WHS
06/03/2015 08:30
HALFYR
PRICE SENSITIVE
REL: 0830 HRS The Warehouse Group Limited
HALFYR: WHS: The Warehouse Group 2015 Interim Results Announcement
THE WAREHOUSE GROUP LIMITED
Results for announcement to the market
Reporting Period: 28 July 2014 to 25 January 2015
Previous Reporting Period: 29 July 2013 to 26 January 2014
CONSOLIDATED OPERATING STATEMENT
2015 Half Year Performance
REVENUE
$1,447.312 million versus $1,420.409 million in 2014, an increase of 1.9 %
OPERATING PROFIT
$56.990 million versus $70.057 million in 2014, a decrease of 18.7 %
EARNINGS BEFORE INTEREST AND TAX
$63.384 million versus $85.067 million in 2014, a decrease of 25.5 %
PROFIT BEFORE TAX
$55.708 million versus $77.790 million in 2014, a decrease of 28.4 %
PROFIT ATTRIBUTABLE TO PARENT SHAREHOLDERS
$43.280 million versus $58.684 million in 2014, a decrease of 26.2 %
EARNINGS PER SHARE
12.5 cents per share versus 19.0 cents per share in 2014, a decrease of 34.2
%
Interim Dividend: 11.0 cps
Record Date: 02 April 2015
Date Payable: 16 April 2015
Tax credits on interim dividend: Fully imputed for New Zealand residents;
Supplementary dividend payable to non-residents.
Auckland, 6 March 2015
Challenging first half but strategy remains on track
The Board of The Warehouse Group (TW Group) today announced an Adjusted Net
Profit After Tax result of $37.2M for the half (H1 FY15), down 19% compared
to $46.2M in H1 FY14, in line with recent guidance. Reported Net Profit
After Tax for the period was $43.3M compared to $58.7M in H1 FY14, with the
previous year's result including additional profits from property disposals
and acquisition adjustments. Group retail sales for the period were
$1,444.7M, up 1.7% compared to H1 FY14.
The lower Adjusted Net Profit result was largely a result of softer trading
performances in the 'Red Sheds' and Noel Leeming. The trading performance
was impacted by a late start to summer seasonal trading and cycling of the
Digital Switch Over (DSO), affecting sales in the Entertainment and Consumer
Electronics categories. The result was also negatively affected by a number
of planned one-off non-recurring costs relating to strategic investments.
These included the rebranding of both Noel Leeming and Torpedo7. The
inclusion of Diners Club (NZ) in the results, which contributed a modest but
planned EBIT loss, affected comparable performance in the half as Diners Club
(NZ) was acquired in March 2014.
The Warehouse
The Warehouse ('Red Sheds') reported sales of $928.7M for H1 FY15, an
increase of 0.9% or $8.6M compared to the same period last year. Same store
sales increased 0.9% in the half. The 'Red Sheds' have now recorded 16
quarters of positive same store sales growth. Second quarter trading was
impacted by a cool spring season and a late start to summer requiring
additional promotion and discounting. Strong sales recovery from Boxing Day
through January was not enough to offset the softer November/December period.
Operating profit for the half was $54.1M, a decrease of $6.5M or 10.7% on H1
FY14.
Categories performing well were Home, Leisure, Outdoor, Consumables and our
new range of Schooltex products. These strong performances were offset by a
decline in the Entertainment category, with the ongoing decline in DVDs and
CDs compounded by the decline in TV sales with the DSO cycling.
The Warehouse's online sales grew strongly in the half and were up 30% in Q2.
The multichannel 'Bricks and Click' model is proving highly competitive with
'Click and Collect' purchases now representing 20% of online sales. This
reinforces the strong position that the Group has built as the country's
leading online retailer.
Commenting on the 'Red Sheds' result Group Chief Executive Officer Mark
Powell said "The Warehouse had a challenging half. With the store investment
program now largely complete the focus will be on continuing to drive sales
growth, while improving productivity to gain profit leverage".
Warehouse Stationery
Warehouse Stationery ('Blue Sheds') reported sales of $124.4M for H1 FY15, an
increase of 2.4% on H1 FY14 ($121.5M). Same store sales increased 0.7% in the
half with the 'Blue Sheds' now recording 22 consecutive quarters of positive
same store sales growth. Operating profit of $4.8M increased by 2.3% over the
same period last year in line with sales growth.
Noel Leeming
Noel Leeming reported sales of $330.4M for H1 FY15, a 0.5% increase on the
same period last year. Same store sales declined by 1.4% in the half.
Despite this decline Noel Leeming increased market share in the technology
and appliances market.
The softer sales performance and increased costs associated with initiatives
such as the rebranding of Noel Leeming, resulted in an Operating Profit of
$2.3M, $4.5M down on the same period last year. A strong rebound in sales in
January was insufficient to offset the Q2 performance.
Commenting on the Noel Leeming result Group Chief Executive Officer Mark
Powell said "After the rebranding Noel Leeming is now well positioned to
consolidate its market leading position and translate that into profitable
growth".
Torpedo 7 Group
Torpedo7 Group reported sales of $64.2M for H1 FY15, up 34.2% on the H1
FY14. This reflects the first full half of operating with the combined R&R
Sports, Shotgun Supplements and No 1 Fitness businesses which were all
acquired in H1 FY14.
Torpedo7 was rebranded in the first half, launching a new look webstore,
converting the R&R Sport stores and opening three new physical stores in
Albany, Mt Wellington and Taupo.
These investments have positioned Torpedo7 for the future, but resulted in an
Operating loss of $0.2M in the half, compared to a profit of $0.7M for the
same period last year.
Financial Services
The Financial Services business reported an Operating loss of $1.4M for H1
FY15 in line with expectations as part of the long term strategy to build a
leading retail financial services business.
TW Group
TW Group has invested significantly over the last few years as part of its
strategic transformation journey. The next phase of that journey will be
focused on consolidating and leveraging those investments for profit growth.
In announcing the result, Chairman Ted van Arkel commented that "while the
Board recognise that the half was challenging in many respects, strategically
a strong base has been built for the future, with the priority now to deliver
a satisfactory return on the investments made."
Subject to any material change in anticipated trading conditions, the
Directors expect the second half profit to be in line with, or above the
second half result last year. The expected Adjusted Net Profit After Tax for
the full year is between $52M and $56M.
The FY15 dividend is targeted to be 16 cents per share, comprising an interim
dividend of 11 cents per share and a final dividend of 5 cents per share.
This is a reduction from the previously indicated 19 cents per share. Given
the decline in profit outlook resulting from the first half, the Directors
consider it prudent to reduce the targeted FY15 dividend to 16 cents per
share. This recognises the Directors' intention to deliver on long term
undertakings made during the capital raising last year, and their confidence
in the fundamentals of the Group strategy. However, this is balanced with
the need to prudently manage the business in a highly competitive trading
environment.
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 +64 21 778 404
End CA:00261525 For:WHS Type:HALFYR Time:2015-03-06 08:30:24
