KEY POINTS:
The Warehouse Group said yesterday that its first-half profit was likely to be little changed from a year ago, blaming flat sales during the lead-up to the key Christmas period.
The discount retailer said net profit after tax for the half year ending January 27 is likely to
be similar to the $60.1 million recorded in the same period a year ago.
Chief executive Ian Morrice said sales performance for the second quarter to date highlighted a patchy and unpredictable retail environment, with the Christmas rush arriving very late in December.
Clothing sales continued to be the "stand-out" area but more competition made appliances and consumer electronics sales "difficult".
The company said it believed retail spending patterns would be unpredictable for some time.
Retailers' Association spokesman Barry Hellberg said that although it had been a "reasonable" Christmas, the growth factor for last month compared with December 2006 would probably be about 5 per cent, rather than the higher levels of previous years.
"In other years December-on-December growth has been more like 7-8 per cent," Hellberg said.
"We actually believe that that trend will continue throughout 2008."
Hellberg said larger companies like The Warehouse were particularly vulnerable to reduced growth.
"In the case of The Warehouse there are probably other factors that are relevant as well, which are higher oil prices and movements in the exchange rate which affect the major companies more than they do the owner-operator retailers."
The Warehouse shares closed down 2c yesterday at $5.78.
Last month, retailers reported a surprisingly strong Christmas, with electronic sales during the festive week alleviating concerns pre-Christmas shopping was in a slump.
But the pre-Christmas rush was not enough to produce strong December growth for many retailers.
Barry Monk, who owns Toyworld stores in Manukau and Sylvia Park, said sales were about the same as December 2007.
He said Boxing Day had given the Manukau store a huge boost, with sales around three times what they were the year before. The biggest growth area was outdoor activities.
Figures from electronic payment company Paymark, the network that processes three-quarters of New Zealand's Eftpos and credit-card transactions, show the value of Boxing Day sales rose by 33 per cent to $90.7 million this season but the value of Christmas Eve transactions was down.
Hellberg said there was a general view that the market had flattened in the past calendar year, largely as a result of the compounded effect of interest rate rises.
One company happy with its December sales was Paper Plus. Chief executive Rob Smith said they were ahead of last year.
"While there's no doubt it happened late, it did happen," he said. Like other retailers, the bookseller did well on Boxing Day, with forward planning softening the blow of discounted prices. "We had prepared for it and we had planned for it, so we were happy with the end result."
* An earlier version of this story wrongly attributed quotes from Barry Hellberg to Ian Morrice.