News: WES UPDATE 1-Australia's Wesfarmers to merge discount stores Kmart and Target

(Updates with details, background in paragraphs 2-8)

July 25 (Reuters) - Australian retail conglomerate Wesfarmers (WES) said on Tuesday it will merge the business units of its budget department store Kmart and discount retailer Target as the group attempts to reduce losses amid persistently high inflation.

The operations of the two flagship brands would be combined into one entity as market conditions worsen while customers battle a rising cost-of-living crisis.

"The announcements are an internal reorganisation of our support offices and there is no impact to the Kmart or Target stores," Kmart Group Managing Director Ian Bailey said in an email to Reuters.

The Wesfarmers retail business delivers around A$9.6 billion ($6.49 billion) in annual revenue across the entities with the organisational restructure aimed to beef up operational performance.

The two brands would remain separate consumer-facing businesses with no impact on retail floor staff and only a "handful of redundancies", Bailey said in an interview with the Australian Financial Review. "We will end up with more jobs in the business a year from now."

Wesfarmers, which owns the brands alongside hardware behemoth Bunnings, Priceline, and Officeworks, announced the news to its staff on Monday with AFR reporting it publicly later in the day.

Behind the scenes, Kmart CEO John Gualtieri will run the combined Kmart and Target stores day-to-day, according to the AFR report.

($1 = 1.4786 Australian dollars)