Warehouse revises up forecast earnings

The Warehouse today revised up its forecast for annual after tax earnings to $95-99 million from an earlier forecast of $83-88m.

The forecast includes a $1m profit on the disposal of profit but does not include losses on The Warehouse's Australian operation sold this year.

July year bottom line after-tax earnings were expected to be between $28m and $31m, the company said.

The country's biggest supermarket operator, Foodstuffs, yesterday completed a raid on the discount retailer for 10 per cent of its stock.

The Warehouse shares jumped 28c on the news to $5.05. They have traded between $5.13 and $3.44 in the last year.

It said the revision was prompted by sustained improvements in second half operating margins, a solid May/June trading performance from The Warehouse New Zealand and lower net interest costs.

Operating profit at the company's Red Sheds for the year would be ahead of expectations driven primarily by cost reduction initiatives and improving gross margin management, particularly in apparel.

Sales for May and June 2006 were 5.9 per cent ahead of the same period last year.

Good performances in grocery and seasonal categories such as winter manchester, apparel and appliances were significant contributors.

In the stationery division, operating profit for the year will also be ahead of expectations driven primarily by higher than expected sales. The contribution from the business-to-business channel remained in line with previous expectations.

Sales for May and June 2006 were 3.1 per cent ahead of the same period last year.

Sales of business machines and office furniture had been strong.

- NZPA