WHS
06/11/2015 09:03
QUARTER
PRICE SENSITIVE
REL: 0903 HRS The Warehouse Group Limited
QUARTER: WHS: First Quarter Sales Update
THE WAREHOUSE GROUP FIRST QUARTER: CONTINUED SALES MOMENTUM
Group Sales for Q1 of $634.5 million
The Warehouse (Red Sheds) Same Store Sales of 3.6%
Warehouse Stationery (Blue Sheds) Same Store Sales of 4.1%
Noel Leeming Same Store Sales of 10.2%
Auckland, 6 November 2015
The Board of The Warehouse Group (TWG) today reported first quarter ending
November 1st retail sales of $634.5 million, up 7.7% from the same quarter
last year. All the Group's retail brands delivered strong sales uplifts in
the quarter. These sales results continue the positive trading momentum that
the Group reported in the second half of FY15.
The Warehouse
The Warehouse (Red Sheds) reported sales for the first quarter (Q1) of $373.9
million, an increase of 4.1% or $14.7 million compared to the same quarter
last year. Same store sales increased 3.6% in the quarter with the Red Sheds
now recording 19 consecutive quarters of positive same store sales. On a
like-for-like basis same store sales increased by 1.8%, which could be
considered as a better indicator of underlying sales performance, as it
accounts for the change in timing of Labour Day, which has fallen in Q1 this
year, as opposed to Q2 last year. As well as sales growth, gross margins have
improved on last year, largely as a result of a strong exit from the winter
season for apparel and home.
The major drivers of sales growth in Q1 were the successful launches of new
season ranges in the core Home and Apparel categories. This was supported by
strong performances from the Gardening, Hardware & Automotive, Jewellery and
Celebrations categories. This has been offset by lower sales in the
Entertainment category as we continue to see market challenges in the
Communications, Computing, Gaming and Music and DVD categories.
The Red Sheds continues to expand its digital capability, with customers
increasingly adopting the "Endless Aisles" and "Click and Collect" options
available to them. One third of our online sales now utilise the "Click and
Collect" service. The integrated online and physical stores offer is proving
to be very popular with customers.
Commenting on the Red Sheds' result Group Chief Executive Officer Mark Powell
said "achieving 19 consecutive quarters of same store sales growth continues
the positive momentum that has been building in the Red Sheds as a result of
significant investment over the last 4 years. Significant progress on
strategic initiatives in the business, particularly those focused on
continuing to improve quality, range, price and our in-store experience, have
been well received by our customers with both sales and transaction volumes
showing growth in the quarter."
Mr Powell added that "This sales growth was achieved with low levels of
clearance activity, resulting in improved gross margins compared to last year
while stock levels are well positioned ahead of the important Christmas
trading period."
Warehouse Stationery
Warehouse Stationery (Blue Sheds) reported sales for the first quarter of
$62.8 million, an increase of 7.7% or $4.5 million compared to the same
quarter last year. Same store sales increased 4.1% in the quarter with the
Blue Sheds now recording 25 consecutive quarters (or over six years) of
positive same store sales. On a like-for-like basis same store sales
increased by 3.3%.
"This has been yet another strong quarter for Blue Sheds, reaffirming their
customer centric strategy (everything you need to work, study, create,
connect) in a competitive sector" said Mr Powell. During the quarter Blue
Sheds opened a new store in Queenstown, an important market previously
without Blue Sheds representation.
Noel Leeming
Noel Leeming reported sales for the first quarter of $163.9 million, an
increase of 14.5% compared to the same quarter last year. Quarterly same
store sales increased 10.2%. The technology and appliances market remains
extremely competitive which places pressure on margins, however our market
share continues to grow, reflecting the differentiation Noel Leeming is
building through its strategy of delivering customer service excellence.
The strong result for Q1 FY16 builds on the stronger trading performance
recorded in the second half of the FY15, and is assisted by the fact that
last year's sales numbers were impacted by limited stock availability in
smartphones and the cycling of the digital switchover.
Particular successes have been in Cellular which has recorded a standout
performance with strong customer demand and good availability of key models.
Our Wearables category also performed well reflecting keen demand for fitness
products and the introduction of Apple Watch in a number of our stores.
During the quarter we consolidated our two stores in Whangarei into one store
with a full service offering.
Torpedo7 Group
Torpedo7 Group reported sales for the first quarter of $33.9 million, up
18.1% compared to the same quarter last year. Commenting on the Torpedo7
Group result, Mr Powell said, "Following the results for Torpedo7 in FY15 we
acknowledged the need to deliver improved performance. These Q1 results are a
positive sign of the progress we are making."
Sales growth to drive profit growth has been delivered across both online and
physical store channels as a result of improvements in stock availability,
product range, and targeted promotions across all channels.
Online
Group online sales (NZ) were $37.0M, up 15.9% compared to the same quarter
last year (up 13.6% on a like-for-like1 basis). All brands have shown growth
in online sales.
TWG
In October 2015 the Group sold the South Dunedin Warehouse store property for
a consideration of $14.1 million realising a pre-tax gain of approximately
$5.4 million.
In announcing the result, Group CEO Mark Powell said, "We are continuing to
focus on delivering profit improvement for our shareholders after a period of
reshaping and investment and this starts with maintaining positive sales
growth. Q1 has certainly delivered on that across all brands. It is
important to remember that Q2 is where the majority of the sales and profit
performance for the half year happens. These first quarter results give us
good momentum heading into the Christmas and summer trading period, however
we still have a lot of work to do in the quarter ahead".
The Warehouse Group recently announced the appointment of Mr Nick Grayston as
its new Group Chief Executive. Mr Grayston will start in early December, with
a handover from Mr Powell over the summer period.
The Annual Meeting of shareholders will take place on Friday 20th November
2015.
Note 1: Same store sales calculated on a "like for like" basis are adjusted
for the timing effects of last years' 53rd week period. This means that the
comparable period last year for the first quarter "like for like" same store
sales calculation is the 13 week period ending 2nd November 2014.
Note: 2: "Endless Aisles" and "Click and Collect" are multichannel shopping
services. "Endless Aisles" is where a customer can place an online order in a
store, when that does not stock that item. "Click and Collect" is where a
customer orders online for delivery to a store of their choice, where they
collect the order.
ENDS
Background: The Warehouse Group Limited
The Warehouse Group Limited comprises 92 Warehouse stores, 72 Noel Leeming
stores, 5 Lifestyle Appliance Stores and 66 Warehouse Stationery stores in
New Zealand plus several online businesses. The Group had an annual 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 Gayle Theunissen as above.
End CA:00272953 For:WHS Type:QUARTER Time:2015-11-06 09:03:13
