Wesfarmers, the Australian conglomerate, has decided to keep the Kmart retail business.

Kmart, a struggling division of the Coles business that Wesfarmers acquired in November, is understood to have performed "better" in the last few months.

"The focus on an enhanced product offer and a better value proposition for customers will continue," said Richard Goyder, managing director of Wesfarmers.

"The board will monitor performance over time, as it does with all Wesfarmers-owned businesses."

When plans for the acquisition of Coles were originally outlined in August last year, the company said Kmart would be operated as a separate division while they undertook a "detailed strategic review of the various options for the business".

Goyder, meanwhile, also announced the retirement of Kmart managing director, Larry Davis, at the end of April.

Mark Goddard, Kmart's general manager of merchandising, will take the reins until a permanent replacement is found.