Warehouse beats profit forecasts

the_warehouse_storeThe Warehouse Group has beaten its annual profit forecast after a better-than-expected second half.

Adjusted profit fell 7.7 per cent to $59.2 million in the year ended July 30, from $64.1 million a year earlier, it said on Friday. That’s ahead of the company’s forecast for adjusted profit of $54 million to $58 million.

Net profit slumped 74 per cent to $20.4 million as it wrote down the financial services unit it sold by $40.1 million and booked $12.4 million in restructuring costs.

Those costs were offset by an $11.5 million gain from property divestments, including the sale of its Newmarket property.

Under the leadership of chief executive Nick Grayston the group has embarked on a three-year strategy to lift profitability by removing the complexity and cost of an inefficient operating model and reshaping the company’s physical footprint to support the digital business.

It cut 143 non-store based roles in the second half, which is expected to reduce annual costs by $17m.

“We have made significant headway in transforming the business over the last year,” chairwoman Joan Withers said.

Warehouse will pay a 6 cent final dividend, keeping its annual payment at 16 cents for a third straight year.

In the company’s largest unit, operating profit at its 92 “red shed” Warehouse stores fell 5.4 per cent to $84.5m as sales remained flat at $1.76 billion.

The company said while profit was lower in the first half, it improved in the second half, lifting to $25m from $23.9m a year earlier.

The apparel business performed strongly throughout the year, however, this was offset by weaker performance in some of the general merchandise categories.

OTHER WAREHOUSE OPERATIONS:

* Noel Leeming stores boosted operating profit 60 per cent to $19.3m

* Warehouse Stationery ‘blue shed’ stores increased operating profit 10 per cent to a record $15.7m

* Torpedo7 sports chain posted a 21 per cent drop in operating profit to $2.7m

* The group’s online sales rose 18 per cent to $199.9m.

Warehouse shares fell 0.5 per cent to $2.01 and have dropped 29 per cent this year.

 

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