WHS
11/03/2016 08:30
HALFYR
PRICE SENSITIVE
REL: 0830 HRS The Warehouse Group Limited
HALFYR: WHS: The Warehouse Group 2016 Interim Results Announcement
THE WAREHOUSE GROUP LIMITED
Results for announcement to the market
Reporting Period: 3 August 2015 to 31 January 2016
Previous Reporting Period: 28 July 2014 to 25 January 2015
CONSOLIDATED OPERATING STATEMENT
2016 Half Year Performance
REVENUE
$1,568.529 million versus $1,447.312 million in 2015, an increase of 8.4 %
OPERATING PROFIT
$73.117 million versus $56.990 million in 2015, an increase of 28.3 %
EARNINGS BEFORE INTEREST AND TAX
$89.377 million versus $63.384 million in 2015, an increase of 41.0 %
PROFIT BEFORE TAX
$79.975 million versus $55.708 million in 2015, an increase of 43.6 %
PROFIT ATTRIBUTABLE TO PARENT SHAREHOLDERS
$57.201 million versus $43.280 million in 2015, an increase of 32.2 %
EARNINGS PER SHARE
16.6 cents per share versus 12.5 cents per share in 2015, an increase of 32.8
%
Interim Dividend: 11.0 cps
Record Date: 04 April 2016
Date Payable: 15 April 2016
Tax credits on interim dividend: Fully imputed for New Zealand residents;
Supplementary dividend payable to non-residents.
Auckland, 11 March 2016
A strong first half performance delivering profit growth
The Board of The Warehouse Group today announced an Adjusted Net Profit
After Tax result of $45.6M for the half (HY16), up 22.3% compared to $37.2M
in HY15, in line with recent guidance. Reported Net Profit After Tax for the
period was $57.2M compared to $43.3M in HY15. Group retail sales for the
period were $1,560.4M, up 8.0% compared to HY15.
The strong performance that was reported in H2 FY15 has continued into the
first half of FY16, with all retail brands recording positive profit growth
off the back of strong sales and effective cost management. The result is a
significant improvement on the comparative period last year. While HY15 was a
particularly difficult trading period and included a number of one-off costs,
the HY16 performance has been achieved by a positive retail environment, and
changes that we have made to the businesses; focusing on improving our
customer offer, margins and cost control. These changes are expected to
continue to deliver benefits into the future.
The impact of a 53 week reporting year in FY15 has meant that the 26 weeks of
the first half of FY16 commenced and ended a week later in the calendar than
last year. This is relevant because the Back-to-School trading peak occurs
at the end of January, and the late finish to the first half year has seen
the inclusion of some of the Back-to-School sales activity that last year was
recorded in the second half. As a consequence we have calculated a
comparison which adjusts for this timing difference. On a realigned basis the
overall sales growth for HY16 is $103.2m, up 7.1% on HY15.
The Warehouse
The Warehouse ('Red Sheds') reported sales of $973.1M for HY16, an increase
of 4.8% or $44.4M compared to the same period last year. Same store sales
increased 4.6% in the half. The 'Red Sheds' have now recorded 20 quarters of
positive same store sales growth. On a like-for-like basis same store sales
increased by 4.0%. Operating profit for the half was $65.5M, an increase of
$11.4M or 21% on HY15.
A number of new initiatives were delivered in HY16, the most significant
being improvements in the product ranges for the Home and Apparel categories,
with a particular focus on improving the everyday low price offer. These
have been well received by customers, and coupled with a favourable overall
retail environment have driven positive margin improvement.
Other initiatives in the first half included the launch of Warehouse Mobile,
and distribution of the new Warehouse Money credit cards.
Commenting on the 'Red Sheds' result, Group Chief Financial Officer Mark
Yeoman said "The team at The Warehouse has delivered a strong first half
result. While the favourable trading environment has certainly helped, we
still need to ensure that we have the right offer for our customers, continue
to support our people well, and execute our trading plans and change
initiatives. The profit leverage that has been achieved indicates that we
are doing well across the business."
Warehouse Stationery
Warehouse Stationery ('Blue Sheds') reported sales of $137.8M for HY16, an
increase of 10.7% on HY15 ($124.4M). Same store sales increased 8.5% in the
half with the 'Blue Sheds' now recording 26 consecutive quarters of positive
same store sales growth. On a like-for-like basis same store sales increased
by 4.0%. Operating profit of $6.0M increased by 25.5% over the same period
last year in line with sales growth.
The timing of the reporting period has resulted in more of the Back-to-School
trading results being reported for the Blue Sheds in HY16, however this is
expected to normalise over the full year. Despite that timing factor, the
Back-to-School campaign has been strong with growth delivered across all key
metrics.
Noel Leeming
Noel Leeming reported sales of $379.8M for HY16, a 15.0% increase on the same
period last year. Same store sales increased by 11.4% in the half. On a
like-for-like basis same store sales increased by 11.1%. Noel Leeming
continues to increase market share in the highly competitive technology and
appliances market. Profit was significantly improved over HY15, a
combination of cycling a tough trading period and one-off rebranding costs,
with a stronger overall business performance across sales, margin and cost of
doing business. Gross Profit margin was impacted by a change in mix, notably
a standout sales performance around cellular which has a comparatively lower
margin than other products.
Torpedo 7 Group
Torpedo7 Group reported sales of $76.1M for HY16, up 18.5% on the HY15. The
Torpedo7 retail stores in particular had a very strong HY16 for sales, with
some margin being traded in the online channel as part of a strategy to
re-engage the online customer base after a period of investing in store
rollouts.
After the half year balance date The Warehouse Group purchased the 20%
residual shareholding giving the Group 100% control of Torpedo7.
Financial Services
The Financial Services business reported an Operating loss of $2.7M for H1
FY16 in line with expectations as part of the strategy to establish and build
a leading retail financial services business. HY16 was a key period in the
establishment of financial services for the Group, with the acquisition of
Westpac's shares in The Warehouse Financial Services Ltd Joint Venture, and
the successful launch of Warehouse Money's two new Visa credit cards. A
securitisation facility was also established as part of the funding strategy
to support growth of the asset book.
Online
Group online sales (NZ were $52.8m, up 24.1% compare to the same quarter last
year (up 23.5% on a like-for-like basis). Strong online sales through the
Christmas trading period reflect the traction that we are getting with
customers around our multi-channel offer.
The Warehouse Group
The Warehouse Group has invested significantly over the last few years as
part of its strategic transformation journey. This year is focused on
consolidating and leveraging those investments to unlock profit growth. The
HY16 result is a positive sign that profit growth is now being realised,
reversing the declines in recent years. Our new Group Chief Executive Nick
Grayston has recently joined the business and will share his vision for the
strategic cycle at announcement of the full year results.
In announcing the HY16 result, Chairman Ted van Arkel commented that "This
result, building on the solid performance in the second half of last
financial year, shows that the company is delivering on profit growth, and on
driving returns from the investments made in past years. We are confident
that the team, under Nick Grayston's leadership, will continue to grow
sustainable profitability. The outlook for the second half will build on
this positive start to the financial year but recognises some of the
challenges ahead; notably ongoing currency driven input cost increases and
the fact that there is one week less in the trading period compared to last
year.
Consequently, subject to any material change in anticipated trading
conditions, the Directors expect the second half profit to be in line with
the second half result last year. The expected Adjusted Net Profit After Tax
for the full year is between $61M and $64M which would represent a 7%-12%
profit growth year on year.
The full year dividend is targeted to be 16 cents per share, comprising the
11 cents interim dividend and a final dividend targeted to be 5 cents. This
targeted 16 cents per share pay out for FY16 is subject to no significant
change in trading, ensuring we are meeting our obligations under our Bank and
Bond covenants and are able to provide appropriate levels of funding for
strategic initiatives.
ENDS
Background: The Warehouse Group Limited
The Warehouse Group Limited comprises 93 Warehouse stores, 72 Noel Leeming
stores. 5 Lifestyle Appliance stores and 66 Warehouse Stationery stores in
New Zealand and several online businesses. The company had turnover of $2.8
billion in FY15 and employs over 12,000 people.
Contact details regarding this announcement:
Media: Mark Yeoman, Group Chief Financial Officer
To be contacted via Gayle Theunissen on +64 9 489 8900, Extn 96333 or +64 21
742 784
Investors and Analysts: Mark Yeoman, Group Chief Financial Officer +64 21
778 404
Note: A reconciliation of adjusted net profit to reported net profit is
detailed on page 4 of the NZX release and in note 13 of the interim financial
statements. Certain transactions such as profits from the disposal of
properties and businesses, goodwill impairment and gains/costs associated
with acquisition of subsidiaries can make the comparisons of profits between
periods difficult. The Group monitors adjusted net profit as a key indicator
of performance and uses it as the basis for determining dividends and believe
it helps investors to understand how the underlying business in performing.
End CA:00279102 For:WHS Type:HALFYR Time:2016-03-11 08:30:01
