In a tough market, retailers are usually the first to feel the pinch and New Zealand retailer, The Warehouse Group, (WHS) was amongst the first to report a slowing outlook in consumer spending.
In results released today for the half-year ended 27 January 2008, operating profit was down 10.8% to NZ$83.3 million, but reported net profit after tax was $64.3 million compared to $60.1 million for the same period last year.
“This result is credible given present trading conditions. Achieving positive same store sales growth in the second quarter demonstrates an ability to respond to what has been a very challenging environment,” chairman Keith Smith said.
In its outlook, The Warehouse Group said the retail activity is likely to continue slowing over the remainder of 2008 as discretionary spending comes under further pressure from macro economic factors and inflation.
The directors said they expect net profit after tax for the full year ending 27 July 2008 to be in the range of NZ$94 million to NZ$98 million including reversal of warranty provisions of up to $8.00 million.
A detailed sales update for the quarter ending 27 April 2008 is due for release on 9 May 2008.
Commenting on The Warehouse New Zealand result the chief executive officer Ian Morrice said, “Whilst we have held sales, gross margin in some categories has been affected by targeted investment in price and stock clearance. We are also continuing to invest in the business for the long term.”
Mr Morrice also said he expected the retail environment to remain subdued for the balance of the year.
The Warehouse Group is one of New Zealand’s largest retailers with 85 general merchandise stores and 43 stationery stores in New Zealand.
It is currently a takeover target of Woolworths and Foodstuffs.
Shares in WHS rose 5 cents to $5.20.
