Wesfarmers says unlikely to sell Kmart unit

MELBOURNE (Reuters) - Conglomerate Wesfarmers Ltd (WES.AX), which won control of Australia's second-largest retailer Coles Group Ltd last week, said on Sunday it is unlikely to sell Coles' underperforming Kmart unit.

Wesfarmers had announced a strategic review of general merchandise chain Kmart and some analysts expected the stores would be sold.

Wesfarmers Chief Executive Richard Goyder said while he would not rule out a sale, it was very unlikely.

"There is a very slight possibility of disposing of the business. It is our strong bias to retain and build the business," Goyder told ABC Television's Inside Business program.

He said one option was to re-brand some of the 180 Kmart stores as the more successful Target clothing stores, or as the hardware stores Bunnings.

Discounter Kmart has been lagging its main rival, the Big W chain owned by Woolworths Ltd (WOW.AX).

Coles shareholders last week overwhelmingly approved the A$20 billion ($18 billion) Wesfarmers offer, Australia's largest corporate takeover, and Coles shares were delisted on Friday.

Wesfarmers takes official control of Coles on November 23, and Goyder said the strategic review of Kmart would begin soon after.

($1=A$1.10)

(Reporting by Victoria Thieberger; editing by Tomasz Janowski)