Warehouse lifts H1 profit 17

Retailer The Warehouse lifted half year net profit 17.3 per cent to $NZ57.4 million ($A44.08 million) as a recovery in overall retail spending remains "patchy".

Revenue for the period from August 3 to January 31 slipped 0.5 per cent from the comparable period a year earlier to $NZ918.9 million ($A705.65 million). After adjusting for discontinued activities, the company said sales were up 0.7 per cent.

Last year's first half profit included a $NZ7.4 million ($A5.68 million) post tax charge relating to the exit from fresh food and liquor.

Adjusted net profit for the latest period was $NZ57 million ($A43.77 million), compared to adjusted net profit of $NZ56.8 million ($A43.62 million) last year, excluding unusual items, The Warehouse said on Friday.

An interim dividend of 17c per share is to be paid, up from 15.5c last year.

For The Warehouse red sheds division sales of $NZ821 million ($A630.47 million) were flat, after adjusting for discontinued activities.

After adjusting for the 2009 financial year's 53rd week, same store sales for the half year were down 1.2 per cent with second quarter sales down 1.1 per cent. Operating profit for the half year was down 3.2 per cent to $NZ78.7 million ($A60.44 million).

Group chief executive officer Ian Morrice said recovery in overall retail spending remained patchy with some specialist sectors seeing quite a bounce-back from the recessionary levels of 2008/9.

Department stores as a sector had not seen the lifts experienced by softgoods, clothing and appliance specialists in the second six months of 2009. The Warehouse's sales performance reflected that, Mr Morrice said.

The Warehouse division had maintained strong overall margin performance achieved in the first half of the 2009 financial year, but having planned for increased sales which didn't eventuate, it had been necessary to clear more seasonal inventory than the same period last year. That affected gross margins.

Progress was being made on growth initiatives, but those gains were not yet sufficient to offset the exit from fresh food and liquor and sales shortfalls in other areas, Mr Morrice said.

Warehouse Stationery reported sales up 8.7 per cent to $NZ96.2 million ($A73.87 million), while after adjusting for the 2009 53rd week same store sales for the half year were up 7.2 per cent with second quarter same store sales up 10.2 per cent. Operating profit was up 139.8 per cent to $NZ3 million ($A2.3 million).

The improvement at Warehouse Stationery reflected a focused approach to trading with customer visits increasing and sales recovery being achieved across most categories, Mr Morrice said.

Sales were expected to recover to levels at least equal to the 2008 financial year having experienced such a significant drop in consumer spending in 2009.

The company is looking to raise $NZ100 million ($A76.79 million) in a fixed rate bond offer, with the funds being used to reduce existing bank debt and to finance the planned construction of new and replacement stores.

The offer of up to $NZ100 million ($A76.79 million) five-year unsecured, unsubordinated fixed rate bonds to the New Zealand public was mainly being done to better align the maturity profile of the group's debt financing with its medium to long term capital programme and to manage funding risk by diversifying the sources of funds, The Warehouse said.

Craigs Investment Partners had been appointed as lead manager for the offer. ANZ, Bank of New Zealand and Forsyth Barr had been appointed as co-managers.

The offer was expected to open on March 24 and close on April 23.

The bonds would be listed on the NZDX.