Warehouse profits up 17pc to $57.4m

Photo / Michael Bradley

The Warehouse lifted half year net profit 17.3 per cent to $57.4 million as a recovery in overall retail spending remains "patchy".

Revenue for the period from August 3 to January 31 slipped 0.5 per cent from the comparable period a year earlier to $918.9m. After adjusting for discontinued activities, the company said sales were up 0.7 per cent.

Last year's first half profit included a $7.4m post tax charge relating to the exit from fresh food and liquor.

Adjusted net profit for the latest period was $57m, compared to adjusted net profit of $56.8m last year, excluding unusual items, The Warehouse said today.

An interim dividend of 17c per share is to be paid, up from 15.5c last year.

For The Warehouse red sheds division sales of $821m were flat, after adjusting for discontinued activities.

After adjusting for the 2009 financial year's 53rd week, same store sales for the half year were down 1.2 per cent with second quarter sales down 1.1 per cent. Operating profit for the half year was down 3.2 per cent to $78.7m.

Group chief executive officer Ian Morrice said recovery in overall retail spending remained patchy with some specialist sectors seeing quite a bounce-back from the recessionary levels of 2008/9.

Department stores as a sector had not seen the lifts experienced by softgoods, clothing and appliance specialists in the second six months of 2009. The Warehouse's sales performance reflected that, Morrice said.

The Warehouse division had maintained strong overall margin performance achieved in the first half of the 2009 financial year, but having planned for increased sales which didn't eventuate, it had been necessary to clear more seasonal inventory than the same period last year. That affected gross margins.

Progress was being made on growth initiatives, but those gains were not yet sufficient to offset the exit from fresh food and liquor and sales shortfalls in other areas, Morrice said.

Warehouse Stationery reported sales up 8.7 per cent to $96.2m, while after adjusting for the 2009 53rd week same store sales for the half year were up 7.2 per cent with second quarter same store sales up 10.2 per cent. Operating profit was up 139.8 per cent to $3m.

The improvement at Warehouse Stationery reflected a focused approach to trading with customer visits increasing and sales recovery being achieved across most categories, said Morrice.

Sales were expected to recover to levels at least equal to the 2008 financial year having experienced such a significant drop in consumer spending in 2009. Subject to any material change in expected trading conditions, adjusted full year net profit for the group was expected to be similar to adjusted net profit for the 2009 financial year.

- NZPA