WHS
18/09/2015 08:43
FLLYR
PRICE SENSITIVE
REL: 0843 HRS The Warehouse Group Limited
FLLYR: WHS: 2015 Full Year Results Announcement and Presentation
THE WAREHOUSE GROUP LIMITED
Results for announcement to the market
Reporting Period: 28 July 2014 to 2 August 2015
Previous Reporting Period: 29 July 2013 to 27 July 2014
CONSOLIDATED OPERATING STATEMENT
2015 Full Year Performance
REVENUE
$2,776.038 million versus $2,650.892 million in 2014, an increase of 4.7 %
OPERATING PROFIT
$91.433 million versus $95.169 million in 2014, a decrease of 3.9 %
EARNINGS BEFORE INTEREST AND TAX
$87.489 million versus $118.627 million in 2014, a decrease of 26.2 %
PROFIT BEFORE TAX
$71.282 million versus $104.764 million in 2014, a decrease of 32.0 %
PROFIT ATTRIBUTABLE TO PARENT SHAREHOLDERS
$52.433 million versus $77.750 million in 2014, a decrease of 32.6 %
ADJUSTED NET PROFIT ATTRIBUTABLE TO PARENT SHAREHOLDERS
$57.134 million versus $60.691 million in 2014, a decrease of 5.9 %
EARNINGS PER SHARE
15.2 cents per share versus 24.1 cents per share in 2014, a decrease of 36.9
%
Final Dividend: 5.0 cps
Record Date: 27 November 2015
Date Payable: 10 December 2015
Tax credits on final dividend: Fully imputed for New Zealand residents;
Supplementary dividend payable to non-residents.
STRONG SECOND HALF SETS A PLATFORM FOR THE FUTURE OF A RESHAPED WAREHOUSE
GROUP
The Board of The Warehouse Group today announced an Adjusted Net Profit After
Tax for FY15 of $57.1 million, which is above the guidance range of $52-$56
million previously indicated to the market. Group retail sales for the year
were $2,770.4 million, up 4.6% compared to last year.
The Group has rebounded strongly from a challenging first half year, with our
second half Adjusted Net Profit increasing 37.4%, from $14.5 million in 2H14
to $19.9 million in 2H15. As a result, the full year FY15 Adjusted Net Profit
After Tax (for a 53 week period) of $57.1 million was 5.9% lower than last
year (for 52 weeks), having been down 19.4% at the end of the first half.
Reported Net Profit After Tax was $52.4 million. Gains on property disposals
were offset by a noncash write down in the carrying value of the Torpedo7
Group, particularly No.1 Fitness, Shotgun Supplements and R&R Sport.
The Warehouse (Red Sheds)
Same store sales growth in the 4th quarter was 0.6%. The Red Sheds have now
reported 18 consecutive quarters of same store sales growth. Second half
operating profit in Red increased 56.6% from $16.3 million in 2H14 to $25.5
million in 2H15. For the full year Red Sheds operating profit was up 3.5%
year on year, compared to being down 10.7% in the first half.
This strong second half recovery was achieved by translating sales and margin
growth into profit leverage. Particularly strong growth was seen in the core
Home and Apparel categories, more than making up for the continued systemic
decline in CDs, DVDs, gaming and books. This is reflective of the ongoing
'House of Bargains' and 'Home of Essentials' strategy in Red. This strong
second half trading result was also helped by favourable winter temperatures.
The focus is now very much on profit leverage through 'better products and
better prices' to drive sales growth, and cost and working capital control.
Warehouse Stationery
Warehouse Stationery same store sales growth in the 4th quarter was 1.7%.
Warehouse Stationery has now reported 24 consecutive quarters of same store
sales growth. This growth supported by strong cost control, resulted in
profit leverage, with operating profit increasing 7.9% from $11.8 million in
FY14 to $12.7 million in FY15. The business is well placed competitively to
continue steady sales growth and profit leverage through its 'work, study,
create, connect' strategy.
Noel Leeming
Noel Leeming continues to grow market share with same store retail sales
growth in the 4th quarter of 8.5%. Its focus on people and services continues
to differentiate itself in a highly competitive technology and appliances
market. FY15 operating profit decreased 43.2% from $11.3 million in FY14 to
$6.4 million in FY15. The first half impact on operating profit of cycling
the digital switchover and one-off rebranding costs were not able to be
recovered in the second half.
Torpedo 7
FY15 was a year of significant change in Torpedo7, with results impacted by
the rebranding of the business and the integration of R&R Sport, No.1 Fitness
and Shotgun supplements. As a consequence, operating profit decreased from
$1.1 million in FY14 to just above breakeven in FY15. Total Torpedo7 sales
grew 21.9% in the year and since March the business has been able to focus
solely on trading with very encouraging results. Torpedo7 is well placed to
take advantage of the growing outdoor and adventure sports market in FY16.
Financial Services
The creation of the new Financial Services business continues on plan and the
FY15 loss of $1.8 million is in line with expectations. The group will launch
the first phase of its financial services products before Christmas.
Online
All of the Group's retail brands are fully online. In addition to straight
forward home delivery, all brands offer 'click and collect' (order online and
pick up in store) and 'endless' aisles' (order extended ranges from within
smaller stores) omni-channel services. The New Zealand online sales have
grown organically and through acquisition, from $18.8 million in FY11 to
$149.2 million in FY15.
Strategy and Outlook
The Strategy of the last four and a half years to 'Keep the Red Core Strong',
'Grow Non-Red', 'Be the Leading Digital Retailer in NZ', 'Be a Leading Retail
Financial Services Business' and 'To Leverage the Group Competencies and
Scale' has reshaped the group for the future.
Commenting on the results, Group CEO Mark Powell said that "the second half
performance was particularly encouraging. After a period of significant
catch-up investment it was good to see strong profit leverage from continued
sales growth. Also, with nearly $150 million annual online sales we are well
placed to take a lead in the industry wide digital revolution."
Group Chair, Ted van Arkel commented that "the CEO succession process is on
track and will allow a smooth hand-over. Meanwhile, the Directors and
management are focused on driving results through consistent sales growth,
cost control and profit leverage."
The Directors are pleased to announce a final dividend of 5 cps, bringing
total annual dividend to 16cps. The dividend policy going forward will be
75-85% of retail adjusted net profit after tax. The separation of financial
services results from the dividend policy reflects its longer term investment
profile. The new finance company's earnings will need to be reinvested over
the next few years to grow its capital base.
FY16 earnings will be significantly influenced by Christmas trading
performance and the expected losses associated with the launch of the new
financial services business. Therefore, it is too early to provide specific
earnings guidance for FY16. However, the current business performance,
coupled with key elements of the Group's strategic plan, should ensure that
Adjusted NPAT for the Group in FY16 is in line with that recorded in FY15.
ENDS
Note: Certain transactions, which the Group defines as unusual can make the
comparisons of profits between years difficult. The Group monitors adjusted
net profit which removes unusual items as a key indicator of performance and
uses it as the basis for determining dividends and believe it helps improve
the understanding of underlying business performance. A reconciliation of
adjusted net profit to reported net profit is detailed on page (5) of the NZX
release and in note 12 of the Audited Financial Statements.
Background: The Warehouse Group Limited
The Warehouse Group Limited comprises 92 Warehouse stores, 73 Noel Leeming
stores. 5 Lifestyle Appliance stores and 65 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 Powell, Group CEO to be contacted via Gayle Theunissen on +64 9
489 8900, Extn 96333 or +64 21 742 784
Investors and Analysts: Mark Yeoman Group CFO to be contacted via Kim Russell
on +64 9 489 3285 or +64 21 452 860.
End CA:00270359 For:WHS Type:FLLYR Time:2015-09-18 08:43:48
