RPT-UPDATE 1-Australia's Wesfarmers to retain Kmart stores

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MELBOURNE, March 19 (Reuters) - Australian conglomerate Wesfarmers Ltd (WES.AX: Quote, Profile, Research, Stock Buzz) decided to retain the Kmart discount store chain it bought as part of its $18 billion purchase of retailer Coles Group.

Following a strategic review, Wesfarmers Managing Director Richard Goyder said on Wednesday the group had been encouraged by Kmart's improved performance in the latter months of the first half of the financial year and the prospects for growth.

Kmart managing director Larry Davis, who led a turn around in the performance of Coles Group's Target stores before heading Kmart, opted to retire.

Wesfarmers said the position would be filled by Kmart's general manager of merchandise, Mark Goddard, until a permanent replacement was recruited.

There had been speculation that the company might sell Kmart to help pay down debt.

Wesfarmers spokesman Keith Kessel said the company had no need to sell any assets due to the Coles transaction.

It was also confident of refinancing A$4 billion of debt this year, although at higher interest rates.

"As a BBB+ rated company, we expect to complete the refinancing, albeit at higher interest rates than would have been the case last year," chief financial officer Gene Tilbrook told Reuters Basis Point.