Warehouse lifts 3Q sales 5.5%, maintains annual profit forecast

Friday 13th May 2016

Warehouse Group, the country's largest listed retailer, lifted third-quarter sales 5.5 percent to $672.2 million and said it's on track to meet its forecast annual profit.

Auckland-based Warehouse, known for its distinctive 'red shed' big barn discount stores, has spent hundreds of millions of dollars overhauling its outlets and buying new businesses to drive growth in the past few years. It retained its forecast for annual profit excluding one-time items of $61 million to $64 million, which would be up between 7-to-12 percent on last year.

"The third-quarter results are in-line with expectations and consequently our full year profit guidance remains the same," chief executive Nick Grayston said in a statement. "We do note however that risk remains in some seasonal stock lines as we continue to experience a warmer autumn than forecast, which may translate through to weaker demand for some winter seasonal ranges."

In the company's largest unit, its 93 Warehouse stores lifted sales 2.2 percent to $389.3 million, while same-store sales advanced 1.9 percent. The latest quarter ran from Feb. 1 through May 1, compared with the year-earlier quarter which covered Jan. 26 through April 26.

Warehouse said sales growth was strongest in leisure through both extended summer seasonal sales and continuity products in hardware and automotive, along with continued growth in home and entertainment.

The profit margin was "broadly in line" with the previous year, which it said was positive given the higher cost of goods as a result of foreign exchange rate movements.

Its Noel Leeming appliance and technology stores increased sales 17 percent to $180.6 million while same-store sales gained 18 percent.

Grayston said the unit continued to grow market share through the quarter in a competitive environment. Cellular and wearables sales improved due to better stock availability of smartphones, and whiteware sales also performed well.

The company consolidated its three Noel Leeming clearance stores into one site at Mt Wellington in Auckland, reducing total store numbers at the end of the quarter to 75 from 77 at the start of the quarter, although the overall footprint of the chain increased to 71,927 square metres from 71,079.

Its Warehouse Stationery 'blue shed' stores increased sales 3.3 percent to $72.5 million, up 1.4 percent on a same-store basis. It added one new store in the quarter, taking the total to 67 and increasing the total footprint to 72,214 square metres from 71,222.

Its Torpedo7 sports chain grew sales 14 percent to $34.8 million, which the company said more accurately reflected underlying improvements in performance, without the impact of new store openings.

Group online sales rose 23 percent to $40.5 million after adjusting for the divestment of ShopHQ, and the company noted it's making further investments after the Warehouse Stationery web store went live in mid-April.

Warehouse shares last traded at $2.74 and have advanced 2.6 percent this year. The stock is rated a 'sell', according to the mean estimate of five analysts compiled by Reuters.

BusinessDesk.co.nz

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