Warehouse sales slip - says no profit growth this year

Warehouse Group reiterated its forecast for no growth in full-year earnings while posting a drop in third-quarter sales because of weak demand for music, DVDs and winter items.

Full-year 'adjusted' profit would be similar to 2009's $85.2 million, the biggest retailer on the NZX 50 index said in a statement today. Sales fell 1.9 per cent to $376 million in the three months ended May 2.

The drop in sales "was almost entirely due to a continued contraction in the music and DVD market and a very slow start to winter with unseasonably warm weather impacting key categories such as winter apparel and heating," said chief executive Ian Morrice.

Shares of Warehouse last traded at $3.57 and have slipped about 7 per cent in the past month amid signs consumers have been less inclined to spend and the housing market, which used to make people feel wealthy, remains moribund.

New Zealand retail sales rose a smaller-than-expected 0.2 per cent in the first quarter, seasonally adjusted, and dropped 0.5 per cent when auto-related industries were excluded.

Sales at Warehouse's Red Shed department stores fell 2.6 per cent to $323.8 million. Same-store sales were down 3.3 per cent after adjusting for last year's extra week of trading.

Warehouse Stationery recorded a 2.2 per cent gain in third-quarter sales to $52.2 million, or up 11.2 per cent on a same-store basis.

Morrice said adjusted NPAT for the full year would be similar to 2009 earnings, subject to material adverse changes.