Friday 27th June 2008 |
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Warehouse fell 4.2% to NZ$4.32 after cutting its full-year profit forecast by about 10%. Jewelry chain Michael Hill International fell 3.7% to 78 cents and children's clothing chain Pumpkin Patch Ltd fell 5.2% to NZ$1.45. Briscoe Group was unchanged at 99 cents after sliding to a record low 96 cents yesterday on its second forecast cut in two months.
"There's probably more news to come out," said James Lindsay, an equities manager at Tyndall Investment Management. "Retail stocks have been hit pretty hard."
The economy contracted 0.3% in the first quarter, which may herald the first recession in a decade. The central bank has kept its benchmark rate at a record high 8.25% to rein in inflation, which it expects to peak at 4.8% in the September quarter. High borrowing costs have sapped demand in the housing market and crimped consumer spending.
Spending by New Zealand households fell 0.4% in the first quarter after rising 0.5% in the final three months of 2007, the GDP report showed. Separate figures showed the nation's annual merchandise trade deficit widened in May on soaring costs of oil imports.
Warehouse cited a "marked downturn" in consumer spending in its statement today. Briscoe yesterday described the retail market as "extremely difficult."
"Consumer confidence and retail spending have deteriorated markedly in recent weeks in response to increasing inflationary pressures on fuel and the cost of living," Warehouse said. A downturn in consumer spending since late May "has significantly reduced the company's sales and margin expectations for the remainder of the financial year."
Profit in the 12 months ended July 27 will be NZ$84 million to NZ$88 million, Warehouse said. It had previously forecast NZ$94 million to NZ$98 million.
Briscoe Group yesterday cut its first-half profit forecast for the second time in two months. The operator of the Briscoes Homewares, Living & Giving, Urban Loft and Rebel Sports stores yesterday cut is first-half earnings forecast to NZ$2 million to NZ$3 million.
Duke cited increases in labour, distribution and fuel costs and said the company will be taking "significant further actions" to cut costs further in the second half.
Consumer confidence collapsed to a 17-year low in the June quarter, according to a Westpac Banking Corp survey this week.
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