Warehouse sales lag behind budget ahead of key Christmas trading season

Friday 13th November 2009

Warehouse Group Ltd, the biggest retailer on the NZX 50, said revenue in September and October were lower than expected, signaling a slow start to sales of seasonal goods. The shares fell 1.4%.

Total sales fell 1% to $362.9 million in the three months ended Nov. 1, the Auckland-based retailer said in a statement. Excluding the impact of discontinued fresh produce, frozen foods and liquor, sales climbed 1.2%.

“Retail demand remains unpredictable despite improving consumer sentiment, as evident from yesterday’s retail sales statistics,” chief executive Ian Morrice said. Consumer spending was expected to “gradually improve” though the extent of any pick up is “uncertain.”

Government figures yesterday showed the volume of retail sales, excluding motor vehicles, rose 0.5% in the third quarter, while value of sales gained 0.6%. Department store sales fell 3.2%. Retailers have borne the brunt of consumers’ response to the economic downturn, which prompted kiwis to pay down debt and boost their savings.

Shares of Warehouse fell 6 cents to $4.24 and have climbed 21% through 2009.

Morrice said he is confident, heading into the second quarter, that Warehouse has “a strong product offer in place” for the crucial Christmas trading period. He declined to give earnings guidance, saying the company will provide an update with its second-quarter sales release on March 12.

Sales at the retailer’s Red Sheds fell 1.5% to $317.7 million in the first quarter, or a 0.5% gain on a same-store basis. Warehouse Stationery sales rose 2.2% to $45.2 million, with revenue gaining 3.8% at stores open at least 12 months.

Businesswire.co.nz

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