Australian retailer Wesfarmers has decided to keep the Kmart chain, which it bought as part of the takeover of Coles last year.

Wesfarmers managing director Richard Goyder said Kmart had performed better and its growth prospects were encouraging.

Kmart’s product range runs from clothing to hardware through 182 shops in Australia and New Zealand. It is positioned as the store “where a happy lifestyle is affordable”. However, it had lost out in recent years to Coles’ stablemate Target and Woolworths’ Big W stores.

Goyder said he would refurbish between 20 and 30 Kmart stores a year and open more shops. “There’s been some confusion about where the business sits and where its future is, but we are pretty clear on where the brand is going,” he said

It is understood that about Aus$300 million (£136.2 million) will be ploughed into Kmart over the next five years and Wesfarmers is hunting for a new managing director for the chain. Incumbent US boss Larry Davis will retire at the end of next month.

Wesfarmers Aus$22 billion (£9.99 billion) acquisition of Coles last year made it Australia’s biggest retailer. After the deal, Wesfarmers drafted in Asda saviour Archie Norman to advise on Coles’ turnaround.

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