Warehouse's profit falls 14 per cent

Warehouse's annual profit is down 14 per cent but within the range it forecast, as its operating margin shrank to 5.6 per cent.

7 September 2012

Warehouse Group has reported a 14 per cent drop in full-year earnings and says it expects retailing to face "mixed" trading conditions in 2013.

Profit before one-time items was $65.2 million in the 12 months ended July 29, down from $76m a year earlier, said the company which is New Zealand's biggest retailer listed on the stock exchange.

Sales rose 3.9 per cent to $1.7 billion.

In May, the company said full-year adjusted net profit after tax would be $62m to $66m and analysts had been expecting Warehouse to better its guidance with earnings of $68.2m.

Net profit jumped 15 per cent to $89.8m, reflecting a one-time gain from property sales.

The retailer's operating margin shrank to 5.6 per cent from 6.8 per cent, with the bulk of the contraction coming from its Red Sheds, where the margin shrank 150 basis points to 5.3 per cent.

Warehouse said adjusted profit will grow in 2013 though it was too soon to give specific guidance.

The company kept its final dividend unchanged at 6.5 cents.

The shares last traded at $2.90, and have gained 15 per cent in the past three months.

Sales at the Red Shed rose 4.2 per cent to $1.5 billion, while the operating profit fell 18 per cent to $80.9m. Same-store sales rose 3.8 per cent.

Warehouse Stationery chain sales gained 2.6 per cent to $206.6m while operating profit declined 2.6 per cent to $9.8m. Same-store sales rose 3.3 per cent.

In the latest period, the company recognised a gain of $18.2m from the sale of property and $7.3m from the release of warranty provisions.

NZN

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