WHS
06/03/2014 09:02
HALFYR
REL: 0902 HRS The Warehouse Group Limited
HALFYR: WHS: The Warehouse Group 2014 Interim Results Announcement
THE WAREHOUSE GROUP LIMITED
Results for announcement to the market
Reporting Period: 29 July 2013 to 26 January 2014
Previous Reporting Period: 30 July 2012 to 27 January 2013
CONSOLIDATED OPERATING STATEMENT
2014 Half Year Performance
REVENUE
$1,420.409 million versus $1,097.152 million in 2013, an increase of 29.5 %
OPERATING PROFIT
$70.057 million versus $76.860 million in 2013, a decrease of 8.9 %
EARNINGS BEFORE INTEREST AND TAX
$85.067 million versus $139.963 million in 2013, a decrease of 39.2 %
PROFIT BEFORE TAX
$77.790 million versus $134.992 million in 2013, a decrease of 42.4 %
PROFIT ATTRIBUTABLE TO PARENT SHAREHOLDERS
$58.684 million versus $106.319 million in 2013, a decrease of 44.8 %
EARNINGS PER SHARE
19.0 cents per share versus 34.3 cents per share in 2013, a decrease of 44.6
%
Interim Dividend: 13.0 cps
Record Date: 12 March 2014
Date Payable: 19 March 2014
Tax credits on interim dividend: Fully imputed for New Zealand residents;
Supplementary dividend payable to non-residents.
PROGRESS AS THE WAREHOUSE GROUP CONTINUES TO RESHAPE ITSELF FOR GROWTH
Group Sales for H1 of $1,420 million
The Warehouse (Red Sheds) Same Store Sales up 4.1%
Warehouse Stationery (Blue Sheds) Same Store Sales up 4.9%
Noel Leeming Same Store Sales up 9.3%
Torpedo7 Group Total Sales growth over 30%
The Board of The Warehouse Group (TW Group) today announced an adjusted1 net
profit after tax of $46.2 million in line with recent guidance and down 12.5%
compared to $52.8 million last year. Reported net profit after tax for the
period was $58.7 million compared to $106.3 million last year when
significant one-off gains were made on the disposal of properties.
Sales in all retail brands were up year over year, resulting in Group sales
for the half of $1,420.4M up 29.5% compared to the first half last year.
Group Trading Profit (the profit from our retail brands) for the half was
down 3.1% vs last year as a result of the Q1 margin pressures in the 'Red
Sheds', with all other retail brands increasing their trading profit.
The Warehouse
The Red Sheds' reported sales for the first half of $920.1 million, an
increase of 6.2% or $53.5 million compared to the same period last year.
Same store sales increased 4.1% in the half. The 'Red Sheds' have now
recorded 12 quarters of positive same store sales. The major drivers of sales
growth in the half were the continuing sales growth in the Auckland market
and double digit sales growth in Womenswear, Menswear, Health & Beauty,
Jewellery, Consumer Electronics, Gaming, Small Appliances & Whiteware
categories.
Strong Christmas trading in the 'Red Sheds' delivered a solid Q2 result, with
3.4% same store sales and gross margins above last year. This solid Q2
result did not fully offset the Q1 margin impact resulting in gross margins
for the half down 40 bps compared to last year. Operating Profit for the
half was $60.6M a decrease of 7.8% over last year.
Commenting on The Warehouse result Group Chief Executive Officer Mark Powell
said "It has been at least a decade since the 'Red Sheds' grew same store
sales more than 4% in a half and had 12 quarters of consecutive growth. It
is still early days but we are pleased with the progress to date. We believe
that the actions we are taking to improve our products, prices, promotions
and store environment and the investment in our team members has started to
bring customers back to The Warehouse, as New Zealand's 'House of Bargains
and Home of Essentials'."
Warehouse Stationery
Warehouse Stationery (Blue Sheds) reported sales for the first half of $121.5
million, an increase of 8.6% or $9.6 million compared to the same period last
year. Same store sales increased 4.9% in the half with the 'Blue Sheds' now
recording 18 consecutive quarters of positive same store sales. Operating
Profit of $4.7M increased 28.1% over last year, with a 60bps improvement in
Operating Profit margins.
The major driver of sales growth in H1 has been the double digit sales growth
in Communications, Computers, Consumables and Copy Centers and the four new
stores opened in the past year. Commenting on the 'Blue Sheds' result Group
Chief Executive Officer Mark Powell said "Warehouse Stationery continues to
grow in a market where a number of the traditional categories are flat or
even in a state of decline. 18 quarters of positive same store sales and
close to double digit sales growth in the half reflects the recent rebranding
and 'work, study, create, connect' strategy, showing that our customers
appreciate the actions we are taking."
Noel Leeming Group
Noel Leeming Group reported sales for the first quarter of $328.8 million, an
increase of 14% compared to the same period last year2. Same store sales
increased 9.3%2 and Gross margins improved 30 bps2. This strong performance
was a result of the merging of Bond & Bond with Noel Leeming, double digit
Sales growth in all major product categories and improved gross margins.
Noel Leeming Group's Operating Profit of $6.8M increased 20% over last year,
although last year was a non comparable two month period vs a full six months
this year.
Commenting on the Noel Leeming result Group Chief Executive Officer Mark
Powell said "Across a range of areas Noel Leeming is contributing the
strategic benefits we expected as a result of the acquisition. It is still
early days and we will be investing in our store environment, the 'passionate
experts' in our stores and the range of services we offer our customers to
ensure that we remain New Zealand's leading Home Entertainment, Appliance &
Technology retailer."
Torpedo7 Group
Torpedo7 Group reported sales for the first half of $47.9 million, with sales
increasing 30% and Gross Margins growing more than 400 bps over the same
period last year3. We have made a significant investment in fulfilment
centre infrastructure & capacity along with TV & Digital advertising to
increase brand recognition in support of our multiyear growth plans.
Operating Profit in the half was $0.7M
In line with our strategic plan for Torpedo7 to be a leading multichannel
outdoor and adventure sport retailer we acquired and integrated No1 Fitness
and Shotgun Supplements. We also acquired R&R Sport in December and
post-Christmas started the process of range integration planning and strategy
development. TW Group recently entered into an agreement to increase its
ownership of Torpedo7 Group from 51% to 80%. "Torpedo7 Groups strategic
emphasis in FY14 is to integrate acquisitions and to build the brand for
future growth. We are investing to create a leading multichannel outdoor &
adventure sport retailer. We continue to be excited by the growth
opportunities we see in this area of our business" said Mr Powell.
TW Group
TW Group has been reshaped over the last two years with 4 clear Strategic
Priorities: First, to 'Keep the Red core strong'. Second, 'Growing Non-Red to
be as large as Red'. Third, to 'be the leading Multichannel retailer in New
Zealand' and fourth, to 'Leverage Group Competencies & Scale'. In a separate
announcement today The Warehouse Group has announced its intention to add a
fifth distinct strategic priority to 'be a leading NZ retail Financial
Services company'. TW Group has outlined a number of actions it will
undertake with respect to this important complementary 5th Strategic
Priority. These actions are likely to be slightly earnings dilutive in the
short term, with this impact being reflected in our FY14 guidance.
In announcing the result, Chairman Ted van Arkel commented "We are in an
ongoing process of reshaping The Warehouse Group, with each business at a
different stage in its journey. Opportunities such as Financial Services,
which has arisen because of our strategy, are exciting and will provide
material earnings to the Group in the medium term."
The Directors have declared an interim dividend of 13 cents per share.
Dividends will be paid on 19 March 2014. The record date is 12 March 2014.
NZX has issued a waiver from the requirement to provide 10 working days'
prior notice of the record date in this instance and accordingly, the record
date for the interim dividend is 4 working days after TW Groups interim
results announcement. Any shareholders wishing to adjust their
shareholdings prior to the ex date for the dividend will therefore need to
make any trades prior to market close on 7 March 2014.
Subject to any material change in anticipated trading conditions, the
Directors expect Adjusted Net Profit After Tax for the full year to be
between $67 million and $71 million. This Guidance includes earnings from
The Warehouse Groups existing businesses of $70M - $74M, and the FY14 H2
impact of Financial Services which could be a loss of up to $ 3M after tax.
The FY14 dividend is targeted to be 19 cents per share, comprising the 13
cent interim dividend and a final dividend targeted to be 6 cents. This
targeted 19 cents per share payout for FY14 and FY15 is subject to no
significant change in trading, ensuring we are meeting our obligations under
our Bank & Bond covenants and are able to provide appropriate levels of
funding for strategic initiatives.
Footnotes
1 A reconciliation of adjusted net profit to reported net profit is detailed
on page 7 of the NZX release and in note 14 of the condensed interim
financial statements. Certain transactions such as the sale of properties and
the release of warranty provisions 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 what is happening in the
business
2 Sales for Noel Leeming relate to continuing stores. Same store sales and
prior year sales comparisons are based on pre-acquisition proforma sales
information. TW Group acquired Noel Leeming Dec 2012
3 Sales & Gross Margins for Torpedo7 Group are based on pre-acquisition
proforma information. TW Group acquired Torpedo7 Group April 2013
ENDS
Background: The Warehouse Group Limited
The Warehouse Group Limited comprises 92 Warehouse stores, 76 Noel Leeming
stores and 63 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:
Investors and Analysts
Stephen Small
Chief Financial Officer
Cellphone: +6421 714159
Media
Mark Powell, Group CEO, to be contacted via Gayle Theuniissen
on +649 489 8900 X96333 or +6421 742784
End CA:00247869 For:WHS Type:HALFYR Time:2014-03-06 09:02:12
