The Warehouse Group reported a 13 per cent decline in its annual earnings in what the company said was a period of “significant change” for the business.
Net profit adjusted for one-time items was $59 million in year ending July 29 which was within the $58 million to $59.5 million range the company gave in late August.
The company posted a 12 per cent increase in net profit to $22.9 million which includes a number of one-off items, notably a $25.6 million write down in the value of goodwill relating to the Torpedo7 business. It is the full remaining goodwill carrying amount that was created when The Warehouse bought the business in 2013 and 2014.
Joan Withers, Warehouse Group chair, said the group had delivered an encouraging result, given the context of the year.
“2018 was a challenging year,” Withers said. “We began a transformation program to accelerate our strategy, made a major change to our operations with the move to EDLP in the core The Warehouse business, and continued to integrate our business across the group.”
She said given the significance of these changes, the result ahead of guidance is pleasing.
“Noel Leeming had a standout year and continued to benefit from execution of consisten strategies and the expertise offered through the assisted sales and service model, delivering annual revenue growth of 8.6 per cent to $880.5 million in FY18,” said Nick Grayston, group chief executive.
Grayston said the transition to the everyday low prices model at its Warehouse red-barn stores has impacted sales less than they have anticipated. The group reported a 2.5 per cent drop in revenue at The Warehouse to $1.7 billion but units sold lifted 6.6 per cent.
The group posted an 8.6 per cent growth for appliance retailer Noel Leeming to $880.5 million while the group’s blue-shed Warehouse Stationery chain saw a 5.3 per cent drop in revenue to $263.8 million.
Sports retailer Torpedo7 posted a 3.6 per cent growth in revenue to $163.4 million.
Group online sales in New Zealand has risen by 6.6 per cent to $221.1 million.
Grayston did not provide a full-year guidance for FY2019 but said the company’s earnings outlook would be dependent on the Christmas trading period.
