WHS
23/01/2014 08:30
FORECAST
REL: 0830 HRS The Warehouse Group Limited
FORECAST: WHS: Trading Update
Auckland, 23rd January 2014
TW Group reports strong Christmas Trading but not enough to fully offset Q1
margin impact in the 'Red Sheds'
The Board of The Warehouse Group (TW Group) today reported that Christmas
trading across the group was strong. The Warehouse 'Red Sheds' is expecting
an increase in same store sales for the half of 4%, total sales growth of 5%,
and a recovery in Q2 gross profit margins to FY13 Q2 levels. However, this
strong Christmas result will not fully offset the previously disclosed Q1
margin issues in the 'Red Sheds' and will result in a forecast Adjusted NPAT
for Group in H1 of $46 - 48M.
Mark Powell, Group CEO said "we are pleased with how all of our retail brands
traded over the critical Christmas period and the Trading Profit (the profit
delivered by our retail businesses) is likely to be down only 1 - 2% in the
half, recovering much of the ground lost in the first quarter. This reflects
the progress we are making as we reshape the Group, in a retail market that
is undergoing significant change." This strategic reshaping of the TW Group
has required significant investment in both the core 'Red Sheds' business and
in new retail verticals, with the acquisition of Noel Leeming and in a number
of multichannel businesses. As expected this has resulted in an increase in
funding costs and a reduction in rental income in the Group segment. These
two items alone will account for approximately half of the reduction vs last
year in Adjusted NPAT, and while important, are more related to TW Group's
funding structure and property ownership than the underlying trading
performance.
Online continues to be a significant game changer in the retail market. In
line with its strategy to be the leading multi-channel retailer in NZ, TW
Group has continued to invest in growing its online businesses with
investments in infrastructure, resources, marketing and customer acquisition
in RedAlert.co.nz, Pet.co.nz, iLovebeauty.co.nz, No1 Fitness.co.nz,
ShotgunSupplements.co.nz, Torpedo7.co.nz, CoLabel.co.nz and its bricks and
mortar brands online sites. This investment is critical to the long term
success of TW Group.
TW Group Chairman Ted van Arkel said "The Board is fully committed to the
strategy which will enable the TW Group to best navigate the ongoing changes
in the retail market in order to create long term value for our shareholders.
While the expected result in H1 is below last year, management acted quickly
to address the margin issues identified in the first quarter, with the
improved margins and sales in the 'Red Sheds' in Q2 strongly supportive of
the strategic direction."
Full year guidance will be given at the half year results release on March
7th, but the improved trend of the second quarter is expected to flow through
into the second half.
ENDS
Background: The Warehouse Group Limited
The Warehouse Group Limited comprises 92 Warehouse stores, 75 Noel Leeming
stores and 61 Warehouse Stationery stores in New Zealand and several online
businesses. The company had turnover of $2.2 billion in FY13 and employs
over 10,000 people.
Contact details regarding this announcement:
Media
Mark Powell, Group CEO, to be contacted via
Gayle Theunissen on +649 489 8900 x96333 or Mobile:6421 742 784
Investors and Analysts
Stephen Small
Group Chief Financial Officer
Mobile: 6421 714 159
End CA:00246302 For:WHS Type:FORECAST Time:2014-01-23 08:30:15
