Costs of store revamping overshadowed an 18% revenue increase by The Warehouse to $2.65 billion, forcing an 18% plunge in adjusted after-tax profit to $60.7 million.
The Warehouse came in at the bottom range of a profit downgrade it issued in June, giving guidance of normalised profit of between $59 million and $62 million; results in line with expectations of brokerages Forsyth Barr and Craigs Investment Partners.
Warehouse chief executive Mark Powell said while the adjusted profit was below last year, that reflected the strategic reshaping the group was undertaking; which included store refits and refurbishments and investment in Career Retailer Wage and Love Your Customer training programme.
Revenue was up 128.4% from $2.23 billion to $2.65 billion, earnings before interest and tax declined 14.4% from $111.2 million to $95.2 million while adjusted after-tax profit was down 18%, to $60.7 million.
Gross profit margins were down 1.2%, from 34.2% to 33%.
Craigs Investment Partners broker Peter McIntyre said he was disappointed that there was no financial guidance given by the company for full year 2015; given it was in the third year of a five-year strategic plan.
''Next financial year [results] will be the day of reckoning for shareholders; on whether The Warehouse's strategy is working or not,'' he said.
He said it was too early to give specific financial guidance.
''However, the key elements of the group's's strategic plan are expected to result in the adjusted net profit after tax in full year 2015 being above that recorded in full year 2014,'' Mr McIntyre said.
He said the median consensus by analysts for adjusted net profit after tax in full year 2015 was a 17% rise to $71 million.
Forsyth Bar broker Andrew Rooney said the adjusted profit of $60.7 million was just ''marginally ahead'' of expectations, noting that Red Shed same-store sales were trending down each quarter; from 5.5% in the first quarter, then 3.4%, 3% and for the fourth quarter, 1.5%.
He highlighted company commentary that next year's profit result was expected to be higher, following on from the group's strategic plan.
''This is not surprising, given full year 2014 was impacted by transitional changes for the group and the warmer-than-usual winter, and is in line with our expectations,'' he said.
Mr Powell said there were ''particularly strong category performances'' in womenswear, consumer electronics, gaming, baby, consumables, small appliances, whiteware and jewellery.
''In spite of a late and warm winter, overall gross margin percentage for the full year was the same as last year.
''However, this was below planned levels and therefore was not sufficient to fully cover the cost invested to enhance customer experience, resulting in an operating profit decline, versus last year,'' Mr Powell said.
He said The Warehouse; or Red Sheds, reported sales for the full year of $1.66 billion, an increase of 4.7%, or $74.1 million, compared with the previous year.
Warehouse Stationery sales were $250.6 million, an increase of 8.1% compared with last year; the same-store sales increased 5.3% for the year.
Noel Leeming sales were $620.5 million with same-store sales increasing 5.6% for the year, with same-store sales growth of 2.2%.
The Torpedo7 group sales were $107.7 million, with an operating profit of $1.1 million.
Mr Powell said 2014 was a year of substantial change for Torpedo7, with the integration of the acquisitions of No1 Fitness, Shotgun and R&R Sport, along with the opening of a new fulfilment centre in Hamilton.
