Kmart is one of Australia and New Zealand’s largest discount department store retailers and is focused on serving customers quality products at low prices in an easy to shop environment. We operate 184 stores, product sourcing offices in Hong Kong, China and India, and employ more than 25,000 team members.

Key categories for Kmart are toys, leisure, entertainment, home, menswear, womenswear, childrenswear, footwear, underwear and consumables. Kmart also offers customers a mix of its own brands such as Now, Girl Xpress, Alpha, Jackeroo and Homemaker as well as national brands such as Apple, Lego, Bonds and Tontine.

Kmart Tyre and Auto Service (KTAS) is one of Australia’s largest automotive service, repair and tyre businesses with 255 stores and is one of Australia’s largest employers of mechanics and apprentice mechanics with a team of over 1,250 people.

Throughout the year, we opened two Kmart and three KTAS stores, and closed one Kmart and 11 KTAS stores.

For more information on Kmart view their online Sustainability Report 2009.

The renewal of Kmart has begun! Wesfarmers appointed former McDonald’s Australia Managing Director Guy Russo as the new Managing Director of Kmart. Following his appointment, a review of the business was undertaken where all aspects from stores and supply chain to supporting functions (such as merchandise and marketing) were assessed, before a way forward for the business was developed.

From an environmental perspective, we engaged EnTech USB to manage our environmental data. This partnership ensures that accurate and robust data is captured for key environmental indicators, including energy use, waste, recycling and, in time, water used from our sites. We will now be able to effectively monitor our impact on the environment and identify opportunities for improvement.

This year has also seen Kmart develop a long-term strategy to reduce our environmental footprint. In addition, Kmart also undertook significant work to identify suitable alternatives to plastic bags and has removed single-use plastic bags throughout South Australia in response to legislation.

Kmart has expanded its community reach through a number of programmes. Once again the Kmart Wishing Tree Appeal was strongly supported by Australian and New Zealand communities. This year the Appeal collected over 400,000 gifts and $90,000 in cash contributions during the Christmas period.

Kmart also introduced a new programme that enables store teams to support local community groups through either donating goods or gift cards from stores. Some of the small groups that received funding included kindergartens, Rotary clubs, schools and emergency service volunteers.

The renewal of Kmart faces many challenges over the coming years. With our new management team in place, a strong focus will be placed on rebuilding a solid foundation for the business and a platform for sustainable growth.

At 30 June 2009, we had 26,469 team members working in our stores, national office, distribution centres and KTAS sites.

Within Kmart 69 per cent of team members are female and 31 per cent are male. In KTAS, 96 per cent of the workforce are males. Our leadership team is comprised of four male and three female team members.

During the year we undertook a comprehensive review of our safety and injury management functions with a new strategy being rolled out across the business during 2009/10.

We have continued with our Manager in Training programme throughout the year and have also introduced a new Store Manager Development Programme. The latter covers three main areas, including ‘managing myself’, ‘managing my team’ and ‘managing my business’.

Kmart developed a detailed environment strategy focusing on reducing our energy and water consumption, increasing the amount of waste recycled, and sourcing sustainable products for customers to purchase. The coming year will see us undertake initiatives from this strategy.

We have completed the required actions under ‘Year 1’ of our National Packaging Covenant Action Plan to reduce the amount of packaging we use and continued to roll out new recycling services to our KTAS stores. This year we recycled 83 per cent of the waste produced in our business, compared to 77 per cent last year.

Greenhouse emissions

Our total greenhouse gas emissions were estimated to be 257,087 tonnes of carbon dioxide equivalent (CO2e), down 17 per cent on last year, and this equates to 64.27 tonnes of CO2e per million dollars of revenue. This decrease can largely be attributed to introducing better reporting systems to accurately capture emissions from natural gas and LPG used in stores and distribution centres and lower conversion factors this year compared to last year. The greenhouse gas emissions were largely due to electricity consumption at our stores, distribution centres and support centres (approximately 89 per cent) and synthetic gases (approximately five per cent).

Energy use

Our main energy use during the year related primarily to electricity consumption at our stores, distribution centres and support centres. Total energy consumption was estimated to be 993,036 gigajoules. Our total energy consumption per million dollars of revenue was estimated to be 248.25 gigajoules. This energy use includes fuel (four per cent of total energy consumption) and electricity (90 per cent).

Energy efficiency initiatives

Kmart will undertake its first Energy Efficiency Opportunities (EEO) audit in 2009/10 at our Chadstone store and we will then determine opportunities that are suitable for implementation.

New building fire safety regulations were introduced in Queensland during the year. These place additional requirements on building owners and tenants and we are working towards becoming compliant.

Trolley fines continue to be an issue for Kmart, with one council impounding 155 of our trolleys. During the year, Kmart paid $21,942 in fines for abandoned trolleys and has now developed a trolley management plan that will be introduced next year.

We are not aware of any potential non-compliance during the year with licensing or approval conditions, except as set out below:

We failed to comply with a Noise Abatement Notice issued by the Environment Protection Authority Victoria relating to a generator at Kmart Bairnsdale. We were fined $5,671 and have now rectified the issue.

This year the Kmart community programme supported over 1,000 small community groups ranging from kindergartens to Rotary clubs, allowing them to continue their community work, either through fundraising or receiving goods from our stores.

The Kmart Wishing Tree Appeal collected over 400,000 gifts and $90,000 in cash that was given to our charity partners to distribute to families in need at Christmas. Christmas wrapping paper, cards and bears were also sold in support of the Appeal, raising a further $95,000 for our partners.

In total, our business contributed over $1.12 million of in-kind support directly to the community throughout the year. These figures are established utilising the London Benchmarking Group, and also show that our customers, team members and suppliers contributed a further $10.82 million of in-kind support. Almost 700 team members volunteered over 4,800 hours to assist community-based programmes during the year.

We have continued to engage with our stakeholders during the year through a variety of means including catalogues, forums for suppliers and team members, our internet site, and letters to relevant government bodies. Our customer relations department is the key point of contact for our customers once they leave our stores, and they received a total of 107,257 contacts throughout the year. Approximately 13 per cent of contacts were complaints, with the remainder being general enquiries or compliments.

Kmart has continued to support the economy through employing over 25,000 team members in Kmart and 1,284 in KTAS. During the year we opened two new Kmart stores and three KTAS stores, and increased the trading hours in the majority of Kmart stores by over 20 per cent, creating additional employment opportunities. Throughout the year, we contributed to the economy through the payment of $603 million in salaries and wages, as well as paying over $201 million to governments at all levels in the form of taxes, levies and royalties.