Investors looking for Australian progress from The Warehouse

Ian Morrice has been working on fashion, house brands and store layouts. Picture / Martin Sykes

Warehouse investors will be looking for more news about plans to sell the company's loss-making Australian operations when the discount retailer opens its books this week.

The company is expected to reveal a full-year net profit within its previous guidance range of between $66 million and $71 million on Friday.

That figure compares to a net profit of $61.1 million last year on revenue of $2.2 billion.

A 17 cent lift in the company's share price last week - to Friday's close of $3.95 - reflected the expectation people would have more money in their pockets after the September 17 election, and retailers were bound to benefit, said a broker.

The stock is likely to push higher if the company's discussions with rival Australian retailer Millers Retail on the possible joint sale of stores has progressed.

In June The Warehouse confirmed it was talking to Millers which owns the Crazy Clarks and Go-Lo outlets and, like The Warehouse, has struggled to make a profit in Australia.

The Warehouse earlier said that it was reviewing various strategic options for its Australian business, which has consistently lost money - between $30 million and $40 million last year. It had hoped to break across the Tasman by 2007.

Revealing the company's third-quarter results - which saw sales at the Warehouse Australia down 8 per cent to $108 million - the company's new chief executive, Ian Morrice, said operations across the Tasman were on track to substantially reduce losses this year.

The question will be how much?

Macquarie Equities analyst Warren Doak said the fourth quarter was a seasonally insignificant one for retailers, for whom the Christmas quarter is key.

He expected the result to meet the $66 million to $71 million range, and would be looking at how margins in its core New Zealand business had stabilised after contracting sharply in the first half.

People would also be looking ahead to the next Christmas period, which would be the first real trading period where Morrice had been able to influence the company's sales direction.

Since he joined the company last year, Morrice has been introducing changes to better position the company for the long term.

These include offering more fashionable products, further developing house brands and testing new store layouts.

He has also revealed plans for two hypermarkets - stores that contain general merchandise and a full grocery, including fresh and frozen food - before the end of next year.