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Warehouse sales hurt as consumers skip CDs and DVDs

Friday 12th November 2010 2 Comments

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Warehouse said sales growth stalled in the first quarter as the biggest retailer on the NZX 50 grappled with falling sales of CDs and DVDs and weak consumer demand.

Sales fell 0.2% to $362.3 million in the three months ended October 31, Warehouse said in a statement. Same-store sales at its Warehouse department stores fell 1.5% while Warehouse Stationery achieved 5.3% growth.

The retailer is “optimistic about the prospect of economic recovery in the medium term” though trading conditions are “expected to remain difficult for some time,” said managing director Ian Morrice.

Figures show New Zealand consumer spending has been tepid at best, with debit and credit card transactions unchanged last month, excluding auto-related categories, even as GST rose.

Warehouse joins homeware and sporting goods retailer Briscoe Group in reporting a patchy performance as households pay down debt rather than spend more.

Shares of Warehouse rose 6 cents to $3.88 yesterday and have declined about 4% this year, while the benchmark index climbed 2%. The NZSE Consumer Index has climbed 9.5% this year.

Sales of CDs and DVDs were down 9% from the same quarter last year, hurt by changing consumer trends to buying online from sites such as iTunes. Morrice said categories such as sporting goods, jewellery, small appliances, health and beauty “are continuing to achieve good growth.”

The retailer is scheduled to release its second –quarter sales with is first-half results on March 11 and will update its full-year earnings guidance then.

Warehouse Group has 88 Warehouse stores and 48 Warehouse Stationery outlets.

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Comments from our readers

On 12 November 2010 at 11:19 am Gavin said:
The Warehouse would sell more CD's if they were in some sort of order. There departments are in a mess and it would take hours to fine a specific title.
On 12 November 2010 at 8:17 pm Murray said:
A total untidy mess in the C.D and D.V.D dept, Gavin is correct, the staff are not that interested either, so staff selection is partly to blame, the Warehouse is at fault in staff selection and lack of supervision of departments stock keeping
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