The Warehouse Group profit grows over 25 per cent in FY19
The Warehouse Group has lifted net profit by 25.6 per cent to $74.1 million during FY19, driven by improved sales and a higher gross margin.
Group retail sales grew 2.6 per cent to $3.07 billion, while all four of the conglomerate’s major brands – The Warehouse, Noel Leeming, The Warehouse Stationery, and Torpedo7 – also saw sales growth.
“While we are proud of what we have achieved this year, there is still more work to be done and we are conscious of the ever-changing retail landscape,” Warehouse Group chair Joan Withers said.
“We are committed to our long-term plan of improving the profitability of The Warehouse Group and we are confident that we are on the right track.”
Group online sales grew 18 per cent, and contributed 7.8 per cent of total group sales.
“While online sales currently make up a small percentage of total retail sales, they are a critical part of our growth strategy,” said Warehouse Group chief executive Nick Grayston.
“After balance date, we launched our new digital platform TheMarket, part of the execution of our wider strategy to construct an enhanced service-based ecosystem around our business.”
According to Grayston, the overall result was due to the discipline, tenacity and hard work of the retail group’s team members.
“The considerable work done over recent years is now evident on the bottom line which is gratifying, and we are looking forward to delivering on the next steps of our strategy,” Grayston said.
Pointing directly to the Warehouse brand, Grayston said its 0.6 per cent sales increase to $1.7 billion was due to warmer weather in the second half, as well as improved inventory management and supplier terms. Same store sales grew 1.5 per cent for the year, while operating profit grew to $85 million – a 5 per cent improvement.
The Warehouse Stationery, however, recovered from system integration and stock availability issues to deliver a record gross profit of $112.8 million, and a 6.2 per cent growth in operating profit to $16.6 million.
“The focus on delivering valuable solutions for customers and careful management of costs has paid off despite industry headwinds in core stationery categories,” Grayston said.
Noel Leeming also saw record operating profit growth of 4.1 per cent of $38.1 million, while Torpedo7 saw expansion costs cause the year to end in an operating loss of $7 million.
“We see this business as having a lot of potential, but continued focus is important,” Grayston said.
“To that end, we recently appointed Simon West as CEO for Torpedo7, who will ensure a dedicated focus for the business.”
Looking toward the next financial year, Grayston said that the group’s efforts to fix the retail fundamentals within the business and invest in a digital future was already showing promise, however it wouldn’t provide an earnings guidance for FY20 until the end of the “critical” second quarter.