Wesfarmers is expected to begin its post-Coles era with a lot less debt thanks to the businesses it has offloaded, but a fall in earnings from Kmart is expected to be a drag on its half-year results.

The company has predicted it will post earnings before interest and tax of between $385 million and $400 million for its department stores division when it reports its half year-results on February 21.

Wesfarmers also said on Monday it expected to gain between $2.1 billion and $2.3 billion from the November demerger of its Coles supermarket division, $670 million to $680 million from the sales of its stake in the Bengalla coal mine, and $265 million to $275 million from it’s Kmart auto business.

Following the completion of these transactions and a few others, the company says it’s net financial debt was $300 million at the end of 2018, after previously being at $3.6 billion on 30 June 2018.

However, earnings from Kmart are expected to be hit by poor Christmas sales, an end to the sale of DVDs, and weaker clothing sales, especially in womenswear.

Wesfarmers says comparable store sales for Kmart are expected to decline 0.6 per cent in the half-year ending on December 31 on the previous corresponding period, excluding the gain on sale of the Kmart auto unit.

This will be partially offset by its Target stores where comparable store sales have risen 0.5 per cent on the previous corresponding period.

Managing Director Rob Scott said the company’s performance continues to benefit from its diverse portfolio of businesses and interests.

“All of our businesses continue to deliver a compelling offer to their customers, and Wesfarmers enters the new calendar year with a strong balance sheet and operating businesses well positioned for the future,” he said.