better margin, so it’s more profitable for them than dealing with third-party distributors and agents.”

Bunnings grew sales by 4.1 per cent to $20.4 billion, driven by DIY home repairs and renovations as it broadened its range of tools, pet and automotive offers.

Bunnings chief executive Mike Schneider will retire in February, with chief customer officer Rachael McVitty set to take over the role. Schneider joined the hardware chain in 2005 as a state operations manager and became managing director in January 2016. McVitty has been appointed deputy managing director and will step into her role on February 1.

Wesfarmers’ head office is based in Perth, but Kmart, Bunnings and Officeworks’ offices are based in Victoria. Scott said Wesfarmers had always had flexible work practices and said the southern state’s proposed work-from-home laws would reduce flexibility.

“Over 90 per cent of our team members don’t have the ability to work from home, so these laws would only apply to a very small proportion of our team,” he said. “Trying to legislate a particular requirement around working from home seems very onerous. It’s going to reduce flexibility.

“Common sense should just prevail,” he said. “In other words, it’s totally unnecessary.”

Wesfarmers will pay a fully franked dividend of $1.20 per share, bringing the total shareholder payout for the year to $2.22 per share.

Investors seemed disappointed with the result, with Wesfarmers’ share price down 4.6 per cent in late afternoon trading. Analysts from UBS and Jarden noted that Kmart, Officeworks and Bunnings’ sales growth for the new financial year was slightly below expectations.

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