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Warehouse predicts flat first-half as Xmas fails to cheer

Tuesday 5th January 2010

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Warehouse Group, the country’s largest listed retailer, predicts its first-half profit will be “similar” to last year’s after sales were flat in the last two months of 2009.

The retailer expects a net profit close to last year’s $56.8 million in the six months ended Jan. 31, to be announced in March, after it posted “flat” sales in the nine weeks through Jan. 3.

Paymark, which processes about 75% of New Zealand’s electronic transactions, found consumer spending climbed 6.1% in the first three weeks of December while the volume of transactions gained 7.5% from the same month in 2008.

“We had anticipated continued steady sales growth over Christmas, but this didn’t materialise,” chief executive Ian Morrice said in a statement. “We believe that our sales are indicative of the broader non-food retail market overall.”

Shares in the retailer slumped 3.3% to $4.07 in trading today after they surged some 20% last year.

Last month, the Warehouse was confident it would be able to cope with strikes by some 2,150 staff over the Christmas period after negotiations with the National Distribution Union broke down over working conditions.

Retailers expected a spending splurge over the Christmas period after a flat 2008 when they bore the brunt of the global financial crisis as New Zealanders cut back on their spending to repay mounting debt.

Still, Morrice was upbeat about the company’s Warehouse Stationery unit, which increased sales 3.5% over the nine-week period ahead of the “back to school” rush over the next two months.

“We also expect that some other specialist retail formats will have increased sales when compared to the extraordinarily challenging market conditions in the same period in 2008,” he said.

Businesswire.co.nz

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