Australian writedown pushes Warehouse to half year loss

The Warehouse slid to a $7.96 million loss in the half year to January 29 after the company reported it had written off $87.8m on the sale of its Australian stores.

The loss compares with a $53.9m profit a year earlier.

It announced an unchanged, fully imputed dividend of 10.5cps to be paid on April 24.

The discount retailer sold its loss-making Australian chain of more than 120 stores to a private equity group last December for A$80 million ($92m).

Chief executive Ian Morrice said mixed signals suggested an uncertain consumer outlook for this year but the company was well positioned to respond if that continued.

Trading conditions since January had been mixed, with sales flat for the Red Sheds.

Adjusting for the Australian divestment full year, earnings were forecast at $83m to $88m, assuming no change in current trading conditions.

Total operating revenue fell nearly 10 per cent to $1.1 billion over the half year while sales from continuing operations rose 1.9 per cent to $933m.

The net operating profit after tax rose 11.1 per cent to $59.9m.

There was a 2.6c loss per share against a 17.6cps profit last year, but adjusted for the Australian divestment, eps rose to 19.6c.

Mr Morrice said The Warehouse New Zealand had a satisfactory performance, one year into a three-year transformation programme.

Warehouse Stationery achieved sustainable sales and margin gains as a result of a renewed focus on operational disciplines.

The dividend payout was 54 per cent on earnings adjusted for the Australian divestment.

Earnings before interest, tax and amortisation from continuing operations rose 7.4 per cent to $94.7m and cashflows from continuing operations rose 15.8 per cent to $106.3m.

Mr Morrice said the Red Sheds had good sales and contribution performance in apparel, entertainment and furniture but there had been higher than anticipated costs repositioning the company to have "everyday price leadership".

New format stores opened in the period continued to perform to expectations.

The company was continuing to focus on reducing the relative cost of doing business.

The Warehouse Stationery had a $3.3m ebita profit against $0.2m a year ago and its earnings to sales margin improved to 3.2 per cent from 0.2 per cent.

The Warehouse's total assets fell $255m to $657m mainly as a result of the sale of the Australian business.

Total gross capital expenditure fell 32 per cent to $30m during the period, while inventory and goods in transit fell by 43 per cent to $245m.

The Warehouse shares closed on Friday at $3.70. They have traded between $3.04 and $4.17 over the last 12 months.

- NZPA