The Warehouse Group expects its EBIT for the current financial year to be “between a $5 million loss and a $5 million profit”.

Although the group experienced a 2.2 per cent sales growth in the third quarter of the year compared to the same period last year, its fourth-quarter sales faced several challenges, the company said in a stock market filing. 

Reduced consumer confidence, combined with a delayed winter, led to a highly promotional retail landscape, and the company experienced greater-than-expected trading variability across The Warehouse, Noel Leeming, and Warehouse Stationery.

As the timing of New Zealand’s economic recovery remains uncertain, consumers continue to maintain discretion in their spending. 

“Now that the cold has set in, our sales momentum has returned with Q4 to date sales ahead of the same period last year,” said the group’s interim CEO, John Journee.

“While this is encouraging, the current market conditions are impacting margins,” he said. 

The company has shifted its focus to managing costs, inventory, working capital and net debt. 

“We have strengthened our financial discipline, including prudently managing costs, inventory, working capital and net debt,” said Journee.

“We continue to streamline operations, update legacy systems, and improve customer conversion with new product ranges and better value. 

“We are confident that the steps we are taking will drive a much-needed improvement in performance over time once fully scaled.”

The Warehouse Group will release its full annual results for this financial year in the first week of October.