Warehouse Group has entered an unconditional contract to sell its Newmarket property.
Warehouse Group has entered an unconditional contract to sell its Newmarket property.
Warehouse Group has entered into an unconditional contract to sell its Newmarket property in Auckland for $65 million and said the proceeds will be used to reduce debt.
Settlement of the property sale is expected to be completed in July 2017 and the sale proceeds of $65m will generate apre-tax gain of approximately $12m, the Auckland-based company said in a release to the stock exchange. Further details will be provided when it announces its full-year result on September 22.
The site will continue to be leased and operated by Warehouse until it is to be vacated in October 2018.
In March, Warehouse posted a 76 per cent drop in first-half profit to $13.6m after the retailer took an impairment charge against its financial services unit, recognised restructuring costs and earned less from its Red Shed department stores. Net debt stood at $263.3m, with a gearing ratio of 33.5 per cent. Warehouse's interest bill was $8.9m in the first half.
At the time, it said weak trading had continued into the second half of the year and as a result, full-year adjusted profit was forecast to be $54m to $58m, a drop of as much as 15 per cent from a year earlier.
The retailer is on a cost-cutting drive, cutting a net 130 jobs at its store support offices in Auckland and some regional centres, in a slimmed business structure to whittle down leadership into its two new arms and move support systems of the existing brands to be group-wide.
The shares last traded at $2.22 and have dropped 22 per cent so far this year.
