Warehouse sales for third quarter down 0.9 per cent

Discount retailer The Warehouse Group today said its sales for its third quarter were down 0.9 per cent on the same time last year at $489 million.

The group's sales for the nine months ended March were also down 0.9 per cent on the previous same period at $1.7 billion.

If the impact of the Australian exchange rate was removed, group sales for the nine months to March would have been 0.4 per cent ahead, The Warehouse said in a statement to NZX.

Chairman Keith Smith said that assuming no change to current trading conditions the group was on track to reach its full-year earnings guideline.

The group's New Zealand operations achieved sales of $328 million in the third quarter, which was 0.9 per cent ahead of the same period a year ago.

Year-to-date sales for the New Zealand unit was $1.15 billion, up 1.7 per cent. However, the all-important same store sales was down 2.5 per cent.

Group chief executive Ian Morrice said the rise in the New Zealand business' sales could be pinned to it opening five new stores over a 12-month period.

There are now 85 of the so-called Red Sheds in New Zealand.

"We are still in the early phases of the implementation of our strategy announced in March to improve our customer offer, and we are making good progress," Mr Morrice said.

"As customers start to see the benefits of lower prices all the time, we expect they will shop at The Warehouse even more often."

It had also introduced the price rollback programme in April, and was re-establishing its competitive product sourcing.

The Group's Australian unit again cast a shadow over the New Zealand unit's performance. Third quarter sales for The Warehouse Australia were A$100m ($106.9m), down 3 per cent.

Same store sales were down 4.9 per cent for the quarter, although Australian store numbers had fallen one to 124 in the past year.

For the nine-month stanza, the Australian business' sales totalled A$377m, or down 2.6 per cent on the previous comparable period.

"Third quarter sales in Australia were within expectations based on our focus on improving operating margins, and we remain on track to substantially reduce our losses this financial year," Mr Morrice said

The group's stationery unit -- Warehouse Stationery -- posted sales of $52.9m in the quarter, up 3.7 per cent on the previous same quarter.

"The increase this quarter was primarily a direct result of a positive sales performance achieved in the B2B (Business to Business) commercial channel," Mr Morrice said.

Warehouse Stationery sales for the nine month period were $149.6m, slightly less than the earlier period's $150m.

Excluding the B2B operation, Warehouse Stationery's same store sales were 4.7 per cent below the same period last year.

"While Warehouse Stationery benefited from 'back to school' sales falling into the third quarter rather than the second quarter, this was more than offset by lower sales of business machines compared to last year," Mr Morrice said.

Looking ahead, Mr Morrice said he expected full year earnings to be in line with the earnings guide issued in January.

At that time, the group said it expected full year earnings to rise between 8 and 16 per cent, to between $66m to $71m.

"We expect the group to be well-placed as increasing pressures on consumers generated by rising fuel costs and increased mortgage payments hit the monthly household budget," Mr Morrice said.

The group's July year profit would be released on September 9, he said.

Shares in The Warehouse last traded at $3.37 on Friday, having ranged between $3.30 and $4.67 in the past year.

Friday's closing share price was the lowest since February 1999.

- NZPA