Warehouse matches profit expectations

Discount retailer The Warehouse Group today matched market expectations with a net after tax profit of $82 million for the full year to July 31.

The result betters last year's profit of $60.4 million by 36 per cent.

A dividend of four cents per share will be paid on November 25.

The group's total operating profit before interest, unusual items, goodwill amortisation and taxation was $147 million, up 20 per cent on the previous year.

Group sales for the year ended July were $1.86 billion, an increase of 11.9 per cent on a year ago.

The Warehouse New Zealand and Warehouse Stationery sales rose 10 per cent during the period. Sales for The Warehouse New Zealand stores were $1.3 billion or 8.1 per cent above the $1.2 billion recorded a year earlier . Warehouse Stationery recorded sales of $124.3 million, 33 per cent above the $93.5 million recorded in the year ended July 2001.

The Warehouse Australia generated sales of $476 million, an increase of 17.7 per cent over the same period last year.

New Zealand group operating margins rose from 9.8 per cent to 10.4 per cent. Margins at the group's New Zealand Warehouse stores rose to 11.1 per cent from 10 per cent a year earlier as increased operating leverage and cost controls kicked in.

Warehouse Stationery recorded an operating margin of 3.4 per cent compared with 7.9 per cent a year earlier. The lower margin was due largely to start up costs in the new e-commerce Business to Business (B2B) venture launched in October 2001.

Excluding B2B costs and revenue, the Warehouse Stationery operating margin was 6.9 per cent versus 7.0 per cent a year earlier. Warehouse Stationery margins have also been depressed by the division's rapid expansion programme, with 12 store openings in the last two years .

The Warehouse Australia operating margin was 0.6 per cent, up from -0.4 per cent a year earlier. Margin improvement across the Tasman is likely to slow from here, however, as the Australian business continues to invest heavily in stores, information technology and logistics capability.

"The costs for getting ready for growth are likely to weigh on the Australian earnings for another two years," the company said.

Today's result includes a charge for unusual items of $300,000 versus a $3.5 million charge in the previous financial year.

Between August 2001 and July 2002, The Warehouse New Zealand opened three new stores, all in new locations (South Dunedin, Motueka and Wainuiomata). Five stores were extended (Levin, Hornby, Fielding, Morrinsville and Gore) and eight stores were refurbished.

The Warehouse New Zealand retail chain at the end of July 2002 consisted of 78 stores, representing 339,343 sq m of retail space, an increase of 7.6 per cent over July 2000.

The Warehouse New Zealand plans to open three new stores before Christmas 2002, a replacement store for Alexandra in September and two stores in new locations (Fraser Cove, Tauranga and Bell Block, New Plymouth). Five stores (Kaikohe, Cambridge, Papamoa, Taupo and Oamaru) are due to be extended by December 2002.

Warehouse Stationery store numbers closed the year at 36 stores, with three stores added during the year (Auckland Airport, Masterton and Penrose).

Total retail footprint increased by 9.9 per cent to 40,406 sq m. Warehouse Stationery expects to open two new stores (Invercargill and Tauranga) and relocate the Napier store before the end of December 2002. A further four stores are expected to be opened before July 2003.

Across the Tasman, The Warehouse Australia opened twenty new stores, eight in Victoria, three in New South Wales and nine in Queensland. Seventeen old format stores were closed.

At balance date, The Warehouse Australia consisted of 120 stores representing 191,341 sq m of retail space, an increase of 27.8 per cent.

In the current financial year The Warehouse Australia plan to open up to twenty new format stores.

Since balance date, the New Zealand group has been trading to expectations.

August sales for the local group were up 19.2 per cent compared with August 2001. The Warehouse New Zealand sales in the month of August 2002 were up 18.1 per cent from the same month in 2001.

Warehouse Stationery sales for the same month were up 28.4 per cent compared with August 2001.

The Warehouse Australia sales for August 2002 (expressed in Australian dollars) were 21 per cent ahead of the same month last year.

Total group sales for the month of August 2002 were 18.3 per cent ahead of last year.

A detailed sales update for the first quarter ended October 30 is due for release in early November.

Shares in The Warehouse closed yesterday at $7.27 against a year high of $7.90 and a low of $6.41.


- NZPA