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Warehouse reiterates forecast for no growth in FY profit as 3rd-qtr sales slip

Tuesday 18th May 2010

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Warehouse Group reiterated its forecast for no growth in full-year earnings while posting a drop in third-quarter sales because of weak demand for music, DVDs and winter items.

Full-year ‘adjusted’ profit would be similar to 2009’s $85.2 million, the biggest retailer on the NZX 50 index said in a statement today. Sales fell 1.9% to $376 million in the three months ended May 2.

The drop in sales “was almost entirely due to a continued contraction in the music and DVD market and a very slow start to winter with unseasonably warm weather impacting key categories such as winter apparel and heating,” said chief executive Ian Morrice.

Shares of Warehouse last traded at $3.57 and have slipped about 7% in the past month amid signs consumers have been less inclined to spend and the housing market, which used to make people feel wealthy, remains moribund. New Zealand retail sales rose a smaller-than-expected 0.2% in the first quarter, seasonally adjusted, and dropped 0.5% when auto-related industries were excluded.

Sales at Warehouse’s Red Shed department stores fell 2.6% to $323.8 million. Same-store sales were down 3.3% after adjusting for last year’s extra week of trading.

Warehouse Stationery recorded a 2.2% gain in third-quarter sales to $52.2 million, or up 11.2% on a same-store basis.

Morrice said adjusted NPAT for the full year would be similar to 2009 earnings, subject to material adverse changes.


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