Warehouse earnings fall 13% in year of 'significant change'
By Rebecca Howard
Sept. 21 (BusinessDesk) - Warehouse Group said its annual earnings fell 13 percent in a period of "significant change" for the business. The shares opened higher as the result was in line with guidance.
Net profit adjusted for one-time items was $59 million in the year to July 29, within the $58 million to $59.5 million range the company gave in late August.
The shares traded up 0.5 percent at $2.04 shortly after the market opened.
The company's reported net profit was up 12 percent to $22.9 million and includes a number of one-off items, including a $25.6 million write-down in the value of goodwill related to its Torpedo7 business, which is the full remaining goodwill carrying amount that was created when the Warehouse bought the business in 2013 and 2014.
Chair Joan Withers said 2018 "was a challenging year."
"We began a transformation programme to accelerate our strategy, made a major change to our operations with the move to everyday low prices in the core The Warehouse business, and continued to integrate our businesses across the group," she said.
Chief executive Nick Grayston said the transition to the everyday low prices model at its Warehouse red-barn stores impacted sales less than anticipated. Revenue at The Warehouse dropped 2.5 percent to $1.7 billion but units sold lifted 6.6 percent and gross margin was 37.4 percent versus 36.8 percent.
Appliance retailer Noel Leeming saw revenue growth of 8.6 percent to $880.5 million while the group's blue-shed Warehouse Stationery chain saw revenue fall 5.3 percent to $263.8 million.
"It was a disappointing year for Blue," the company said. "We experienced a weaker result in FY18 due to internal systems integration issues and an industry segment that is facing challenges due to changes in customer buying behaviour."
Sports retailer Torpedo7 lifted revenue 3.6 percent to $163.4 million.
Group online sales in New Zealand increased by 6.6 percent to $221.1 million.
Looking ahead, Grayston did not provide full-year guidance for the 2019 year but said the earnings outlook would be dependent on the Christmas trading period.
Warehouse will pay a final dividend of 6 cents per share, taking the total annual dividend to 16 cents per share.