Christmas cheer bypasses Red Sheds

Last-minute Christmas shoppers couldn't prevent a fall in sales at The Warehouse. Photo / Steven McNicholl

Sluggish retail sales over Christmas have hit The Warehouse, which warns profits could be up to 10 per cent down for the first half of this financial year.

The country's biggest non-food retailer says it expects adjusted group net profit for the six months ending January 30 to be between $51 million and $54 million, compared with $57 million for the same period last year. Its shares fell 8c yesterday to $3.42.

Total sales for the two months ended January 2 were down 2.7 per cent compared with the same period last year. Same store sales were down 3.8 per cent.

Warehouse Stationery sales were flat on last year for the two month trading period with same store sales up 0.7 per cent.

Group chief executive Ian Morrice said spending on consumer electronics, gaming, CDs and DVDs was well down.

"For us December is by far the biggest period of the year for those categories so they have a disproportionate share of our sales in this two months than they do in the rest of the year."

Sales of bigger ticket items such as televisions and gaming equipment were down "significantly" since the GST rise to 15 per cent in October.

"All the indicators that we had from the retail market is that sales in non-food in particular are going to be pretty soft in this season and it's difficult to say why consumer spending hasn't lifted year on year," Morrice said.

The early start to what has turned out to be a hot summer had helped other categories.

"The broader part of our business - seasonal items such as footwear and apparel - have performed pretty much in line with last year. Some of them are up and some of them are level." The group's half-year results will be released on March 11.

Retail Association chief executive John Albertson said he wasn't surprised at The Warehouse figures given the choppy Christmas spending across the sector.

"It was all over the place. The first part of December was strong, then it flattened off and in the last few days it came back quite strongly, then Boxing Day was down."

Across the sector, Albertson was expecting anything from nil to 2 per cent growth for the Christmas period.

"I don't think there's been a lot of movement on last year but the market has become a hell of a lot more competitive.

"It's probably reflected in the pricing of the home appliance-type guys."

Paymark figures showed spending on Eftpos and credit cards during the first 21 days of December rose 3.8 per cent on last year, but then fell 0.8 per cent in the final weekend before Christmas - normally one of the busiest times of the season.

Tight budgets and wet weather were blamed.

This came after retail sales fell the most in more than 13 years in October after consumers the previous month boosted purchases of home appliances and furniture before the GST increase.

Sales declined 2.5 per cent from September, the biggest since May 1997.

Albertson said retailers would not look on 2010 with any fondness but the Rugby World Cup offered some hope towards the end of this year.

The influx of tourists would be helpful but more important was improved sentiment, he said.

"My gut feel, the first three to four months is going to be pretty tough then after that is will start to improve."