Warehouse 3Q sales fall 2.9%, outlook flat

Warehouse 3rd-qtr sales fall 2.9%, annual profit growth to stall

May 8 – Warehouse Group, which operates 85 Red Shed department stores and 46 Warehouse Stationery stores, posted a 2.8% decline in third-quarter sales, reflecting the decision to exit fresh and frozen foods and liquor.

Sales fell to NZ$383.5 million in the three months ended April 26, the Auckland-based company said in a statement today.

“Consumer demand remains soft but we have made significant progress towards improving our market position,” chief executive Ian Morrice said. “Despite a slower than preferred start to winter we are confident that our strong seasonal offer will support continued positive momentum.”

Warehouse last year abandoned its strategy to roll out so-called hypermarkets, which combined groceries with a department store, as the recession eroded margins. Full-year adjusted net profit will be similar to last year’s, when the company posted earnings of NZ$80.9 million excluding unusual items.

Shares of Warehouse fell 0.8% to NZ$3.72 and have gained 7.4% this year. The average analyst recommendation is ‘hold,’ based on the ratings of eight first that follow the company

Consumer confidence has dimmed with rising unemployment, which has reached 5%, according to government figures yesterday, less than economists were expecting. The Westpac McDermott Miller Consumer Confidence Index for the first quarter, released in March, fell to 96 from 101.3 in the previous three month period on a scale where a reading of 100 means pessimists outnumber optimists. Still, the Roy Morgan Consumer Confidence Rating last month showed New Zealanders were more optimistic about the next five years than at any time since October 2007.

Sales at the Warehouse’s Red Sheds fell 1.5% to NZ$332.4 million in the third quarter. On a same-store basis, sales rose 1%.

Warehouse Stationery’s third-quarter sales dropped 11% to NZ$51.1 million, or down 9.9% on a same-store basis.

“The stationery and office products sector remains difficult with higher ticket technology, office equipment and furniture sales down significantly on last year,” Morrice said.

(Businesswire)

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