The Warehouse shows how to dial up a bigger profit

Listed retailer The Warehouse boosted its recent half-yearly profit by using a clever accounting manoeuvre in the treatment of the losses on pre-pay mobile phones.

It treated losses on mobile phones as assets, adding an extra $6.6 million to its profit.

The chain's profit in the six months to January 31 was up $11.3 million, or 31% on the corresponding six months of the previous year, but if the canny mobile phone treatment had not been used, profits would have been up only 12%.

Accountancy lecturer Alan Robb said the justification for treating trading losses as assets was questionable.

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