Wesfarmers reported FY22 EBIT down 4%. However, as COVID-19 impacts eased, 2H22 EBIT rose by 10%. The strongest growth came from WesCEF and Kmart. Bunnings had a much stronger top line result in 2H, but its margins fell at an accelerating rate. We expect Bunnings margin pressure to persist over the next two years. Kmart’s margins should rebound in FY23e and WesCEF should have another strong year given higher prices. We expect the share price to come under pressure as Bunnings sales slow in calendar 2023.