Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Warehouse lifts annual earnings 12%

Friday 23 September 2016 09:28 AM

Warehouse lifts annual earnings 12%, pipping guidance, as cost cutting improves margins

By Paul McBeth

Sept. 23 (BusinessDesk) - Warehouse Group lifted annual earnings 12 percent, just beating the top end of its guidance, as the country's largest listed retailer eked out bigger reductions in its cost base to widen operating margins.

Adjusted profit rose to $64.1 million in the 52 weeks ended July 31 from $57.1 million a year earlier, the Auckland-based company said in a statement. Revenue increased 5.6 percent to $2.92 billion with sales growth across all of the retailer's brands. Gross margins shrank due to its Noel Leeming group lifting sales of low-margin consumer electronic goods, however, operating margins widened to 3.8 percent from 3.4 percent as Warehouse focused on stripping out costs.

Net profit rose 49 percent to $78.3 million, or 22.6 cents per share.

Chief executive Nick Grayston said the board has approved his three-year strategy which will focus on lifting profitability by removing "complexity and cost" of an inefficient operating model and reshape the company's physical footprint to support the digital business. The group's online sales rose 22 percent to $185.8 million, accounting for about 6 percent of total revenue.

"The improvement in the financial performance of the group demonstrates that the trading strategies are delivering results," Grayston said. "Our task is to ensure that the business is a strong and profitable competitor in the future retail environment, which will look very different from the traditional retail business model that has served us so well to date."

Warehouse spent hundreds of millions of dollars overhauling its outlets and buying new businesses to drive future growth in the past few years under the leadership of Mark Powell, and Grayston, a former Sears Holdings executive, took over in December.

The board declared a final dividend of 5 cents per share, payable on Dec. 8 with a Nov. 25 record date. That takes the annual return to 16 cents, unchanged from a year earlier.

The shares last traded at $2.90, and have increased 8.6 percent this year.

The company's flagship 'Red Sheds' stores lifted sales 2.5 percent to $1.76 billion for a 12 percent increase in operating profit to $79.6 million, and the blue shed stationery chain increased sales 6.2 percent to $279.2 million with profit up 12 percent to $14.3 million as better sourcing helped widen margins for both units.

Noel Leeming profit jumped 88 percent to $12.1 million on a 13 percent increase in sales to $752.1 million, grabbing market share with the collapse of consumer electronics chain Dick Smith, while ceding margin due to the increased volume of consumer electronic goods being sold.

Torpedo7 boosted sales 13 percent to $148.7 million for a profit of $3.4 million, building on the breakeven result it achieved a year earlier, while the launch of its financial services unit reported an operating loss of $3.4 million, which Warehouse said was in line with expectations.



© Scoop Media

Business Headlines | Sci-Tech Headlines


NZTA: Major New Zealand Upgrade Programme Projects Go To Tender

Two major New Zealand Upgrade Programme projects are beginning tenders for construction. The New Zealand Upgrade Programme is a $6.8 billion investment to get our cities moving, to save lives and boost productivity in growth areas. The first Auckland ... More>>

Reserve Bank: RBNZ Seeks To Preserve Benefits Of Cash

The Reserve Bank – Te Pūtea Matua is taking on a new role of steward of the cash system “to preserve the benefits of cash for all who need them”, Assistant Governor Christian Hawkesby told the Royal Numismatics Society of New Zealand annual conference ... More>>


Economy: Double-Dip Recession Next Year, But Housing Rolls On

New Zealand's economy is expected to slip back into recession early next year as delayed job losses, falling consumer spending, and the absence of international tourists bites into growth. More>>


Microsoft New Zealand: Microsoft Expands “Highway To A Hundred Unicorns” Initiative To Support Startups In Asia Pacific

New Zealand, 14 October 2020 – Today Microsoft for Startups launches the Highway to a Hundred Unicorns initiative in Asia Pacific to strengthen the region’s startup ecosystem. This follows the initiative’s success in India, where 56 startups were ... More>>

Fonterra: Farmers Taking Another Step Towards New Zealand’s Low Emissions Food Production

They’re hot off the press and intended to help take the heat out of climate change. Fonterra farmers are already among the world’s most sustainable producers of milk and now have an additional tool in their sustainability toolbox. Over the last few ... More>>


Electricity: New Zealand Remains In Top 10 For Energy Balance

The World Energy Council’s Energy Trilemma Index has become part of the energy dialogue both globally and in New Zealand. The Index illustrates the need for countries to balance energy security, energy equity and environmental sustainability. New Zealand ... More>>


Courts: Businessman Eric Watson Sentenced To A Four-Month Jail Term

New Zealand businessman Eric Watson has been sentenced to a four-month jail term in the UK for contempt of court, TVNZ reports. More>>

OECD: Area Employment Rate Falls By 4.0 Percentage Points, To 64.6% In Second Quarter Of 2020

The OECD area employment rate – the share of the working-age population with jobs – fell by 4.0 percentage points, to 64.6%, in the second quarter of 2020, its lowest level since the fourth quarter of 2010. Across the OECD area, 560 million persons ... More>>

Spark: Turns On 5G In Auckland And Offers A Glimpse Into The Future Of Smart Cities

Spark turned on 5G in downtown Auckland today and has partnered with Auckland Transport (AT) to showcase some of the latest in IoT (Internet of Things) technology and demonstrate what the future could look like for Auckland’s CBD with the power of 5G. 5G is ... More>>

Stats NZ: Monthly Migration Remains Low

Since the border closed in late-March 2020, net migration has averaged about 300 a month, Stats NZ said today. In the five months from April to August 2020, overall net migration was provisionally estimated at 1,700. This was made up of a net gain ... More>>

University of Canterbury: Proglacial Lakes Are Accelerating Glacier Ice Loss

Lake Tasman, New Zealand | 2016 | Photo: Dr Jenna Sutherland Meltwater lakes that form at glacier margins cause ice to recede much further and faster compared to glaciers that terminate on land, according to a new study. But the effects of these glacial ... More>>


Dairy: Fonterra Sells China Farms

Fonterra has agreed to sell its China farms for a total of $555 million (RMB 2.5 billion*1), after successfully developing the farms alongside local partners. Inner Mongolia Natural Dairy Co., Ltd, a subsidiary of China Youran Dairy Group Limited ... More>>