Sharechat Logo

Warehouse cuts annual earnings forecast as warm weather crimps seasonal sales

Friday 20th June 2014

Text too small?

Warehouse Group, New Zealand's largest listed retailer, cut its forecast for annual earnings as warmer autumn and winter weather crimped sales and margins of seasonal clothing and home products.

Warehouse expects adjusted full-year profit of $59 million to $62 million, down from its March forecast for $67 million to $71 million, and $73.7 million last year, the Auckland-based company said in a statement.

The retailer is in the process of rejuvenating its 91 distinctive large format 'red shed' stores. To expand group earnings, the company aims to grow the 'non-red' side of its business to be as large as the red sheds, having bought 11 businesses in 18 months, adding technology and appliance retailer Noel Leeming, outdoor sports chain R&R Sports and online sporting goods retailer Torpedo7.

"While sales in the Red Sheds are still above last year, sales of seasonal apparel and home products are below plan and are increasingly having to be sold at decreased margins to maintain seasonal sell-through and avoid end-of-season overstocks," the company said. "Over the last three weeks there has been a material deterioration in sales and margin versus plan in the Red Sheds and it is likely the remaining winter season will see discounted trading in the market, with limited opportunity for full margin sales.

"These market conditions add further unpredictability to the remaining June and July trading environment."

Torpedo7, which is being integrated with R&R Sport, No.1 Fitness and Shotgun.co.nz, also failed to meet profit expectations as sales lag forecasts, Warehouse said. The company's Noel Leeming, Warehouse Stationery and Financial Services units were all performing in line with profit expectations, it said.

“The revised guidance is representative of a particularly difficult seasonal trading environment," chairman Ted van Arkel said in the statement. "However, the reshaped TW Group has developed a stronger base and significant opportunities for growth. In the next year the focus will be on consolidating the changes made and leveraging profitable growth.”

Shares in Warehouse last traded at $3.32, and have slipped 11 percent so far this year, making it the third-worst performer on the benchmark NZX 50 Index. The stock is rated an average 'hold', according to analysts polled by Reuters.

BusinessDesk.co.nz

Father's Day SOON! Crazy Deals on ALL IRG Yearbooks - More than 50% OFF - $19.99 for 44th IRG Yearbook 2018-2019


  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:

NZ dollar rises after Orr talks up the economy
Comvita posts $27.7m net loss on goodwill write-downs
Buyers emerge for Denton Morrell client book
WEL reviewing capital structure of fibre business
Cavalier announces strategic collaboration with NZ Merino Company
Delegat continues to invest after record year
Kiwibank's annual profit eases as fee income drops
TIL lifts operating earnings, watching for slowdown
Vector profit slides 44% on struggling HRV writedown
Steel & Tube returns to the black but says margins are squeezed

IRG See IRG research reports