The Warehouse delivers 17pc profit rise

Plans $100m bond offer

PROFIT RISE: The Warehouse has reported a 17 per cent rise in half year earnings.

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The Warehouse has reported a half-year net profit of $57.4 million, an increase of 17 per cent year on year.

Revenue for the six months ending January dipped 0.5 per cent to $918.92m.

The retailer's 2009 half-year result of $49m was partly due to a $7.4 million post tax charge relating to the exit from fresh food and liquor.

Adjusted net profit after tax for the half year ended 31 January 2010 was $57.0 million compared to adjusted net profit of $56.8 million last year, excluding unusual items.

Adjusted revenue was up 0.7 per cent on last year to $918.9m.

The half-year result is in line with analysts' expectations.

Chief Executive Ian Morrice said: "The recovery in overall retail spending remains patchy with some specialist sectors seeing quite a bounce-back from the recessionary levels of 2008/9. Department stores as a sector has not seen the lifts experienced by softgoods, clothing and appliance specialists in the second six months of 2009. The Warehouse' sales performance reflects this.

"Our strong overall margin performance achieved in the first half of the 2009 financial year has been maintained, although having planned for increased sales which didn't eventuate, we have needed to clear more seasonal inventory than the same period last year impacting gross margins. We are pleased with the progress we are continuing to make on a number of our growth initiatives but these gains are not yet sufficient to offset the exit from fresh food and liquor and sales shortfalls in other areas."  

Warehouse Stationery reported sales of $96.2 million up 8.7% compared to last year.

In January the big red shed reported flat sales for the nine weeks to January 3 on the same period the previous year, and flat same store sales year-on-year.

Craigs Investment Partners analyst Mark Lister said while The Warehouse's results were uninspiring compared with those of other retailers, such as the Briscoe Group, it had not suffered as much during the downturn and therefore had less ground to recover.

The company also said it is looking to raise $100 million in a fixed rate bond offer, with the funds being used to reduce existing bank debt and to finance the planned construction of new and replacement stores.

The offer of up to $100m five-year unsecured, unsubordinated fixed rate bonds to the New Zealand public was mainly being done to better align the maturity profile of the group's debt financing with its medium to long term capital programme and to manage funding risk by diversifying the sources of funds, The Warehouse said today.

Craigs Investment Partners had been appointed as lead manager for the offer.  ANZ, Bank of New Zealand and Forsyth Barr had been appointed as co-managers.

The offer was expected to open on March 24 and close on April 23. The bonds would be listed on the NZDX.