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Warehouse earnings, sales drop - more pain in 2012

Earnings and sales fell at The Warehouse over the past 12 months and next year may be tough too. Photo / Michael Bradley.
Earnings and sales fell at The Warehouse over the past 12 months and next year may be tough too. Photo / Michael Bradley.

Warehouse Group, the biggest retailer on the NZX 50 Index, posted an 8.9 per cent decline in full-year earnings before items and said profit may decline in 2012, reflecting an uncertain retail sector and costs of sprucing up its stores.

Profit excluding unusual items fell to $76 million in the 12 months ended July 31, from $83.4 million a year earlier, the Auckland-based company said in a statement.

Net profit climbed to $77.8 million from $60.2 million in the previous year, when it took a $22.8 million charge on changes to depreciation rules. Sales fell 0.3 per cent to $1.67 billion.

The retailer said even though the economic outlook should help buoy consumer confidence, the global economic backdrop in uncertain and volatile, leaving doubt over scope of any growth in retail spending.

Government figures last month showed New Zealand retail spending grew 0.9 per cent, seasonally adjusted, in the second quarter, amid signs households were feeling more confident.

Consumer confidence rose to a seven-month high in August, according to the ANZ-Roy Morgan Consumer Confidence survey.

Profit before items in 2012 may slip to $70 million, with net profit of about $80 million, the company said today.

"Some pressure on earnings is likely to remain in the short term as we work through the early stages of implementing our strategy," chairman Graham Evans said.

Warehouse will pay a final dividend of 6.5 cents a share with a record date of Nov. 4. Its shares last traded at $3.45.

Warehouse 'Red Shed' department stores had annual sales of $1.46 billion, down 0.9 per cent. Same store sales also rose 0.9 per cent. Operating earnings fell 12 per cent to $112.7 million.

Warehouse Stationery sales rose 4.1 per cent to $201.5 million while same-store sales gained 4.6 per cent. Operating profit at the stationery stores rose to $10.1 million from $8 million a year earlier, when it recognised $1.2 million of charges for restructuring distribution.

- BusinessDesk

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