Warehouse annual profit almost trebled after $3 billion in group sales

Dunedin's Torpedo7 premises in Andersons Bay Rd, near The Warehouse. Photo: Peter McIntosh
Dunedin's Torpedo7 premises in Andersons Bay Rd, near The Warehouse. Photo: Peter McIntosh
The bargains keep coming at Warehouse Group. New Zealanders snapped up more than $3 billion worth of retail items at Warehouse Group stores last year.

The retail chain yesterday reported an almost three-fold increase in after-tax profit to $65.4 million, with an equivalent increase in earnings to 18.9c (2018: 6.6c) a share.

Group sales were up 2.6%, on the strength of positive sales performances across the group's four major trading brands: The Warehouse, Warehouse Stationery, Noel Leeming and Torpedo7.

Of overall operating revenues, The Warehouse accounted for $1.7 billion, Noel Leeming $924.6 million, Warehouse Stationery $268.6 million and Torpedo7 $172.5 million.

In line with revenue, the red sheds continued to have the biggest national footprint, with 93 sites, compared to 70 for Warehouse Stationery, 77 Noel Leeming outlets and 18 Torpedo7 stores.

Warehouse Group chief executive Nick Grayston said the results reflected the considerable work the company had done in recent years.

Mr Grayston said the financial year had been a year of development and transformation for The Warehouse, following its move to ''everyday low pricing.''

''Transformation-related initiatives also played a large part in the result, including improved inventory management and supplier terms, along with careful management of costs,'' he said.

Mr Grayston said Warehouse Stationery had recovered from its systems integration and stock availability issues and returned to historical levels of performance, to deliver a record retail gross profit of $112.8 million, on the strength of its print and copy and furniture categories.

Noel Leeming had also continued its upwards momentum with a record retail operating profit of $38.1 million, on the back of a 5% improvement in sales.

''The technology expertise offered to customers has made the brand experience more valuable, as people look to incorporate more and more technology into their lives,'' Mr Grayston said.

While sales in Torpedo7 had increased 5.6% year-on-year, with a 1.2% improvement in gross profit, costs associated with the store expansion programme (an additional four stores), had resulted in an operating loss of $7.0 million.

Mr Grayston said online sales were up 18%, now representing 7.8% of total group sales.

''After balance date, we launched our new digital platform TheMarket, part of the execution of our wider strategy to construct an enhanced service-based ecosystem around our business.

''Our strategy of fixing the retail fundamentals and investing in the digital future is showing promising signs of delivering results in terms of profit, revenue growth and customer behaviour, and remains unchanged.

He said the earnings outlook for next year would depend on the critical second-quarter trading period.

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