Sharechat Logo

Daily ShareChat: The Warehouse

By Jenny Ruth

Thursday 25th November 2010

Text too small?
 Jenny Ruth

The Warehouse Group's first-quarter results were disappointing and it has been losing market share to rivals such as Briscoe's and specialty stores over the last few quarters, says Nachiket Moghe, an analyst at Aegis Equities Research, which is owned by Morningstar.

"We'd like to point out that Briscoe probably benefited from the inclusion of the busy Labour weekend trading this quarter," Moghe says. Briscoe's same-store (stores open more than 12 months) sales were up 6.1% in the same quarter and it has out-performed The Warehouse for the past few quarters.

"We think The Warehouse will have to lift its game in order to win back customers. It needs to work on product quality and store presentation in our view. Shoppers are happy to pay a little more at rival outlets than shop at the Red Sheds."

Until it addresses these issues, The Warehouse will continue to lag its traditional rivals, he says.

The Warehouse reported first-quarter Red Shed sales fell 1.5%, impacted by a 9% year-on-year decline in CD and DVD sales, while its stationery store sales rose 2.9%.

Moghe says because of this result, he has cut his forecast net profit for the year ending July 2011 to $84.5 million from $87 million previously.

Recommendation: Hold.


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
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