Warehouse reports 'solid' third quarter

By Phil Boeyen, ShareChat Business News Editor

Tuesday 7th May 2002

Third quarter sales growth at The Warehouse (NZSE: WHS) has shown some levelling off in New Zealand but an improved performance across the Tasman.

For the three months ended April the company recorded group sales $410 million, an increase of 15.5% over the same period last year.

Sales at the New Zealand Red Sheds rose 9.3% to $271 million, which compares with last year's third quarter growth of 15.3%. However while overall growth has fallen, same store sales were up 6.7% compared to the previous year's growth of 5.1%.

"The Red Sheds enjoyed a solid Easter with sell-through levels similar to that experienced last year. Early indications suggest that winter merchandise, particularly apparel, is selling to plan," says Warehouse boss Greg Muir.

Sales at the group's Warehouse Stationery stores rose by 23% to $31.6 million in the quarter, however that was well down on growth of 48.6% recorded in the same period last year.

"Sales growth for the quarter was a little subdued for Blue Sheds because the comparable quarter last year included the successful launch of the Neo Gateway computers in Warehouse Stationery," says Mr Muir.

"The earlier primary and secondary school opening dates this year also meant a lot of the "back to school" stationery sales occurred in January - our second quarter period, rather than in the month of February."

Same store sales at Warehouse Stationery rose 13.4% compared to sales growth for the same period last year of 27.9%.

In Australia the retailer's stores, formerly named Clints and Solly's, bumped up sales by 33.3% to A$88.1 million compared to growth the previous year of just 1.3%. Same store sales have risen by 10.6% in Australian dollar terms compared with last year.

Greg Muir says the company is continuing to focus on capturing top line sales growth, maintaining momentum in the new store rollout programme and implementing improvements in its supply chain in Australia.

"In the short term, this strategy will mean operating margins will remain subdued while we make significant investments in the transformation of this business into a format similar to that seen in the Red Sheds in New Zealand.

"While we are happy with our top-line sales growth in Australia, until we complete the transformation of the business, the sales increases will not be reflected in increased earnings".

Mr Muir has described trading patterns for the third quarter as "business as usual' with solid sales improvement across the three brands.

However he also notes that while the macro-economic environment has been generally supportive for retailers, the company is "mindful that recent interest rate rises may begin to slow consumer spending."

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