Sharechat Logo

Warehouse FY earnings fall 14 percent as margins shrink

Friday 7th September 2012

Text too small?

Warehouse Group, the biggest retailer on the NZX 50 Index, reported a 14 percent drop in full-year earnings, meeting its own guidance, and said 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 $76 million a year earlier, the Auckland-based company said in a statement. Sales rose 3.9 percent to $1.7 billion.

In May, the company said full-year adjusted net profit after tax would be $62 million to $66 million and analysts had been expecting Warehouse to better its guidance with earnings of $68.2 million. Net profit jumped 15 percent to $89.8 million, reflecting a one-time gain from property sales.

The retailer's operating margin shrank to 5.6 percent from 6.8 percent, with the bulk of the contraction coming from its Red Sheds, where the margin shrank 150 basis points to 5.3 percent. Warehouse said adjusted profit will grow in 2013 though it was too soon to give specific guidance.

"Key elements of the group's strategic plan including investments in store experience and multichannel, together with category and margin dollar growth strategies should ensure adjusted profit in FY13 is above that recorded in F12," said chairman Graham Evans.

The company kept its final dividend unchanged at 6.5 cents. The shares last traded at $2.90, and have gained 15 percent in the past three months. The stock is rated a 'hold' based on the consensus of eight recommendation compiled by Reuters, with a price target of $2.68.

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

Its Warehouse Stationery chain had a 2.6 percent gain in sales to $206.6 million while operating profit declined 2.6 percent to $9.8 million. Same-store sales rose 3.3 percent.

Inventory across the group rose to $309.4 million from $262.7 million. Operating cash flow fell to $44.5 million from $96.9 million a year earlier, reflecting "increased investment in inventory to improve in-store stock availability and support growth categories," it said.

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

BusinessDesk.co.nz

Bond Offer: Infratil Ltd, 7.2 year & 10.2 year unsecured unsubordinated bond


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

The Warehouse Group
Warehouse FY profit jumps 61 percent on property sales, acquisitions
Warehouse firms up plans to pay more for staff with training, long service
Warehouse Red Sheds, stationery boost 3Q sales, FY guidance unchanged
Warehouse seeks better workforce with higher pay, more training
Warehouse almost doubles 1H profit on property sales, dividend beats expectations
Warehouse buys majority stake in online retailer Torpedo7 for up to $33M
Warehouse buys unprofitable Noel Leeming chain for $65M
Warehouse 1Q sales rise 1.9% as stationery leads growth
Warehouse buys Insight Traders