The Warehouse Group says its third quarter sales rose 1.9 per cent with its flagship Red Sheds brand returning to positive same-store sales growth.

The latest result follows 2.7 per cent growth in first-half sales.

"We're encouraged that our sales are heading in the right direction as we continue to drive changes to meet changing customer expectations and leverage our group scale to operate more efficiently and deliver growth in earnings," says chief executive Nick Grayston in a statement.

The Red Sheds same-store sales rose 1.7 per cent to $363.3 million in the three months ended April 28 - overall sales were up only 0.8 per cent because, although store numbers remained the same at 93, the square footage of those stores has been reduced.


The Red Sheds' sales had been down 1.4 per cent overall in the second quarter and down 0.3 per cent on a same-store basis.

The company says margins were up across most categories and clearance improved significantly on last year but units sold were still down 0.8 per cent.

"We had a pleasing Easter performance with seasonal confectionery unit growth up 2.4 per cent and an improved sell-through rate compared to last year," Grayston says.

"Easter fell late in the year and coincided with Anzac Day and the school holidays to create favourable trading conditions with people having more time to shop," he says.

"Grocery continued to trade well, particularly in confectionery and health and beauty with Valentine's Day fragrances popular. We are also seeing intense competition in apparel, footwear, jewellery and intimates with units down 3.2 per cent."

Warehouse Stationery sales rose 0.6 per cent both on a total chain and same-store basis to $71.1m. "It was pleasing to see a third quarter of sales growth after operation integration issues in full-year 2018," the company says.

The Noel Leeming chain's sales rose 2.3 per cent, with same-store sales growth of 1 per cent, to $217.1m.

"Performance was strong across all categories, resulting in continued market share growth in a competitive market. Small appliances and audio visual and gaming categories performed particularly well," Grayston says.


The company's outdoor adventure brand Torpedo 7 lifted sales 6.9 per cent to $39.1m with store numbers growing from 11 to 18 and same-store growth coming in at 2.3 per cent for the latest quarter.

The group's online sales jumped 18.7 per cent compared with the third quarter last year and Grayston says the company continues to invest in its new digital platform.

He has left his full-year guidance for adjusted net profit to come in between $63-66m, subject to any material changes in anticipated trading conditions.

Stripping out restructuring costs and the exit of the ill-fated financial services unit, underlying earnings the previous year were $59m.

The shares were unchanged at $2.07 when trading opened, and are up 1 per cent so far this year.