WFAFY (WFAFY) Q4 2026 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for holding, and welcome to the Wesfarmers 2026 Full Year Results Briefing. [Operator Instructions] This call is also being webcast live on the Wesfarmers website and can be accessed from the homepage of wesfarmers.com.au. I would now like to hand the conference over to the Managing Director of Wesfarmers Limited, Mr. Rob Scott.

Thank you very much, and hello, everyone. Welcome to our 2026 Full Year Results Briefing. I'm joined on this call with our divisional managing directors and our CFO, Anthony Gianotti. I'll start with a summary of the group's performance, followed by some comments on our strategic progress over the last year. I'll then hand over to Anthony to talk in more detail to our financials. I'll then conclude with some perspectives on our portfolio positioning and the outlook for the group. And then Anthony, the divisional MDs and I would be delighted to take your questions. So starting on Slide 4, a slide that we'll be familiar with many of you. It sets out Wesfarmers primary objective, which is to deliver a satisfactory return to shareholders. We define satisfactory as a top quartile total shareholder return over the long term. We only believe it's possible to achieve long-term value by anticipating the needs of our customers, looking after our team members engaging with suppliers in a fair and ethical manner, contributing positively to the communities where we operate, taking care of the environment and acting with honesty and integrity. And in the last year, our businesses have continued to make good progress in each of these areas. So turning to Slide 5. This year, we reported net profit after tax of $2.9 billion. Excluding significant items in the prior year, this represents an 8.3% increase for the year. This growth was underpinned by strong earnings contributions from our largest divisions: Bunnings, Kmart and WesCEF. The result reflects the resilience of our businesses and the strong execution of our growth in productivity agendas. Many of you will have heard me talk about the virtuous cycle at the heart of the Wesfarmers model. By running our businesses as efficiently as possible and keeping our costs low, we're able to keep prices low for customers and continue to invest in new capabilities and platforms. This investment helps to build stronger businesses for the future, creating fulfilling jobs for our team, all while delivering better returns to shareholders over the long term. As a result of the pleasing growth in profit, the Board has determined to pay a fully franked final dividend of $1.20 a share, which brings the total dividend for the year to $2.22 per share, a 7.8% increase. Turning to Slide 6. While we're pleased with our financial results, they really only tell part of the story. Over the past year, we've continued to invest in our existing businesses while building new businesses and revenue streams for the future. And this slide outlines these areas. So firstly, with our existing businesses, our focus is very much on reaching more customers and serving them better. Strategic partnerships with leading global technology companies have ensured that our team members have access to world-class tools that support them to be more efficient and to direct time to high-value tasks. In agentic commerce, we've launched AI-powered shopping assistance, Buddy at Bunnings, Joy at Kmart and Ollie at Officeworks and applications that help team members, especially in retail settings to better serve our customers. Across the group, the use of AI is all aligned with our people-first digitally enabled approach, which puts our team and customers at the center. We continue to bring more value and choice to customers as we renew and expand our offer at Bunnings, Kmart and Officeworks. We're also investing in new store formats, including the Kmart Plan C plus renewals, K Home and atomica and Health. Investments in distribution and fulfillment centers and new express delivery options make our online offer faster and more reliable. And we're also building new platforms that extend our growth beyond our existing businesses. At WesCEF the expansion of Mt Holland, which we announced in July is expected to double spodumene concentrate production, lowering unit costs and accelerating cash flows. Our growing retail media business continues to expand using the scale of our store network and customer reach to generate a new source of earnings. The new marketplace at Kmart and the developing marketplace at Bunnings are delivering very strong growth and provide customers with more choice across hundreds of thousands of additional products. And the Built Living joint venture is progressing and will deliver residential apartments faster at a lower cost and at scale through advanced manufacturing. Now turning to Slide 7, which provides some of the divisional highlights for the year. I'll let Anthony talk to this in more detail, but I just wanted to touch on an important portfolio action through the year. On the first of July, our Industrial and Safety businesses transitioned to Bunnings Group. This brings together businesses with market-leading positions and highly complementary customer bases and will enhance customer offers, drive incremental sales and unlock cost efficiencies. And we see this as a significant opportunity for Bunnings to strengthen its commercial capabilities and accelerate growth with small- to medium-sized customers. This is another example of our focus on creating long-term value through disciplined portfolio management. Now before handing over to Anthony, I just wanted to turn to Slide 8. And consistent with our objective, this slide sets out some of the broader progress during the year in the areas of team, community and environment. On safety, the group TRIFR has improved from 9.5 to 9.1 at year-end with WesCEF delivering a record result of 0.6. Across the group, 4% of Australian team members identify as Aboriginal or Torres Strait Islander people, maintaining employment parity. And we were proud to recently release our ninth Reconciliation Action Plan, which was our second at the Elevate level. And we've also made good progress on climate resilience, reducing group Scope 1 and 2 market-based emissions by over 20% during the year. This step change was underpinned by our retail divisions achieving their 100% renewable energy electricity targets in the 2025 calendar year. Now with that, I'll move to Slide 9 and hand over to Anthony.

Thanks, Rob, and hello, everyone. I'll start on Slide 11, where we've provided some further details on the sales performance across each of our divisions. I'll speak to performance across each of them in more detail on Slide 12, but overall, it was pleasing to see sales growth achieved across all of our divisions in the financial year. In our retail businesses, the group's well-established everyday low-price operating models continue to resonate with consumers supporting transaction growth across all of our businesses. Our marketplace has delivered strong growth in the year, extending our reach across e-commerce channels with gross merchandise value across Bunnings and Kmart marketplaces now exceeding $250 million. GMV in Bunnings marketplace grew more than 25%, reflecting strong demand for home and living categories and an increase in the number of vendors on the platform. On Slide 12, at a group level, divisional earnings increased 6.2% for the year, supported by strong results in Bunnings, Kmart Group and WesCEF and positive momentum in Health. Our retail businesses continue to execute well and their ongoing focus on productivity and cost discipline supported continued investment in low prices and customer experience while also delivering operating leverage with earnings growing faster than sales. I'll now step through the divisional results in a bit more detail. In Bunnings, sales growth of 3.9% was supported by Bunning's lowest price positioning, which underpins sales growth across both consumer and commercial customers and across all product categories and regions. Consumer sales growth was supported by strong demand for home repair and maintenance products, while range innovation and expansion drove strong sales growth in the tools, automotive, rural, pet and lifestyle categories. Growth in commercial sales reflected resilient demand as Bunnings strengthened its proposition through faster fulfillment and specialist services. Digital sales grew across all channels with marketplace continuing to deliver strong growth benefiting from the launch of the Bunnings commercial and services marketplaces during the year. Bunnings continued to progress a range of productivity initiatives, which strengthened its cost discipline and allowed further investment in price. Bunnings earnings, excluding property contributions of $2.45 billion represented an increase of 5% for the year. Kmart Group delivered earnings of $1.1 billion for the year, an increase of 6%. Kmart Group's strong value credentials and world-class product development continue to resonate with customers with prices dropped on more than 2,500 items during the year. Product innovation in Anko's one-up and two-up price tiers also continued to generate strong demand. Comparable sales growth in the second half reflected more challenging conditions for seasonal categories in the fourth quarter and the impact of a material deterioration in the exchange rate on Kmart's New Zealand dollar-denominated sales. Adjusting for the New Zealand dollar impact, comparable sales growth for the second half was above the first half. Strong earnings growth reflected Kmart Group's focus on productivity and cost control, which mitigated the impact of ongoing cost of doing business pressures during the year. WesCEF earnings increased 18.5% to $473 million for the year, driven by higher prices for nitrogen-based products and spodumene concentrate. In Chemicals, earnings decreased on the prior year due to the rapid rise in ammonia index pricing following escalation of the Middle East conflict. Given the price lag in sales contracts, this significantly impacted earnings in the second half, but will provide a benefit as index prices normalize into the 2027 financial year. In Energy, our earnings decreased due to a lower Saudi CP price, and in Fertilizers, earnings increased on the prior year, which was supported by a strong end to the 2025 season, partly offset by increased import costs in the second half of the financial year, again due to the Middle East crisis. In Lithium, the business delivered its first positive earnings with a profit of $40 million, which was driven by higher market pricing for spodumene concentrate and above nameplate production at the Mt Holland mine and concentrator. Ramp up of the refinery and the progression of qualification activities were affected by intermittent odor issues with the installation of mitigation measures initiated late in the financial year. In Officeworks, sales increased 3.7% and earnings of $165 million were 22.2% below the prior corresponding period, but in line with our previous guidance. Earnings were impacted by approximately $40 million in one-off costs associated with its transformation program, largely reflecting restructuring activities and the ERP-related costs. Successful execution of the program will structurally lower the cost base and provide a foundation for improved performance. The program remains on track for completion by the end of this calendar year. Wesfarmers Health continued to focus on its transformation program to accelerate growth and improve returns. Earnings of $92 million, excluding purchase price accounting adjustments, increased 12.2% on the prior year. Priceline Pharmacy's headline network sales increased 12.7%, which includes both retail and dispensary sales. Priceline's retail sales were supported by a positive customer response to differentiated price -- beauty, skin care and private label ranges and competitive pricing on key value lines. Digital sales also grew strongly, supported by the launch of the new Priceline Pharmacy app. MediAesthetics also delivered profitable growth, supported by a simplified operating model and digital health maintained strong momentum with growth in InstantScripts users and services. In Industrial and Safety, excluding Coregas, earnings increased 16.9% to $76 million, supported by a strong performance in Blackwoods, which delivered growing share in a challenging market and a higher earnings from Workwear Group. As Rob has already mentioned, Blackwoods and Workwear Group have transitioned into Bunnings from the 1st of July this year. And as a result, the Industrial and Safety division will no longer continue as a separate division and the financial contribution from these businesses will be included in Bunnings result moving forward. Turning now to Slide 13. Our other businesses and corporate overheads reported a loss of $170 million, which was in line with the prior year. The group's share of profit from associates and joint ventures increased by $42 million to $106 million, primarily driven by favorable property revaluations from the BWP Group and improved contribution from the group's investment in Flybuys, Wespine and Gresham. Group overheads were broadly in line with the prior year, while other corporate earnings decreased by $27 million. This decrease primarily reflected a lower group insurance result and the loss of BWP management fees following its internalization earlier in the year. Other EBIT includes the operating costs and investment in OneDigital comprising our OnePass membership program, acceleration of our group AI initiatives, investment in the group's customer and data insights capabilities and the group's retail media network. Total investment across these initiatives for the year was $73 million. As we said previously, the benefits from these investments will continue to be realized through incremental sales and earnings in our businesses. Turning to working capital and cash flow on Slide 14. Group operating cash flow finished 6.5% lower than the prior year due to deliberate investments in working capital in WesCEF and Health. These investments were temporary decisions our divisions made to strengthen availability to customers. In Health, inventory contingency was increased to protect ethical supplies against supply chain disruptions due to the Middle East conflict. Similarly, in WesCEF, investment in additional fertilizer inventory at elevated prices to minimize the impact of supply chain disruptions from the conflict in the Middle East adversely impacted operating cash flows. WesCEF also held higher spodumene inventories, which will be used as feedstock in preparation for the ramp-up of the covalent lithium refinery. Across our retail divisions, cash realization remained strong at 99%, reflecting disciplined working capital management. Overall, inventory remains in a healthy position with good stock availability across the retail divisions. Free cash flow for the year increased 15.8% to $4 billion with lower operating cash flows offset by the proceeds from the sale of Coregas and the sale and leaseback of 7 properties following the wind up of the BPI restructure during the year. Moving to capital expenditure on Slide 15. The group invested gross capital expenditure of $1.2 billion during the year, which was 4.1% higher than the prior year. The increase reflected major project spend across a number of our divisions, in Kmart and Officeworks, both commenced the development of new omnichannel supply chain facilities. In Bunnings, CapEx included investment in new stores and expansion projects with an increase in space growth, reflecting its focus on optimizing warehouse and smaller format stores. And in WesCEF, CapEx included spend on the Covalent Lithium project and the completion of the first phase of the expansion of the sodium cyanide facility. Proceeds from the sale of property increased for the period, which reflected increased disposals as a result of the wind-up of the BPI structure which resulted in net capital expenditure for the year, decreasing 29% to $779 million. For the 2027 financial year, we're expecting net CapEx for the group to be in the range of $1.3 billion to $1.5 billion. And this includes approximately $200 million of CapEx associated with the expansion of the Mt Holland mine and concentrator, which we announced in July this year. and increased investments as well in new stores, refurbishments and supply chain across the group. Turning to balance sheet and debt management on Slide 16. The strength of our balance sheet continues to provide the group with significant flexibility and capacity to support future investment. The group's net financial debt increased to $5.3 billion which reflected the distribution of $1.7 billion associated with the capital management initiative in December last year. We continue to actively monitor the group's debt mix, and we manage exposure to variable interest rates. Lower average cost of funds for the year reflected lower cash rates for the majority of the financial year, combined with our low fixed rate bond program. Our finance costs, including the component of interest that was capitalized increased 8% to $202 million. During the year, Wesfarmers debt-to-EBITDA ratio increased from 1.7x to 1.9x following the capital management initiative, but we have continued to maintain significant headroom against our key credit metrics. In July, S&P revised the group's credit rating downgrade threshold ratio from 2.75x to 3x debt to EBITDA, increasing the group's debt headroom within its current rating. The group retains considerable funding headroom and committed unused bank financing facilities of approximately $1.7 billion. In the 2027 financial year, total borrowing costs are expected to be higher due to higher levels of net debt, increased capital expenditure and a high cost of funds. And finally, to shareholder distributions on Slide 17. As Rob has already mentioned, the Board has determined to pay a fully franked final dividend of $1.20 per share, bringing the total dividend to the year of $2.22 per share fully franked. This is consistent with our dividend policy, having regard to available franking credits balance sheet position, credit metrics and cash flow generation. In line with the recent practice, the group does intend to purchase shares on market to satisfy shares that are issued as part of the dividend investment plan. And with that, I'll now turn back to Rob to cover off on outlook.

Thanks, Anthony. I'll turn to Slide 19. And as said, Wesfarmers' primary objective is to deliver satisfactory returns to shareholders over the long term. But what I wanted to do in this slide was really to -- in a time when economic conditions are quite challenging for many people, underscore the importance of when businesses like Wesfarmers are generating profits and investing in their businesses, the broader benefit that we play to national prosperity. So we provide salary, wages and careers to more than 100,000 team members in Australia with wages of over $6 billion paid last year. Each week, our businesses serve millions of customers each seeing value and convenience in the goods and services that our team worked hard to offer. And in fact, this is probably the greatest source of value that is delivered back to the community through the amazing value we offer to customers. Across our customer base, we also serve 2.3 million Australian business customers across Bunnings, Officeworks, Blackwoods and Workwear Group. Our divisions help raise $102 million for community organizations across Australia and New Zealand. We're also one of Australia's largest taxpayers. Last year, we paid $1.6 billion to federal and state governments. And then this year, we will distribute $4.2 billion to over 470,000 shareholders with millions more Australians invested through their super accounts. Now turning to Slide 20. Before I discuss the outlook, I just wanted to make 3 points on how the group is positioned. First, our portfolio is strong. It consists of high-quality, resilient businesses that allow us to deliver satisfactory returns through the cycle. Second, we're making good progress on our growth and productivity agenda, which allows us to invest more in our customer offer and supports our future growth. And third, we have exposure to growing demand through our newer platforms with attractive long-term fundamentals, including opportunities in health, lithium and now modular construction and retail media. Of course, underpinning all of this is our disciplined approach to capital allocation and our strong balance sheet, which, as Anthony said, gives us flexibility to invest in our portfolio and consider new opportunities that may arise over time. Turning to the group outlook on Slide 21. Uncertainty about -- around the outlook for inflation, interest rates and house prices continues to weigh on consumer and business sentiment. Households are facing persistent cost of living pressures and higher operating costs are affecting business confidence and investment. And we've obviously been calling this out through most of this calendar year. Despite these challenges, Australian consumer demand remains resilient and Wesfarmers retail divisions remain well positioned to deliver on our corporate objective. Our divisions will continue to mitigate cost pressures through the execution of their productivity agendas. Bunnings, Kmart Group and Officeworks are well positioned to grow profitably and win a greater share of customer wallet supported by their lowest price positioning, expanding addressable markets and their broad customer appeal. This positioning will be reinforced by the ongoing development of the omnichannel assets and capabilities to drive incremental sales and earnings. For the first 7 weeks of the 2027 financial year, Bunnings sales growth was slightly stronger than the second half of the 2026 financial year assisted by some unseasonably dry weather in July. Kmart Group sales growth was broadly in line with the sales growth experienced in the second half. And Officeworks maintained positive sales growth with sales growth slightly below the second half. Now together with our joint venture partner, SQM, we remain focused on ramping up the Covalent refinery while optimizing production and sales of spodumene concentrate. Wesfarmers Health remains focused on executing their transformation program and capitalizing on health and wellness trends to further improve earnings and returns. Overall, I'm really pleased with the group's performance and strong execution of our strategic agenda, and we're well positioned to navigate a range of economic circumstances given the strength and diversity of the group. Now lastly, you would have seen that today, we announced that Mike Schneider will retire from his position as MD of Bunnings Group in February next year. I'd like to thank Mike for the exceptional contribution he has made to Bunnings and the Wesfarmers Group over many years. Mike will be succeeded by Rachael McVitty. Rachael will be an excellent leader and brings strong commercial and operational experience. She is currently the Chief Customer Officer, where she leads Bunnings store network and more than 50,000 team members. Rachael has been with the group for 17 years in a variety of roles. I look forward to working with Rachael to continue to deliver Bunnings strategic agenda. And we'll also have more opportunity to celebrate Mike's amazing achievements prior to his retirement later this financial year. So this succession process has followed the usual process adopted by Wesfarmers over years, and we're very fortunate to have such a depth of internal talent to draw on across the group. Now with that, we'd be very happy to take your questions.

[Operator Instructions] The first question today comes from Michael Simotas from Jefferies.

Good morning in WA. Good afternoon, everyone else. Look, just wanted to try to understand your view on the consumer as they face into your key retail businesses. We sort of look at the outlook commentary and some of the sort of numbers that you've given. Is it fair to say that there's been a slight moderation in demand generally, but it's happened at a fairly moderate rate. And then you've delivered some pretty good operating leverage over the last few years. Do you think in the current environment with demand and cost of doing business inflation coming, you can continue to do that over the coming 12 months?

Michael, it's Rob here. I might make some high-level remarks and I'll then hand over to Aleks and Mike Schneider, just to talk a bit more about the consumer. If you look at our commentary on the economy, the outlook, I would say it's very similar to what we talked about at our Strategy Day and very similar to what we talked about at the half year. We're not seeing a worsening of conditions. We're actually seeing a continuation of the conditions that we've experienced through much of 2026 calendar year. I think what's important to -- I know that you guys focus a lot on 7 weeks trading, and you try and interpret what does that mean for the year ahead. I would just give you -- I'd provide a bit of caution to how you analyze that. We did call out a couple of factors. Weather is not a reason to celebrate or commiserate results over the long term. But on a week-to-week basis, it can have an impact. As John Gualtieri can talk to, the supply of tech products can also have a short-term impact on sales. But the point I'd like to leave with you is that we are really just seeing a continuation of conditions where customers remain very discerning around how they spend their money and very value conscious given the cost of living pressures. So I might hand over to Aleks first and then Mike Schneider to give a bit more color. And they can also talk to your question on operating leverage.

Michael, just on consumer, consistent with what Rob said, very much a continuation of the themes that I talked to at the Strategy Day. So the overarching piece is that the importance of value is continuing to grow for our customers. We continue to see them become really focused when they shop and value seeking in their behavior. What does that mean for our business? The trend of fewer items in the basket is what we're seeing. However, the positive is our active customer base continues to grow, and our transaction count continues to grow, but we are definitely seeing customers become more deliberate in their shopping behavior. The other one that has continued within our business is the strong value proposition of our offer and the product innovation and really extreme value within our two-up price tier continues to resonate very strongly for our customers. So when we deliver quality and aesthetic at an extreme value price point. We continue to generate really strong demand for those price tiers within our business. So we feel across all of that, we're extremely well positioned in the current environment to continue to deliver value for customers and continue to grow our share of wallet and we continue to see growth across all of our customer cohorts, whether that's demographics or affluence levels. From an operating leverage perspective, there's a few factors within the result that are continuing within our business. So firstly, we maintained really strong pricing and inventory disciplines across the year and across the second half, which contributed positively to margin outcomes. It is an inflationary environment from a COGS perspective, but we work really hard with our supplier base to drive productivity across all of our sourcing business. We're also starting to see some benefits from the investments that we're making in shrink reduction initiatives, including our front of store gates across our store network. And clearly, FX is in a more favorable position in terms of mitigating some of the cost inflation we're seeing, both domestically and overseas as well, including the impact of fuel, which have been a material impact in recent months. Productivity is very much still on our agenda, and we're delivering really good productivity across our supply chain and across our store network from the ongoing digitization of our operating model, which is also continuing to mitigate some of the inflationary pressures. In terms of the look ahead, a lot of those things are in our base and will continue to play out in FY '27. Clearly, we've called out an elevated level of investment in FY '27 related to our next-gen commissioning. So we take over the site in October which means that we have a period of dual run costs within New South Wales with no benefit because we won't start to operate the site until early FY '28. We haven't quantified the impact of that, but clearly, it's a material enough impact to call out. What it will do is it will impact our ability to deliver operating leverage to the same degree as we have in recent years. However, I'll reiterate what I said at the Strategy Day, which is we're still aiming to grow earnings in F '27 and we are also aspiring to deliver earnings growth ahead of sales growth for the year ahead as well because of all of those other factors that I talked about. But clearly, the level of that operating leverage will be impacted by this very material one-off investment. I'll hand to Mike now. Thank you.

So just check with Mike. Mike is actually in Melbourne today on the conference call. So Mike, I just want to check if you're connected?

Rob, can you hear me now?

Yes, that's great. Thanks, Mike.

Michael, thanks for the question. And look, Aleks, obviously gave a really extensive answer, and there's not a lot of things here that we would sort of think differently on, particularly from the consumer point of view. I think what we've been very successful at doing over the last sort of 24 months or so is diversifying range growing in new categories. That continues to give us a strong customer acquisition pipeline. We're seeing that through the comp growth in some of those core categories. So we've been really pleased with that. I fully agree with Rob and with Aleks' comments on sort of the focus on value from the consumer. But I think that's really playing to the sort of capabilities that businesses like Bunnings have and the value proposition we put in front of our customers. So from that point of view, and then sort of looking into the sort of immediate next couple of months, what we can see with festive, with seasonal and through the sort of spring/summer campaigns that we're in a really strong position to participate and compete strongly. And I think that will benefit customers, but also benefit Bunnings from a sort of performance point of view. On operating leverage, we are pleased with the ongoing work that we're doing, continue to sort of demonstrate that through the work that we're doing on productivity. We're less mature than, say, a Kmart business on a global sourcing aspiration. So that's continuing to give us opportunities to deliver great value for customers, but also improve performance in the margin space. So as we look forward over the next sort of 12, 18 months, I'd anticipate the initiatives that we've got underway will continue to deliver operating leverage. But as I've said, probably every one of these results calls over 10 years, very focused on absolute returns over the long term as well, and we'll keep driving those really hard.

The next question comes from Shaun Cousins from UBS.

Another question for Mike around Bunnings and Mike, thanks for answering my questions over the years and best of luck to Rachael in the new role. If we think about Bunnings in the past has called out, macro drivers such as household disposable income, renovation activity, housing churn, housing value and formation, where the lifestyle demographic trends and technology. Several of these are quite weak at the moment, particularly housing churn and value following the federal budget. Can you talk a bit about how that -- how these negative factors impact Bunnings sales growth? Alert to the comment you made earlier around it being a diverse business. But you've got probably a more challenging macro outlook, and what happens to Bunnings sales as you have less housing churn. It seems to have been a driver in the past and there's less of it happening now?

Yes. Thanks. Great question. Shaun, I've enjoyed your questions over the years as well. So thank you for those. But for us, I think the point on diversified business is important because we've always thought to have a very resilient business balancing discretionary and necessity spend. There's a lot of characteristics that's still very favorable in the housing space. We've got a lot more people spending a lot more time working at home, doing things around the home, so we continue to see a lot of active participation. What's also really pleasing is sort of the attachment rates of the newer categories when customers are shopping in our stores. So coming in for a core mission and then adding on with some of the things in our more consumable sector. So that's performing well. And some markets are performing very strongly. In the Western Australian market, the South Australian market continued to perform very strongly on all the indicators we've seen and we've probably called out weaker economic performance in some East Coast markets now for a little while. So we're sort of established in understanding consumer behavior responding to that. And I think, ultimately, at the end of the day, even though housing churn is down, we still see housing as a long-term asset in our personal portfolio. So we really want to make sure that we invest in that, and that's what we're seeing customers continue to do. We continue to see activity on alterations and additions and there still is housing churn, obviously. So we're participating in that. So I think notwithstanding some of the sort of headlines you read about, we're seeing strong participation in our core categories. and ongoing attachment to those new ones. So we'll be watching it very carefully. We're working super hard to make sure the offer is strong, but our ability to outperform the market is something we've always been really focused on and will continue to do so.

The next question comes from Adrian Lemme from Citi.

Congrats, Mike, on your pending retirement. Always enjoyed our discussions. The Bunnings EBA, I believe, expires at the end of this month and to my knowledge, hasn't been renewed yet. You may not be able to give us a lot of detail. But can you give us a steer at all as to the level of wage growth we should expect in FY '27, might it be similar to the Fair Work decision of 4.75%, please?

Yes. Great question, Adrian. We've obviously had a long history of sort of making sure that the way we structure our EA, it really benefits our team plays to the sort of permanent base that we've got, and it has for a long time and remains well above GRIA. So we're well positioned around that. We've got long discussions underway with team and obviously with the SDA as well, and they are coming to a conclusion, which is great. We got to put that in front of our team pretty soon, but we don't anticipate anything above GRIA. We think we'll be able to strike a really good balance. And we model this through the P&L over a multiyear period. So our ability to sort of absorb the increases and offset those with productivity improvements across the business are well established. So I think our ability to handle that commercially is very strong. Our ability to reward our team is very strong and that's something we're really focused on. So I think that's sort of where we sit at the moment.

Thank you. The next question comes from Tom Kierath from Barrenjoey.

I've got one for Aleks. Just on the K Home format. It's been running a couple of months now. Can you maybe just step us through what some of the learnings are, which categories you're doing well? How are you kind of thinking about the rollout potentially?

Thanks, Tom. so we're really pleased with the early trading results of the first K Home at Box Hill. Some of the things that we've seen in there has been really reinforcing the opportunity we see on furniture and really creating a new market for extreme value price points in our furniture offer. The penetration of that within the box has been very strong, and we're seeing very strong cross-shop with furniture in a lot of the baskets in the store, which has been really pleasing. We've seen really strong basket sizes as well. So the transactions have been good, but once customers are in the store, they're really engaging with the breadth of the offer in the store, which has been really exciting to see and we're seeing really good penetration of our two-up price points within the store as well. So there's some of the early -- very early reads that we're seeing. We clearly have a lot more to do to understand the format and the way that customers trade over the course of a year and really how we optimize our inventory offer in there, particularly for the furniture side of things, which to date has been online only and really surfacing that in store, we can see a very strong demand for it. We're going to plan to open a second K Home store in November this year in Queensland in a very different type of catchment. And we haven't announced it yet. But I think that will be an important second data point in terms of the way that the store trades in a very different type of shopping center to the Box Hill store. And I'm sure we'll get lots of new learnings out of that, that allow us to optimize the format even further.

The next question comes from Peter Marks from Goldman Sachs.

One just on Bunnings and new categories into FY '27. Are you able to give us a bit of an update on how you're thinking about appliance as we look into FY '27 that can support that top line growth in Bunnings.

Peter, I really apologize that didn't come through very clearly. Can I just get you to ask the question again, please?

Yes. Sorry, Mike. Just thinking about how you think about category expansion into FY '27. Could you give us an update on appliances and anything else, any other categories which you've been thinking about for FY '27 that can support that top line growth in Bunnings?

Yes, great question. Similar to what we talked about at Strategy Day. We've got a number of different growth initiatives growing from the core of the business. So categories like tools and automotive and pet care. They've all gone through sort of Phase 2 and Phase 3 range expansion and innovation, which are continuing to perform well. We're just expanding our smart home category. We've got our EV charging category, our solar category. We've got rural now rolling out to 121 or so stores across the network. So all the things we sort of picked out at Strategy Day, we continue to execute on. What's really pleasing us is that they are all resonating with customers really well, and they're all solving different problems and projects around the home. So for us, that's really exciting. And when you start getting to sort of the solar space, that really plays across both consumer and commercial. So that's performing really well as well. So I think all will continue to be drivers as we go forward as well the categories like marketplace, you heard Rob talked to that before. We've been blowing away with the growth in marketplace over the last 12 months. That strong double-digit growth has continued into this financial year. So I've been really pleased with that as has been the takeup both of endemic and nonendemic retail media customers. So that one is still very nascent for us, but we think will be a really important earnings driver as the years go by as well. So I think foundations are good, the expanded categories are good. And I think that gives us some really positive things to chase as we head out this financial year.

Okay. Great. And any update on the appliance category in particular?

Yes, on appliances, we've got plans now signed off for the layout in about 78 or so stores, I think it is. So CapEx has been approved for that. We've got a couple of different brands. We're working with and looking forward to bringing that into market. Some of those will come in pre-Christmas and then in the second half. But if you've been in our stores, you'd have seen some promotional drops of dishwashers, washing machines and dryers. They're not brands that customers would necessarily know, but the value in them has been extreme and the take-up and sell-through has been fantastic, which really, I think validates the view that we can drive great volume in this with brands. And when you sort of sell the volumes of kitchens that we do across the Bunnings business, driving attachment rates to those makes that a really exciting category for us.

The next question comes from Craig Woolford from MST Marquee.

Just wanted to ask a question about the cost of goods outlook for the retail businesses. I think there's always a lot of moving parts, and this year is no different, but I'd expect there's currency as tailwind, how you're managing that combined with the implications on either cost of goods from raw materials or packaging and higher sea freight costs?

Craig, it's -- look, as you rightly said, there's a very -- there's a whole lot of different cost drivers across a very broad mix of products that we sell. I might let Mike kick off with a couple of observations and then go to Aleks and John.

Yes. Thanks, Rob. I think, firstly, the work we're doing in the global sourcing space, which is really targeted sort of commodity-based entry-level categories is delivering a couple of things. It's delivering us some lower COGS, which we're obviously able to deliver greater value to customers, but it's also giving us a much better look through the broader supply chain. So raw materials and those things. really helping us understand and in some way, sort of replicate the amazing work that Aleks and her team do at Kmart. As I've said probably many times over the years, there's a mix of inflation and deflation across the board. We've got such a diversified portfolio from timber to greenlife to paint. And all of those things are growing or manufactured here in Australia, so immune from some of the global supply chain challenges. So from a COGS point of view, we're not sort of seeing significant inflation on COGS through the P&L. But obviously, we watch very closely what's going on globally, but then work very hard with our supplier partners and sourcing agents to make sure that we're really justifying any increase to cost because we're super mindful that it's challenging for our consumers out there, and we want to just continue to offer compelling value to them. I might hand over to Aleks.

Thanks, Mike. I think as I mentioned in my earlier comments, in terms of input costs across raw materials, it's a net inflationary environment. And clearly, the impacts of fuel feed into a lot of those raw materials as well. And then from a fuel and an ocean freight perspective, it is an inflationary environment, the strengthening of the Australian dollar plays a mitigating impact to all of that. And similar to what Mike said, our sourcing teams work really, really hard with our supplier base to continue to drive productivities through our entire supply chain and look to offset those impacts as much as possible to ensure we can continue to invest in value for our customer base. I'll hand to John.

Thanks, Aleks. I think I'll break the question up in 2. So we've got a private brand business. And it's like Mike and Aleks, we've been working through. And a lot of the cost of goods sold, you've been able to negate through scale through the partnership with Anko and through the reset of our merchandise strategy. Then if I just take a moment and talk a little bit about chips and memory. We've seen an increase in chips and memory. But the increase started last November, December, and our teams have been working with supply since that point in time to try to mitigate those cost increases. And so we've been able to secure, I think, better than market increase products for our customers as a result of the planning that we have been able to work with our suppliers. So that's kind of negated I think where the market's increased their prices. But we do have other areas where prices have flowed straight through to our cost of goods sold and working through with our suppliers.

Thanks. Just one for Aleks. Just you said that there was a net inflationary environment. Is that even after the currency and maybe the -- I guess, the implication there is that there's still hedges that need to roll off. Is that how we should think about it?

Yes. I mean I think we've talked about our hedging policy in the past. So we hedge 12 to 18 months in advance. So the spot rate impacts that you see don't flow through immediately. It's quite a progressive impact on the P&L, which is really important for us because it means we can plan our business well in advance. My point on the net inflationary is more in terms of raw material input costs across all of the different inputs. You've got your ups and downs, but overall, raw materials are in an inflationary cycle. But equally, we worked really hard on productivity with our supplier base to try and offset as much of that as possible.

The next question comes from Bryan Raymond from JPMorgan.

Just another one for Aleks on K Home actually. I just want to extend on the prior question there. I'd just be interested to see what you're sort of looking for out of these trials, how many trial stores you might need to do before you can really push go on a broader rollout, whether it's dependent on the DC being fully up and running before you can do that if the expenditure category is dependent there and also just how you see the opportunity in terms of space in the large format or stand-alone centers which you can look to roll that format out in?

Yes. Thanks, Bryan. In terms of what we're looking to prove out, it really is the economic the format. So sales density is a really key measure that we would look at, and we would want to really satisfy ourselves that we can generate really good sales density out of this format because if we can do that, the economic equation, clearly becomes a lot easier for the rest of the store. Outside of that clearly, we've got a lot to learn in terms of how we resource it, how we flow stock through to the store, and there will be a whole lot of operational things that we need to learn from. But sales density would be the key metric that we focus on from an economic perspective. The second one really is how does the format perform in different catchment types? And I mentioned the second store that we're going to do is in a very different type of shopping center to Box Hill, again, given it's a brand-new format with no trading history, really understanding the transaction frequency, the basket size of customers and how all of that plays out across different catchments is going to be important for us. On the supply chain perspective, we've sold for that through our existing facilities in Victoria, so it's not currently a constraint in terms of being able to roll out more stores over time, clearly, depending on the materiality and the number of stores in different states, we would need to look at supply chain solutions, but the supply chain at the moment isn't a constraint to doing more trial stores. How many would we want? I think realistically, a handful of stores in different demographics and different catchment types would allow us to get confidence that the results can be replicated more broadly. We're having really constructive conversations already with lots of landlords around opportunities nationally. So I'm confident that if we can prove out the economics and we can get good commercials in terms of available space that there is a rollout opportunity when we're ready to press the button on that.

The next question comes from Caleb Wheatley from Macquarie.

I was just interested if you could provide a bit more detail in, I don't know, the "nonretail income streams." And I guess I was particularly focused on Hammer Media, I appreciate it's still quite early, but it has been sort of up and running for maybe a year or so now. But then even your comments on marketplace and the growth that's coming through there. So just kind of broader sense across the business, what's the sort of materiality of those sort of nontraditional income streams? And how are you thinking about sort of the opportunity for that to become more meaningful in a group sense?

Caleb, Rob here. I'm assuming you're meaning the nonretail businesses within the retail divisions because clearly, we have when you actually look at the higher -- some of the higher growth rates of earnings were delivered in WesCEF and Health division this year, and we would expect that to continue. But going back to the point that you mentioned, we are still at the very early stages of our journey in terms of retail media and marketplace. We did call out that we've seen very significant growth in both, albeit off a low base. On the media side, and look, I might let Mike make a few comments because Bunnings has made some amazing progress, but it is also worth noting that we've also seen really pleasing progress with retail media in Officeworks, in the Health division and also through some of the nonendemic partnerships that we've entered into through OneReach, which Leah Balter is overseeing. So I'll let Mike talk to that. On the marketplace side, if you look collectively at the Bunnings and Kmart marketplace, we grew marketplace sales by over 70% this year. And importantly, those sales are profitable sales for the group. And actually, the more we grow the marketplace, not only are we better leveraging the amazing traffic that we have across the group, the digital traffic we have across businesses like Kmart and Bunnings, we're also creating additional opportunities for businesses like Target and Officeworks that are participating on those marketplace platforms. And then it is creating this flywheel effect because then the opportunities around retail media are accelerated through that as well. So we are very excited about continuing to expand the marketplace sales. But I'll hand over to Mike just to give a bit of context on some of the retail media strategy and growth.

Yes. Thanks, Rob, and thanks, Caleb. I just want to add a couple of points, too, on marketplace. So it continues to grow really well for us. It grew about 30% in the last financial year, and that sort of growth continued into the new financial year. We're now at about 310,000 SKUs and 616 partners that we're working with. And just to sort of remind everyone, this is a curated marketplace that focuses on things for the home. And that's now turning up in about 25% of all online shopping basket. So our customers really get it. It's deeply integrated into our digital ecosystem and performing really, really well. And I think that's something that continue to drive and grow in years ahead, launching it in New Zealand next month. And as Rob touched on earlier, we've got services and commercial marketplaces running. So really pleased with that. On retail media, I think Bunnings is uniquely positioned to really drive growth here because of its branded strategy. We are a house of brands. We've got fantastic participation from our endemic supplier, so our existing supplier base. but also really strong interest, which we're working in partnership with Leah and her team at OneReach on around nonendemic and brands that want to participate. So brands like Toyota and American Express even promoting things like federal elections and things like that. We've been able to sort of really participate in lots of different ways. We've got close to 600 screens across our sort of store fleet and continue to grow that. Our Tradio retail media, radio station is performing very, very well. It's outperforming expectations on ratings. So I think incredibly well equipped to sort of grow that. As you know, Caleb, it's only really been running for sort of 12 or so months. So not material to earnings at this point in time, but really excited to see where this goes. And I think really demonstrates as a group, what Wesfarmers can really do in this space just because of the retail brands we have, the connection to suppliers, but also the incredible customer data that we can use to generate real engagement and personalization for the customer, but real value for endemic and nonendemic suppliers as well.

Thank you. The next question comes from Benjamin Gilbert from Jarden.

Rob, just maybe you can help me around the outlook for WesCEF. There's obviously a lot of puts and takes that's sort of sitting within there. It feels like you're potentially seeing more headwinds than not in the WesCEF business ex lithium for fiscal '27. And when we put it all together, do you think there's still scope to grow given some of these cost impulse? And then second part -- sorry, just on the lithium side. You've obviously talked about the odor issues and those sorts of things and you're obviously going to have half of that contracted out for the spot. Are you still expecting quite a material uplift, obviously, given some of the pricing tailwinds netted against some of these other issues, et cetera, running for the plant.

Ben, I'll let Aaron talk to it in more detail. But we certainly weren't trying to convey a negative outlook. In fact, as Aaron will talk to, there's actually quite a number of benefits that should flow through as a result of recent capacity expansions, some recontracting benefits, et cetera. I know that we do -- just because, obviously, the business is always subject to global commodity price changes, weather impacts et cetera, we always kind of include those risk factors in all of our commentary around outlook. But I'll hand over to Aaron to talk to the specifics.

Yes. Ben, just starting with the WesCEF core portfolio, and then we'll touch on lithium. I think it's actually -- it's a positive outlook for us for FY '27 across a few factors. The first is we've published what I think is a helpful chart in the WesCEF section showing the impact of the ammonia curve. Obviously, as ammonia prices are kind of retracing and normalizing after the Middle East situation, are we going to get that benefit in FY '27. So we're already seeing that in our -- the first quarter of this financial year, that will start to drop into the earnings. We've been on a long program in the last few years on capacity expansion. So we are well down the path on the sodium cyanide expansion where we're lifting production by about 30,000 tonnes. That will be complete at Christmas this time -- sorry, Christmas this year, and then you're going to get a full 12-month benefit in FY '28, but you'll start to see the earnings uplift in FY '27 from that. There's also been an increase in the ammonium nitrate margins. That's been something that the wider industry has been talking about for a few years as the supply/demand imbalance is kind of normalized. There's been really strong iron ore production growth up in the Pilbara, and we have benefited from recontracting with some of our key customers. We tend to do that on a 3- to 5-year cycles. We've just renewed a material contract that will start benefiting in FY '27. So really on that core chemicals portfolio within WesCEF, FY '27 is really a year where we start to harvest a lot of the benefits of capacity expansions and work that's been underway for the last few years. And so I see that as a positive story. Over on lithium, as you said, we've flagged here that we expect to sell at least half of the nameplate production from Mt Holland. That is good margin business at the moment. Obviously, you saw a profitable FY '26, but that is going to step up in FY '27 for lithium because Mt Holland is running at nameplate capacity, you're getting a good cost position as a result of that at unit costs. And I'm not going to call lithium prices, but we've already made some sales, material sales for the FY '27 year in spodumene and attracting the current spot price as you're making good money on those tonnes. The second half of FY '27 will really be around the pace of the hydroxide refinery ramp-up. If that is slower than expected, we obviously have the benefit that we can offset that by selling more spodumene at profit.

And the other issues, is that -- that's just going to be the other half just in terms of the ramp, right? So if there's more delays around the ID, you can just put more into spot at spot, is what you're saying?

I mean that's the -- I suppose, the benefit of a vertically integrated operation. We have that flexibility embedded in the business model that we can quickly allocate any spare spodumene tonnes at that good profitable margins at the moment into the spot market.

The next question comes from Richard Barwick from CLSA.

I've got another question for Aleks on Kmart. Can you just clarify the planned C stores, Aleks, 20 converted in FY '26. Are you planning on adding 20 more, is it 40 more into '27?

Richard, we're planning up to another 20 this financial year. So we've already launched some incremental ones. And then in the second half, we'll look at the rollout profile as we scale the format and as we optimize based on the learnings of having an expanded number of stores across the fleet.

And that sort of conversion, Aleks, is that -- like is it disruptive? Should we be thinking about the conversions at least in FY '27 as a drag on earnings? Or is it -- are they actually additive?

No. Look, the objective through the refurb program is to try to minimize the disruption as much as possible so I wouldn't be calling any material dilution to sales or profit as a result of the conversion program.

Okay. And just to second one, you've said that you won't give us a number for the drag from the bringing in the new fulfillment center. But can you clarify, is the impact going to be contained to FY '27, or is this going to sort of flow in terms of dual running costs and stuff into FY '28 as well?

Yes. The biggest impact is this financial year because we take the facility on in October and then commence our part of the fit out, which means we're paying rent on a facility where we have 0 benefit, while at the same time, a lot of the technology investment hits the OpEx line as we get into FY '28, it will be a progressive transition from the old facility into the new one, and it will be a progressive benefit realization as well. So it's really this year where we have the material cost impact with no benefit attached to it.

The next question is from Phil Kimber from E&P Capital.

I was just going to follow on from Ben's question around lithium. Just in particular, how the ramp-up of hydroxide works. While that is in ramp-up, are you actually reporting sales at just basically no margin for that business as customers are testing the product? Or do you actually report sales, but they're basically offset by costs during ramp-up while that occurs. And just trying to understand initially how long does it take, is it -- when it's at a decent run rate and starts becoming profitable, at that point, it starts being recorded in the P&L or is it capitalized? I just -- I wasn't sure how it worked through that ramp-up period.

There's a few elements into that question. I might just touch on the qualification process and what we -- how we sell those tonnes first and then come to the capitalization piece and hopefully, that gets you there. The first part, when you're selling lithium hydroxide, which is obviously very different to the spodumene market. There's an open spot price. We can sell that at good profits, as I mentioned, to Ben. On hydroxide, we are going through the qualification process. But in the meantime, we have sold lithium hydroxide at very close to the index price. But because you're unqualified, there is a small discount versus the headline index price. But at the moment, that hasn't been an issue. It's a good quality product. There's plenty of battery makers and Chinese buyers that will buy that off that spot reference price. Ultimately, once we complete the customer qualification process that we've spoken about before and you start hitting your commercial quantities, we'll be then selling under our commercial agreement, which once again will follow the reference prices with other mechanisms in there. At the moment, the refinery costs on a unit cost of production are being capitalized under the standards until you hit effectively a commercial scale of production, then those unit costs are capitalized. And the way it basically works is you have a long run estimate of what your future mature cost position should be per tonne. Any cost above that during the capitalization phase is taken to the balance sheet. So we'll need to make a decision during the ramp-up profile when we move from capitalization phase to expensing it.

Yes. And is that -- once that decision is made, is there like a catch-up on the bit that was capitalized? So you have to amortize that in one hit? Or does that sort of just stay on the balance sheet?

No, that will stay on the balance sheet and then be effectively depreciated over the life of the asset. But it's relatively small in the scheme of the initial construction CapEx.

The next question comes from Michael Simotas from Jefferies.

Just wanted to follow up on the commentary around Kmart's seasonal sales being a little bit weak in the fourth quarter. And specifically, whether the inventory associated with those categories is still being held or whether you have managed to work through it?

Thanks, Michael. As I mentioned earlier, I think we managed inventory really well throughout last financial year and really closed June with a really healthy inventory position. So we go through our normal markdown and clearance processes at the end of a season, which we have been doing and the impact would be well within kind of normal levels. So there's no abnormal clearance levels to speak of that you should be concerned about hitting the first half profit numbers.

The next question is from Adrian Lemme from Citi.

Thanks for a quick follow-up. Mike, I saw the lease extension on 62 properties with the BWP Trust was announced earlier this month. I was just curious in the context of the strong growth we've seen in industrial rents in recent years, where did rents land relative to the rest of the portfolio, please?

Relative to the rest of the portfolio broadly in line. I think the property team have got incredible experience sort of working through these. And obviously, we've got fantastic long-term relationships with our landlords as well. So there's nothing in that, that caused us any indigestion. They're long-term leases with lots of options. So very comfortable. Anthony might have something else to add that, that would really be all for me.

No, I think that's right, Mike. I mean that was really about extending the initial term of those leases and making sure that we have secured those for the longer term and very much under what we'd probably call standard Bunnings lease term. So nothing really to call out in terms of costs.

The next question comes from Peter Marks from Goldman Sachs.

Just one for Anthony, a bit of a housekeeping one on tax rates and net interest, maybe with net interest first, like stepped up to $264 million in the second half, I appreciate it's going up in '27, are you able to help like talk us through like the magnitude of that? Or any more help on that would be helpful. And then tax rate second half was a bit lower than what I was expecting. So just wondering how you're thinking about that into FY '27.

Yes. So thanks, Peter, for the question. A couple of things there. So on interest rates, we've tried to give a bit of guidance because clearly, there's been -- we benefited from certainly low interest rates. And if you look at the balance of the average rate and the average cash rate through the year, we benefited more from the interest rate reductions, then obviously, the subsequent interest rate increases were later in the year. You combine that with the fact that you then got an extra $1.7 billion, we paid out the capital management initiative $1.7 billion. So our base level of debt is higher. You combine that with the CapEx program that we've got. And that's why we've tried to just give you some guidance around the fact that borrowing costs will be higher. There's nothing sort of fundamental -- there's no fundamental issue with that, and we were still benefiting from the fact that we have about $3 billion of bond debt that's sitting on a fixed rate of about just above 3%. So we're still going to benefit from that. but we're obviously going to have more debt that's on variable terms that will be subject to interest rate increases, which we've seen occur through the financial year. So there's nothing sort of outside of that. I think we're just calling that out to make sure that you better understand how that's likely to flow through. Sorry, I've forgotten your second question.

Just the tax rate.

Yes. So during the year, we did have a bit of a tax benefit because we had some tax losses that we were able to utilize to offset some of the capital gains we will have got from the BPI property sales. So you will have seen our effective tax rate this year was a little bit lower, not massively, but a little bit lower than we would typically have, and that really came as a result of tax losses that we were able to utilize to offset capital gains on the BPI property sales. That should normalize into '27. We do have some further BPI property sales planned for FY '27, but that will be a lot smaller, so less of an impact.

The next question comes from Bryan Raymond from JPMorgan.

Thank for taking the follow up. Now I know it's been a lot of discussion on the consumer already. But I just want to be really clear around post budget performance in Bunnings. Have we actually not seen any impact -- have you seen an impact at all in Bunnings in terms of activity around some of those more renovation linked categories, let's say, as we've seen all the data coming out around activity in new listings and in terms of borrowing and so on is down certainly into double digits. So I'd just be interested if there's been any flow-on effect that you've seen to date?

Thanks, Bryan. Great question. Yes, couple of reflections. One, notwithstanding some of the reporting that is sort of occurring around housing and lending and those sorts of things. The data that we see still strongly points to very strong levels of equity in owner-occupied properties and things like that, which gives us confidence that there's still plenty of activity being done in the alterations, additions, repairs and renovation space. We haven't -- to be a little bit more specific to your question, we haven't seen anything noticeable post budget. Obviously, seasonally, the winter months can be a little bit quieter because of weather for projects getting started on site or even projects being done in and around the home, cold weather can make it hard for sort of painting and things like that. But I certainly haven't seen anything that's giving us any cause of concern. And as I said before, I think some of those fundamentals around people working at home more, spending more time around the home, and even not spending some discretionary money on going out and entertaining and doing more things at home, all are things that we benefit from. So yes, I think we -- as I said before, comfortable with where we're at, at the moment. And I think we've sort of got the mix, the assortment and the value proposition right to perform better than how the market performs, which is how we've always thought about this over the long term.

Okay. That's comforting to hear. Thanks, Mike, and thanks for answering my questions over the years and best of luck.

No, thanks so much, Bryan. Really appreciate it.

At this time, there are no further questions.

Well, thank you, everyone, for that. And if any further questions, please give Michelle and the team a call. Thanks a lot.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.