The Warehouse Group has posted a lift in first-half profit as it continues to restructure and invest in digital services.

New Zealand’s largest retailer posted a 12 per cent rise in net profit to $35.8 million in the 26 weeks ending January 27 compared to the $31.9 million from the previous corresponding period.

Taking out $2.2 million of restructuring costs and the exited financial services unit, underlying earnings rose 5.9 per cent to $37.4 million.

Sales rose 2.7 per cent to $1.64 billion.

The retailer, which also owns Red Sheds, Warehouse Stationery, Noel Leeming and Torpedo7, said its exit from its ill-fated financial services division and transformation programme have started paying off.

“We’re making good progress, we still have a large job in front of us but we are on track,” said Joan Withers, The Warehouse Group chair.

Withers said key achievements for the transformation programme in the first half included delivering a store performance enhancement programme, improvements in speed-to-shelf, in-store availability and inventory management.

Nick Grayston, company chief executive, said the improved result came despite a flat Christmas trading period experienced across the retail sector.

Grayston said while the group’s core strategy of fixing the retail fundamentals and investing in the digital future remains the same, mid-term and longer-term strategy is being reviewed to ensure future growth.

The Warehouse announced it anticipates annual earnings to be $63-66 million. That compares to earnings of $59 million in the 2018 financial year.