The Warehouse half year net profit falls to $58.2m

By NZPA

Monday 10th March 2003

Discount retailer The Warehouse, whose shares have lost a quarter of their value in two months, today announced its half year net profit fell to $58.2 million from $59.1 million a year ago.

However, it announced a 10.5 cents per share imputed dividend, up 1cps on a year ago, which will be paid on April 22.

Its shares have fallen to $5.49 on Friday from $7.35 on January 20.

Group sales for the six months to January 31 rose 8.4 percent to $1.098 billion, while operating earnings rose 4.8 percent to $105.6 million.

The result was affected by a one-off "Australian logistics restructuring charge" and discounting this, the net profit was up 7.2 percent at $63.5 million.

Chief executive Greg Muir said Warehouse Stationery had a great first six months, with both the retail and business-to-business operations hitting sales and earnings targets.

"That business is now a genuine multi-channel business that can further extend its presence into the stationery and business machines market," Mr Muir said.

He said the mainstream Red Sheds recorded record sales in the half.

"While the market was disappointed with the sales numbers that we released on February 5, the earnings result for Red Sheds was a solid one as demonstrated in our maintaining operating margins above 13 percent.

"We are not complacent about our position in the market and are increasing our focus to develop and execute strategies that will grow our sales and earnings momentum in the Red Sheds," he said.

The Red Shed stores recorded a 6.2 percent increase in sales.

Operating earnings before interest, taxation and unusual items rose 5.2 percent to $96.7 million and operating margins declined slightly to 13.04 percent from 13.15 percent.

In what could be bad news for Michael Hill International, early results of a trial of jewellery sales in four Warehouse stores had been "very encouraging". A roll-out to all Warehouse stores would be completed this year.

Warehouse Stationery sales were 25.2 percent ahead of the same period last year. It recorded an operating margin of 5.2 percent compared with 1.6 percent a year earlier.

The Warehouse Australia achieved a 19.4 percent increase in sales over the corresponding period last year but operating earnings fell to $A4.5 million ($NZ4.94m) compared with $A6.5 million ($NZ7.13m) a year ago.

The Warehouse Australia plans to open up to ten large format stores before the end of July and will this week open its first store in South Australia.

Mr Muir said the company could open up to ten stores in and around Adelaide over the next two years.

Mr Muir reiterated the company's February 5 "guidance" on the full year net profit in a range between $90 million to $95 million.

The one-off costs came to $7.28 million compared with a gain a year ago of $800,000.

Total assets rose $24.4 million to $738.2 million. Total inventories, including goods in transit, were $15 million higher than the same period last year.

Total debt, less cash on hand at 31 January 2003 was $166.9 million, 17.7 percent less than at the same period last year. The ratio of debt-to-debt plus equity improved to 31.5 percent from 38.9 percent a year earlier.

Between August 2002 and January 2003, The Warehouse New Zealand opened three new stores including one replacement. One store was closed.

Warehouse Stationery opened five new stores, four in new locations, and one store was closed.

The Warehouse Australia opened 11 new format stores and closed three small stores. At January 31, Warehouse Australia had 128 stores.

The Warehouse shares were unchanged in early business today.

Comments from our readers

No comments yet