Warehouse sales up 1.1 per cent in October quarter

Discount retailer The Warehouse today announced a 1.1 per cent increase in total sales to $488.4 million for the October quarter.

The group's flagship "Red Shed" stores in New Zealand posted a 1.6 per cent increase in overall sales to $316 million, from $311 million for the same period last year.

But the Red Shed's same-store sales, which exclude newly opened stores, fell 2.6 per cent.

The Warehouse said in a statement the weaker same-store sales were mainly because of disappointing apparel sales, generally softer conditions in the non-durable retail good sector, and strong comparative figures for the year-earlier.

Chief executive Ian Morrice said in a statement The Warehouse had not benefited hugely from the recent housing boom.

"While headline retail sales reported by the Statistics Department appears strong, our analysis suggests that store-types that have a high level of exposure to new housing or house renovations such as whiteware, carpets and other durables are growing at twice the pace of those in the non-durable goods store-type sector such as ourselves," Mr Morrice said.

The group's troublesome Australian operation posted flat total sales of A$115 million ($127.3 million), while same-store sales fell 2.4 per cent.

But Mr Morrice said despite the flat figures, the Australian operation has sustained improvements in gross margins, giving him confidence heading into the Christmas season.

"Having addressed many of the merchandise issues that affected the business last year, the challenge now is to grow top line sales and achieve positive same store sales growth", he said.

Meanwhile, Warehouse Stationery, or the "Blue Sheds" recorded sales growth of 17.6 per cent compared with the corresponding period last year. Excluding sales attributable to the business-to-business operation, same-store sales were up 8.6 per cent.

But Mr Morrice said the Blue Sheds were undergoing a year of consolidation in 2005 and lower levels of sales growth were expected going forward.

Warehouse shares fell 14c to $3.90 in early trading today, having ranged between $3.89 and $5.90 over the past 12 months.

- NZPA