The Warehouse's earnings before interest, tax, depreciation and amortisation (ebitda) is forecast by Craigs Investments Partners to be $135 million, down 12.3% from $154 million last year, while similarly, the estimated after-tax profit of $64 million is down 15.7% on $76 million.
Craigs broker Peter McIntyre's after-tax profit estimate of $64 million was in the mid-range of The Warehouse's earlier guidance of between $62 million and $66 million.
"There's continuing challenges in the retail sector because of weak consumer spending, the paying off of household debt and the convenience of online shopping, which is becoming even more competitive," he said.
He said "key" to The Warehouse's result on Friday would be the extent of financial guidance provided, and its dividend, which he forecast would decline from 22c last year to 19c.
He said despite expectations of revenue increasing 4.8% from last year's $1.64 billion to $1.72 billion and a 3% increase in first-half sales, those figures could not offset increased costs and the discounting required to clear stock.
"Sales may well be up [but] there still remains pressure on margins with the discounting," Mr McIntyre said.
A year ago, the Warehouse delivered a disappointing full-year result, with after-tax profit down almost 9% to $76 million, at the bottom end of earlier guidance and well below analysts' expectations.
Overall revenue for the year to July 2011 was down 0.3% to $1.66 billion, earnings before interest and tax were down 5.7% to $119.3 million and after-tax profit, after one-off unusual items, was $76 million, down 8.6% on $83.4 million the year before.
To counter the plateauing of growth, management revealed last year a major three to five-year strategy to reinvigorate the Red Sheds. It planned to spend about $300 million on refurbishments and new Red Sheds stores over the next five years.
The latest strategy update outlined capital expenditure of $429 million over five years, on 14 new stores and refurbishment of more than 60 stores nationwide, funded through cash flow and debt facilities.
Mr McIntyre said some of those costs had been offset by property sales during the year.
