Warehouse Group, the country's biggest listed retailer, expects lower first-half earnings as margins at its flagship Red Sheds come under pressure and it spends more on adjusting to a new competitive environment.
Adjusted net profit after tax is expected to be below $46.7 million in the first half after sales growth at its Red Sheds in the first quarter didn't translate into larger earnings. Also contributing to a more muted performance outlook is the retailer's investment in an expanded online presence and a series of acquisitions, retiring chairman Graeme Evans told shareholders at today's annual meeting in Auckland.
Annual earnings are expected to beat last year's $73.7 million, but by less than previously thought. The company will give more detailed guidance after the Christmas trading period, he said.
"While we were anticipating adjusted NPAT in the first half of FY14 to be in line with the first half of FY13, the gross margin pressure we commented on in our Q1 sales release and our continued investment in the business is likely to result in the first half FY14 adjusted NPAT falling below the first half of FY13," Evans said in speech notes published on the stock exchange.
"We are still expected adjusted NPAT for the full year of FY14 to be above the full year of FY13, although by less than we had initially expected," he said.