Warehouse shares fall on bad Xmas sales news

Warehouse chief executive Ian Morrice. Photo / Natalie Slade

Warehouse Group, New Zealand's biggest listed retailer, has revised its interim earnings downwards after sales declined over the key Christmas retailing period.

The shares fell 2.6 per cent to $3.41 after the announcement.

The Auckland-based company cut its forecast first-half profit to a range of between $51 million to $54 million in the six-months ended January 30, compared to the $57 million reported in the same period a year ago.

That comes after total sales fell 2.7 per cent in the two months ended January 2 compared to the same period last year, while same store sales declined 3.8 per cent. Flat revenues at its stationery outlets partially offset the fall, with same-store sales up 0.7 per cent.

"As widely reported retail sales in general have been very soft over this key seasonal trading period," chief executive Ian Morrice said in a statement.

"We expect the sector to remain difficult and highly promotionally driven over the course of our 2011 financial year, but New Zealand consumers clearly remain even more focused than we predicted on strengthening their balance sheets."

The results are broadly in line with weaker consumer confidence figures, which sank to an 18-month low in the December quarter according to the Westpac McDermott Miller Consumer Confidence Index. The survey quizzed kiwis on the Christmas gift spending intentions, and the results showed the median consumer planned to spend a net 36 per cent less on presents than they did last year, at a total of $413.

The retailer said the decline was lead by softer sales of consumer electronics, gaming, CDs and DVDs, which were "well down" on last year, although apparel, footwear and other seasonal categories traded in line with last year's levels.

Warehouse will release full-year earnings guidance with the first-half result on March 11.