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Warehouse may look at capital management in 2010: Smith

Friday 27th November 2009

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Warehouse Group Ltd, the biggest retailer on the NZX 50, will consider “any appropriate capital management initiative” in the New Year, chairman Keith Smith told the annual meeting today.

Smith told shareholders the retailer will “continue to manage its capital structure with the intention of maintaining a conservative gearing ratio,” according to speech notes released on the NZX. Though 2010 may hold new opportunities, now is not the time for any major capital initiative, he said.

“Market conditions do not support any major capital management initiative at the present time,” Smith said in his speech. “The opportunity for any appropriate capital management initiative will be considered again in the new calendar year.”

The company reported weaker than expected sales in September and October, signalling a slow start to the holiday shopping season as retail demand remains unpredictable. Sales at the Red Sheds fell 1.5% in the three months ended Sept. 30 to $317.7 million while Warehouse Stationery sales rose 2.2% to $45.2 million.

Smith said the retailer has “weathered this recessionary storm well” and that the stability of their earnings showed how “resilient” Warehouse is through “economic cycles.”

The shares declined 1.2% to $4.10 on the NZX today, and have climbed about 16% this year.

Retailers were the only group in the National Bank Business Outlook survey to report a pick-up in confidence this month as they prepare for the busy holiday shopping period. Still, this comes as consumer sentiment remains subdued about the current state of the economy and bodes ill for stores looking to boost flagging revenues.

Businesswire.co.nz

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