Warehouse sales hit $1B in first half

By Phil Boeyen, ShareChat Business News Editor

Monday 11th March 2002

Retail group The Warehouse (NZSE: WHS) continues to build momentum, reporting a 14% rise in interim profit, $1 billion in first half sales and a strong start to the second half of the financial year.

Group net profit in the six months to the end of January was $59.1 million, up from last year's $51.95 million with sales at $1.013 billion compared to $913.44 million previously. Excluding one-off gains and losses, the profit result is $7 million or 13.5% above last year.

CEO Greg Muir says the interim profit is a record result and reflects the progress the company has made in all its brands.

"We've been able to grow the group bottom line faster than top line sales growth, despite investing heavily in new business infrastructure. This is an encouraging indication of the group's profit potential in the years to come.

"The more established businesses in the group have considerable potential to drive further bottom-line improvement through efficiencies and smarter operational practices. While the newer businesses are currently small contributors to the bottom line they will become significant sources of future profit growth."

In New Zealand the 'Red Sheds' grew sales by 9.6% with operating earnings before interest, taxation and unusual items rising 14.7% to $92 million. Operating margins rose to 13.2% from 12.6%.

"The improved operating margin is beginning to reflect the investment in new merchandising tools and processes that have been introduced in the last twelve months," Mr Muir says.

"We are only just starting to capture the benefits of our investment in new merchandise planning tools in the business and we are excited that over time we can continue to improve our Ebit margins in the Red Sheds through the use of these tools.

Warehouse Stationery sales in the first half rose were 38.5% of the previous year but operating margin fell to 1.6% from 6.3%.

"As previously advised, Warehouse Stationery launched a new 'business to business' (B2B) sales channel in late 2001 at a cost of $2.2 million. The impact of the initial set up costs was to reduce overall Warehouse Stationery operating margins."

Excluding B2B, the Stationery operating margin would have been 5.5%.

In Australia sales rose 16.1% but operating margins fell to 3.1% from 4.1%. The company attributes the drop to the extra cost of turning the Clints and Solly's stores into The Warehouse format and positioning the brand retail market.

"The strength of the group gives us the ability to accelerate the pace of development in Australia even if that means incurring higher costs in the short-term. We remain confident that the new format stores are the future of the business, this is evident from the higher spend per customer and positive customer reaction," says Greg Muir.

The company has also reported a solid start to the second half with The Warehouse New Zealand sales up 14.1% in February and same store sales higher by 11.4%. Warehouse Stationery sales for the same month were up 16.8% or 9.1% on a same store basis and in Australia sales rose 27% with same store sales up 8.1%.

Mr Muir says the company is optimistic the current macro-economic conditions in NZ and Australia will remain broadly supportive for consumer spending.

The interim dividend has been declared at 9.5 cents per share, 1 cent higher than last year's first half payout.

Comments from our readers

No comments yet