The Warehouse has booked a gain of more than 30% in half-year after-tax profit, at $57million, the Red Sheds division having now recorded 20 consecutive quarters of same-store sales growth.
Group chief financial officer Mark Yeoman said the strong performance of the previous half year had continued into the latest first-half trading period.
All The Warehouse's retail brands recorded positive profit growth due to strong sales and effective cost management, he said in a statement yesterday.
‘‘The result is a significant improvement on the comparative period last year,'' he said.
That period had been a ‘‘particularly difficult trading period'' and included some one-off costs.
However, yesterday's half-year result was achieved by a positive retail environment, and business changes, focusing on improving customer offer, margins and cost control.
‘‘These changes are expected to continue to deliver benefits into the future,'' Mr Yeoman said.
Craigs Investment Partners broker Peter McIntyre said The Warehouse was helped by a strong performance over the peak summer period, and the timing of some back-to-school sales, which would have typically fallen into second-half trading.
He noted operating cashflows were down 40% to $75.8 million, but that was largely a timing impact.
A strong first half, following a ‘‘solid'' second half, suggested the cost investment WHS had been making in recent years was starting to pay off.‘‘However, tempering these positive signs are the strong macro backdrop and favourable weather we saw in the first half.
‘‘Additionally, the retail sector will face notable foreign exchange headwinds, along with a potentially moderating consumer environment,'' Mr McIntyre said.
Forsyth Barr broker Suzanne Kinnaird said the result was ‘‘modestly ahead of our expectations and the company's guidance'', underpinned by a strong Red Shed result.
‘‘The company is facing headwinds from the material depreciation in the New Zealand dollar against the US dollar,'' she said.
The second half result will also include an expected loss from Financial Services.
‘‘Guidance implies the company is expecting second-half profit to be flat on the year before, despite these headwinds,'' she said.
She noted The Warehouse was well positioned to benefit from the closure of Dick Smith's 62 New Zealand stores over the next two months, although Mrs Kinnaird expected Noel Leeming to have already seen some benefits.
The Warehouse (Red Sheds) reported sales up 4.8%, or $44.4 million, to $973.1million compared with last year, with same-store sales up 4.6%. Operating profit was up 21% or $11.4 million to $65.5 million.
Warehouse Stationery (Blue Sheds) reported sales up 10.7% to $137.8million, with 26 consecutive quarters of positive same-store sales growth. Operating profit of $6 million had increased by 25.5%, in line with sales growth.
Noel Leeming reported a 15% sales increase to $379.8 million. Mr Yeoman said Noel Leeming continued to increase market share in the highly competitive technology and appliances market, attaining a stronger overall business performance across sales, margin and cost of doing business.
Torpedo7 Group, now 100% owned by The Warehouse, reported sales increase of 18.5% to $76.1 million.
Mr Yeoman said the Torpedo7 retail stores in particular had very strong sales, with some margin being traded in the online channel as part of a strategy to re-engage the online customer base after a period of investing in store rollouts.
Online sales were up 24.1% to $52.8 million, with strong sales through the Christmas period reflecting the traction The Warehouse was getting with customers around its multi-channel offer, Mr Yeoman said.
The relatively new Financial Services business reported a $2.7 million operating loss, but was in line with expectations, being part of the strategy to establish and build a leading retail financial services business, he said.
At a glance
The Warehouse, half year to January result.
Revenue: up 8.4% from $1.44billion to $1.58billion.
Earnings before interest and tax: up 41% from $63.3m to $89.3m
Profit after tax: up 32.2% from $43.2m to $57.2m
Interim dividend: 11c per share
Stores: 93 Warehouse, 72 Noel Leeming, 5 Lifestyle Appliance, 66 Warehouse Stationery
Full year 2015 turnover: $2.8billion, employs more than 12,000 staff.
- Source: WHS
