Warehouse Group profits tipped to fall 1.6%

The Warehouse Group is unlikely to emulate the success of Briscoe Group when it reports its interim profit on Friday.

While the Briscoe Group reported a substantially improved profit and sales for the full year ended January 31, The Warehouse is expected to report flat group sales and profit for the six months ended January 31.

Forsyth Barr broker Suzanne Kinnaird is forecasting earnings before interest and tax of $83 million for the period, down 1.6% on the previous corresponding period.

Profit after tax was expected to be up 2.3% at $56.1 million.

That would be made up of slightly lower profit at The Warehouse Red Sheds and a slight improvement at Warehouse Stationery.

"In post-Christmas trading updates, The Warehouse said sales for the nine weeks to January 3 were flat on last year in the main Red Sheds business and up 3.5% in stationery.

"On a same-store basis, sales were flat in The Warehouse and up 4.7% in stationery.

"We expect these trends to have continued through January, with The Warehouse's share of overall retail sales continuing to drift down."

The ongoing flat sales trend at The Warehouse through the downturn of the past two years was a concern, Ms Kinnaird said.

A relative improvement became less likely as the economy improved, she said.

Sales below expectations probably meant inventories would be slightly up.

Margins might come under pressure in the second half if the dollar fell further in value against the United States currency.

A Woolworths or Foodstuffs takeover remained possible but unlikely in the short-term, she said.