First half Warehouse result down 76pc

Shoppers at The Warehouse. Photo / File

New Zealand's largest listed retailer The Warehouse Group has posted what it said was a "mixed" first half performance across the Group.

The company reported net profit after tax of $13.6 million for the first half of 2017 to January 29. This was down 76 per cent from $57.2m in the first half of 2016.

Adjusted net profit was $39.7m - down 12.9 per cent.

This was in line with its downgraded profit guidance which was issued in December.

In a statement just before Christmas, the company said its performance in the lead up to Christmas had been below expectations and it was unlikely this would be entirely recouped.

In its result, the Group said a weak performance in its Red Sheds business coupled with a larger year on year loss in its Financial Services was only partially offset by a strong result from Noel Leeming.

It said a number of one-off costs from operating model changes and the previous acquisition of its Financial Services business had also impacted on the result.

Group retail sales for the period were $1.6 billion, up 3.3 per cent on the previous first half result. Gross profit rose 1.2 per cent to $519m.

The Group encompasses The Warehouse, Noel Leeming, Warehouse Stationery and Torpedo7.

Group chief executive Nick Grayston said the mixed result highlighted the need for the company to accelerate change and restore sustainable profit growth.

He said the Group Strategy outlined at its full year 2016 result was being implemented.

"The new operating model will drive greater operational synergies, particularly in the Red and Blue sheds, increase our focus on e-commerce and digital capabilities, and allow Group to play a stronger and more objective role in guiding the performance of the portfolio," Grayston said.

"The second half of this financial year will therefore represent a period of transition as we prepare the organisation for future success whilst at the same time ensuring we stabilise current performance trends."

Grayston said the company's strategy was to get the retail fundamentals right and invest to remain relevant for its customers.

He said the company needed to compete effectively to ensure the sustainability of the business long-term.

"The company must evolve, and not doing so is the riskiest decision this company could make," he said.

The company expected adjusted net profit for the full year to be between $54m and $58m, representing a ten to 15 per cent profit decline year on year.

The full year dividend was targeted to be 15c per share.

Last month the company announced a restructure of its organisation, resulting in the loss of around 130 jobs. Grayston said the move was aimed at streamlining operations.

Estimated savings resulting from the restructure were between $15m and $20m, which included salary savings, reduced external provider costs and other overheads, Grayston said.

The Warehouse Group share price opened at $2.57, and has declined 3.3 per cent in the last 12 months.