Warehouse third quarter sales modest as slowdown bites

Discount retailer The Warehouse today posted a modest increase in third quarter sales as the softening economy continued to bite.

The Warehouse said sales in the three months to April 30 were $386.4 million, up 1.3 per cent on the same period a year earlier.

The retailer said demand remained "patchy", with economic indicators suggesting an "uncertain consumer outlook" for the rest of the year.

The Warehouse said it was sticking with previous full-year earnings guidance of between $83 million and $88 million, after adjusting for the divestment of its Australian discount arm.

Group sales for the financial year to date of $1.318 billion were 1.7 per cent ahead of the same period last year.

Third quarter sales for its flagship Warehouse NZ division were down 0.3 per cent on the same period a year ago at $327m , while year to date sales were up by 1 per cent.

Same store sales for the quarter declined 2.7 per cent in the quarter to be down 1.7 per cent in the year to date.

"Continuing patchy consumer demand and the late onset of winter have affected our seasonal categories, with the result that The Warehouse NZ sales were below our expectations for the quarter," Warehouse chief executive Ian Morrice said.

"Although there were highlights in the sales performance, including the addition of Apple iPods to our range late in the quarter, these gains did not compensate for a slower start to winter merchandise sales."

While no new stores opened in the quarter, the Pakuranga store extension was completed in early April.

In contrast, Warehouse Stationery had a strong third quarter, with sales, at $59.4m, up 11 per cent on the same period a year earlier.

Year-to-date sales at $159.5m were 6.3 per cent ahead of last year.

Same store sales were up by 11.9 per cent in the quarter and 4.6 per cent for the year to date.

The Warehouse opened its first Warehouse Cellars store in Tauranga in April -- offering wine and beer alongside its existing grocery range. The store was trading well.

The next major development for group is opening the first in-store pharmacy at its Te Rapa concept store in Hamilton in the fourth quarter.

The Warehouse will also go head-to-head with the major supermarket chains, opening its first Warehouse Extra format store in Sylvia Park, Auckland, in June.

At 12,500sq m, The Warehouse Extra store will be the first in Australasia to offer customers a Walmart-style non-food and food product range under one roof.

"This is a new way of shopping for New Zealanders," Mr Morrice said.

As well as the general merchandise and apparel usually found in a Warehouse store, customers would find fresh food, a full grocery range, wine and beer, an in-store pharmacy, a cafe and a bakery.

The Warehouse jettisoned its troubled Australian discount offshoot in November last year and now has 85 Warehouse New Zealand stores and 43 Warehouse Stationery stores.

The company has 10,000 employees across New Zealand.

Shares in The Warehouse last traded on Friday at $3.95 against a year high of $4.17 and a low of $3.04.

- NZPA