Warehouse lifts profits 13pc to $74m

The Warehouse's pay rise comes into effect on August 1. Photo / Dean Purcell

New Zealand's biggest listed retailer, The Warehouse Group says adjusted net profit lifted 13 per cent to $73.7 million in the year to July 28 on the back of revenue growth from three new Red Sheds stores in Auckland and strong consumer electronics, beauty and confectionery sales.

The company said full-year reported net profit, which includes gains made on property sales, rose 61.1 per cent to $144.7 million.

See the company's results presentation here.

Total group sales, which includes the contribution from its newly acquired Noel Leeming consumer electronics business, which it purchased in December, lifted 29.3 per cent on the previous year to $2.2 billion.

Sales at the firm's core Red Sheds stores rose 4.4 per cent, while same store sales increased 2 per cent.

The Warehouse said the three new Red Sheds stores in Mt Roskill, Royal Oak and Silverdale had improved the firm's performance in Auckland.

The completion of 28 store refits by end of the year had also driven revenue growth, the company said.

Chief executive Mark Powell said Red Sheds' operating profit for the year was up 5.3 per cent to $85.2 million, which indicated that the firm was "starting to head in the right direction".

"We will continue to invest in store refit and our people in FY14," he said.

The company said that despite one of the warmest winters on record, gross margins rose 1.3 per cent to 36.3 per cent - their highest level in several years.

Warehouse Stationery opened five new stores during the year and increased sales 12.2 per cent to $231.8 million, while same store sales lifted 2.8 per cent.

Noel Leeming posted sales of $390.7 million, an operating profit of $11 million and same store sales growth of 7 per cent during its first eight months under Warehouse ownership, the company said.

The company said Torpedo7, the Hamilton-based online sports gear retailer in which The Warehouse acquired a 51 per cent stake earlier this year, had sales of $24.2 million and earnings before interest and tax of $700,000, in line with expectations.

The Warehouse group chairman Graham Evans said good progress was being made on the transformation of the company that was taking place under Powell's leadership.

"The Board is confident this strategic focus will continue to deliver results for our shareholders," Evans said.

He said the level with which Christmas trading affected earnings made it difficult to give specific guidance on the year ahead, but adjusted net profit for 2014 financial year should be higher than today's result.

The company declared a final dividend of 5.5 cents per share, representing 89 per cent of adjusted earnings, to be paid on December 12.

Shares, which have gained almost 30 per cent in the past year, opened at $3.76 this morning.