Christopher Adams

Christopher Adams is the Markets and Banking reporter for the New Zealand Herald

Sales up at The Warehouse, profits dip

Staff members stock the Warehouse store in Royal Oak in Auckland. Photo / Dean Purcell.
Staff members stock the Warehouse store in Royal Oak in Auckland. Photo / Dean Purcell.

The Warehouse Group, New Zealand's biggest listed retailer, has reported half-year profit in line with guidance and a lift in sales across its various retail brands.

Adjusted net profit fell 12.5 per cent in the 26 weeks to January 26 to $46.2 million, compared with the same period a year earlier, the company said.

The Warehouse said sales across all of its brands - which also include Warehouse Stationery, electronics retailer Noel Leeming and online sportsgear seller Torpedo7 - saw a pick-up, resulting in 29.5 per cent lift in total group sales to $1.42 billion.

See its latest financial results presentation here.
See also: Warehouse moves into world of finance

Trading profit (what the company earns from its retail sales rather than other income streams like property sales) fell 3.1 per cent as a result of margin pressures the firm faced in its core Red Sheds (The Warehouse) business during the first quarter.

All the other brands increased their trading profit, the company said.

The Red Sheds reported a 6.2 per cent lift in half year sales of $920.1 million, while same store sales lifted 4.1 per cent.

"It has been at least a decade since the Red Sheds grew same store sales more than 4 per cent in a half and had 12 quarters of consecutive growth," said chief executive Mark Powell. "It is still early days but we are pleased with the progress to date. We believe that the actions we are taking to improve our products, prices, promotions and store environment and the investing our team members has started to bring customers back to The Warehouse, as New Zealand's house of bargains and home of essentials."

The company said Warehouse Stationery's sales rose 8.6 per cent to $9.6 million, while same store sales grew by 4.9 per cent.

"It is still early days but we are pleased with the progress to date. We believe that the actions we are taking to improve our products, prices, promotions and store environment and the investing our team members has started to bring customers back to The Warehouse..."
The Warehouse chief executive Mark Powell

The stationery division's operating profit of $4.7 million was a 28.1 per cent increase on the previous half.

Noel Leeming's sales rose 14 per cent to $328.8 million, with a 9.3 per cent increase in same store sales.

"This strong performance was a result of the merging of Bond & Bond with Noel Leeming, double digit sales growth in all major product categories and improved gross margins," the company said.

The Warehouse said Torpedo 7's sales increased by 30 per cent to $47.9 million, while gross margins grew by 400 basis points compared with the same period a year earlier.

The online retailer's operating profit for the half-year was $700,000.

The Warehouse said adjusted full-year net profit for the group was expected to be in the range of $67 million to $71 million.

The guidance includes earnings of from existing businesses of $70 million to $74 million and the impact of the company's move into financial services in the second half, which could result in losses of up to $3 million after tax.

The Warehouse declared a half-year dividend of 13 cents per share and is targeting an annual dividend of 19 cents per share.

- NZ Herald

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