Warehouse predicts 2013 profit growth

The Warehouse expects adjusted profit in the 2013 year will likely beat last year's $65.2 million. Photo / NZH
The Warehouse expects adjusted profit in the 2013 year will likely beat last year's $65.2 million. Photo / NZH

Warehouse Group, the country's biggest listed retailer, reiterated its forecast for this year's earnings to beat those in 2012, and sees signs of growth in consumer spending.

Chairman Graham Evans told shareholders at today's annual meeting that adjusted profit in the 2013 year will likely beat the $65.2 million and the retailer will update that guidance when it releases first-half earnings in March. Warehouse sees signs of growth in non-food retail sales and expects further improvement in the coming year.

"Having assessed a number of factors including the shorter-term impact of the group's strategic plan and reinvestment programme, the board is of the view that adjusted earnings for F13 are likely to be higher than achieved in F12," Evans said in speech notes published on the NZX.

"We expect consumer spending in the non-food sector to continue improving over the next 12 months, but the extent of any underlying growth remains uncertain."

Warehouse increased first-quarter sales 1.9 per cent to $377.3 million on the strength of its stationery unit. The retailer has finished the first year of a turnaround plan that aims to deliver a better shopping experience for customers via investment in its chain of stores. That's seen it develop new channels to distribute products, including a website offering customers discounts.

The shares were unchanged at $3.15, and have gained 5.7 per cent this year. The stock is rated an average 'hold', based on eight analyst recommendations compiled by Reuters, with a median target price of $3.05.

The company's earnings will be "significantly influenced" by the January quarter, which includes the Christmas trading period, Evans said.

Other retailers have downplayed the prospects of strong Christmas trading, with children's clothing chain Pumpkin Patch this week signalling stores are still discounting their wares.

Evans said the board sees potential in Stephen Tindall's alternate director, Robbie Tindall, and has embarked on a mentoring role to develop his skills.

- BusinessDesk

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