The Warehouse has notched up "robust" sales and maintained its margins during the past 10 weeks, despite the recession and expects a similar half-year after-tax profit, around $57 million.
However, there remains a cautionary tone for the year ahead, with The Warehouse expecting overall consumer spending to remain weak.
For the 10 weeks to early January, total sales were down 2.5%, but the Red Shed chain achieved the similar margins to the corresponding period last year, group chief executive officer Ian Morrice said in a statement yesterday.
He forecast the group's after-tax profit for the first half of the financial year ending January 25 would be similar to last year's profit of $56.8 million, but before costs associated with exiting Warehouse Extra and Cellars and electricity derivatives are deducted.
ABN Amro Craigs broker Chris Timms said the half-year prediction was at ABN's "upper end" of forecast expectations.
"They have had reasonably robust sales, given the economic environment at present, but more surprisingly they have been able to maintain [profit] margins without sacrificing sales," he said when contacted yesterday.
While more people were expected to shop at The Warehouse during Christmas than previously because of the recession, Mr Timms believed a wider range of higher quality goods had boosted it towards the better-than-expected performance.
Mr Morrice said the performance was underpinned by effective margin and inventory management, increased direct sourcing and implementing a cost reduction programme.
"We expect there will be further pressure on consumers and we will invest in maintaining our price leadership position to grow market share.
"We aim to manage the recent negative shift in currency rates through further cost-price reductions and continued tight inventory management," he said.
The Warehouse half-year result to end of January is scheduled to be announced on March 12.
