The half-year report out tomorrow from retail giant The
Warehouse Group is much anticipated by brokers and investors
alike after changes to the company structure with the
purchase of Noel Leeming.
The share price was up yesterday to close at $3.47 after
reaching a high for the day of $3.51, as investors
anticipated a good result. In the past six months the shares
have traded at a low of $2.68 and a high of $3.56.
Craigs Investment Partners expects operating earnings of $106
million for the six months ending January, up 20% on the
previous corresponding period (pcp). The reported profit is
forecast to come in at $54.8 million, up 17% on the pcp.
Craigs broker Chris Timms said yesterday the forecast profit
increase was driven primarily by sales growth as New Zealand
retail sales continued to benefit from a strong housing
market, a two-month contribution from the Noel Leeming
acquisition and normalisation of apparel margins.
Of interest would be Red Shed operating margins, the store
refresh strategy, the performance of Noel Leeming and details
on this week's Torpedo7 acquisition, he said.
According to Statistics New Zealand, in the 12 months to
December, retail sales in The Warehouse categories grew
around 3.5% on the pcp. The group had also opened three Red
Sheds and eight Blue Warehouse Stationery stores since the
start of the 2012 financial year.
Costs were up significantly in the second half of 2012,
largely as a result of The Warehouse investing in staff to
improve customer experience, Mr Timms said.
Whether the group could generate sufficient sales to offset
that increase remained to be seen.