KEY POINTS:
Flat consumer demand has continued through November, The Warehouse chairman Keith Smith told the company's annual general meeting in Auckland today.
"As the Christmas trading season is such an important part of our sales and profitability, we will not be in a position to give earnings guidance for the full year until we release our interim result in early March 2007," he said.
Earlier this month The Warehouse Group reported first quarter sales of $382.4 million, up 1.6 per cent on the corresponding period last year.
Mr Smith said the sales for the first quarter reflected the patchy but overall flat consumer demand signalled by the company in September.
Today's meeting comes after a turbulent few months during which founder Stephen Tindall worked on a plan to privatise the company, but decided not to go ahead with it.
His pull back came after Australian supermarket giant Woolworths bought 10 per cent of The Warehouse, helping lift the company's share price.
The other member of the New Zealand supermarket duopoly, Foodstuffs, had previously bought 10 per cent of The Warehouse.
Both Woolworths and Foodstuffs were therefore in a position to block any formal takeover attempt.
Mr Tindall's family interests and the Tindall Foundation hold around 51 per cent of The Warehouse.
Today Mr Smith said the annual meeting gave him a rare opportunity to set the record straight on a few matters relating to Mr Tindall's takeover plans.
" When Stephen approached the board with thoughts on privatising the company, the board permitted due diligence being granted given the lack of competitive risk associated with him doing so and the potential benefits to shareholders from receiving a proposal.
"The board formed a committee of independent directors, appointed external advisors and assisted management with the due diligence process," Mr Smith said.
"Throughout this process, until notice of the intention to consider making a proposal was received from Stephen, the board believed strongly that there was nothing to disclose as the matters (including the likelihood that any proposal would in fact be received, and its terms) were entirely speculative.
"There has also been comment that there has been a 'lack of information' from the independent directors," he said.
"We reject these claims. Stephen's announcement to the market was made at a comparatively early stage in the process (when he had decided to make an offer in the near future, rather than when an offer was formally made), and the board and the independent directors responded with advice to shareholders as soon as possible after his announcement.
"The company during this period acted promptly and in accordance with its continuous disclosure obligations.
"As it transpires, the board has never received a proposal from Stephen and his associated parties."
Mr Smith also said today that further growth plans were likely to be developed by management in the coming year.
Reflecting increased confidence in the strategic direction of the company, the board had approved a significant increase in capital expenditure on the previous year.
"This investment is necessary to help us press home our advantages and cement further operational efficiencies in both The Warehouse and Warehouse Stationery."
Gearing of the company had improved following the sale of The Warehouse's Australian business and improved returns from the New Zealand operations.
Chief executive Ian Morrice said it was interesting to note that other retailers clearly saw more value in the company than the market was reflecting until their interest was declared.
"If a company's value is significantly discounted by the market to the extent that The Warehouse was only 6 months ago, then as the strategy unfolds and begins to gain traction the opportunities ahead for the group have aroused the interest of fellow large scale retail groups."
Mr Morrice said the company had quit "elegantly" exited from Australia for the right strategically reasons.
Shares in The Warehouse were unchanged early today at $6.90, having been as high as $7.06 early this month and as low as $3.44 a year ago.
- NZPA
