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Plenty of black ink for big red barn

By Phil Boeyen, ShareChat Business News Editor

Monday 4th September 2000

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Discount retailer The Warehouse has posted a full year tax-paid profit of $70.5 million - nearly 30% up on last year.

The company has announced a final 4 cents dividend, to bring the full year total to 12.5 cents per share compared with 9.5 cents in 1999.

Sales topped a billion dollars, at $1.075 billion, with five new The Warehouse stores opened during the year, and two small, old format stores closed.

The company recently noted that fourth quarter sales had slowed compared with earlier quarters, but says since balance date trading conditions have improved. It says during August The Warehouse total sales were up 15% and Warehouse Stationery were up 40% on August 1999.

A foray into mobile phones appears to be bearing fruit, with the Gold Prepaid Phone business provided a modest operating profit contribution in its first full year.

The Warehouse has also given further details of its foreign exchange hedging, following market fears its bottom-line could be hit by the foundering kiwi dollar.

The company says it has purchased forward exchange contracts to cover its forecast US dollar requirements until the end of March 2001 at rates higher than the current prevailing market rate. It says it is comfortable that the currency policy is delivering sufficient exchange rate certainty for the business to be able to react to adverse movements in the kiwi dollar.

Final settlement of its Australian retail purchases - Clint's Crazy Bargains and Silly Solly's - is expected late in September. It says it will then start a share buyback up to the value of A$33 million.

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