Mixed quarter for Warehouse as Red Sheds flat

The Warehouse Group, the country's largest listed retailer, provided some "reasonable numbers" for the three months ended October 28 but very little detail, Craigs Investment Partners broker Chris Timms said yesterday.

The Warehouse Group lifted first-quarter sales 1.9% with its Blue Shed stationery stores leading growth as its Red Sheds reported a flat result.

Group sales rose to $377.3 million in the quarter from $370.4 million in the same period a year earlier, the Auckland-based company said in a statement. Sales at its Red Shed stores were up by 0.8% to $325.7 million and were flat on a same-store basis, while the stationery outlets' revenue climbed 9.1% to $51.6 million.

Blue Sheds sales rose 3.7% on a same-store basis.

Mr Timms said no information about profit margins was included and those margins were crucial to understand how well the company was trading.

"Same-store sales are up but we need to look at the numbers behind those sales."

Online sales had increased 138% from a low base but those sales had started to become meaningful, Mr Timms said.

The Warehouse chief executive Mark Powell said that while same-store sales in September and October were lower than the prior corresponding months, largely due to the Rugby World Cup, The Warehouse sales' performance in August was strong and the group was set up very well to enter the important second quarter.

"I am confident that our decision to remove some of our home appliance and whiteware products from sale, while having a short-term impact, is clear evidence of The Warehouse putting the customer first, which will benefit overall brand perception in the long-term," Mr Powell said.

In September, the retailer reported a 14% drop in full-year earnings to $65.2 million, in line with guidance, and flagged mixed trading conditions for the 2013 year.

Mr Timms said no guidance was provided in the quarterly announcement although the group had previously indicated the 2013 financial year would be improved from 2012.

Chairman Graham Evans said the quarter was a mixed one, but the board still backed the company's strategy will deliver value to shareholders.


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