Coles and Bunnings were the top first-quarter perfomers among Wesfarmers' retail businesses, with the Perth-based conglomerate also reporting weak performances by its Target and Kmart divisions.
Coles increased sales by eight per cent to $8.09 billion in the three months to September 30, but it faces challenging trading conditions in the lead up to Christmas.
Within this total, sales at Coles convenience stores jumped by 17.7 per cent while Coles food and liquor sales increased 5.5 per cent from the previous corresponding period.
Sales at Wesfarmers home improvement business (Bunnings) increased 8.5 per cent to $1.73 billion, up from $1.59 billion.
Wesfarmers also said sales at Target declined by 1.4 per cent while sales at Kmart increased by just 0.1 per cent.
Total home improvement and office supplies sales increased 7 per cent to $2.09 billion, up from $1.95 billion.
Wesfarmers managing director Richard Goyder said he was generally pleased with the results, particularly given that consumer sentiment had remained subdued throughout the quarter.
"A highlight of the result was the strong sales momentum in Coles and Bunnings, with both businesses continuing to build on the solid results achieved in 2011," Mr Goyder said in a statement.
Bunnings sales increased in both consumer and commercial areas due to improvements in the customer experience, category enhancements and strong growth in the store network, he said.
But Target continued to experience difficult trading conditions, with sales negatively affected by ongoing price declines and a high level of promotional activity in the market.
Coles managing director Ian McLeod said the first quarter results represented strong progress in a tough retail environment.
"We have maintained momentum from the last quarter despite annualising strong comparable sales growth numbers," Mr McLeod said.
The growth came alongside the transformation program being rolled out across the business as well as the customer response to the Down Down campaign.
"However, weak consumer confidence in the face of rising living costs will continue to make trading conditions challenging in the lead up to Christmas," he said.
Coles experienced food and liquor price declines of 1.8 per cent during the quarter due to lower prices on groceries and lower fresh produce inflation as crops began to recover from flood and cyclone damage earlier in the year.
The company's easy Warehousing neared completion in the second quarter of the financial year and Coles refurbished 10 stores in the new format.
It opened three new stores and closed two stores during the quarter.
Six new liquor stores were opened and five were closed during the period.
Coles Express performed well in the quarter with comparable fuel volume growth of 5.2 per cent and Coles Express opened three new sites during the quarter.
John Gillam, managing director of home improvement and office supplies, said the business was focused on driving further service improvements for consumer and commercial customers, expanding categories, enhancing merchandising, growing the network and reinvesting in existing locations.
In the home improvement business, three Bunnings Warehouses and two trade centres were opened during the first quarter.
Significant price falls across a number of categories, particularly technology and furniture, had an adverse impact on sales growth in the office supplies business.
Difficult trading conditions continued through the first quarter as sales declined at Target.
"Trading conditions were tough, August was the only month with a positive sales outcome and we are seeing the poor sales outcome in September extending into October," Target managing director Launa Inman said.
"In particular, sales of electrical related goods and entertainment categories were well down on the previous year."
Target refurbished 13 stores during the quarter, while two new stores were opened and no stores were closed.
Kmart managing director Guy Russo said the apparel and home categories performed well during the quarter but there was a softer performance in areas that had recently undergone a significant range or promotional change.
Shares in Wesfarmers slipped two cents to $32.16 by 1016 AEDT.
