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All flat at the big red shed

Two years of flat sales at The Warehouse may be a big concern for the country's biggest retailer, but should be good news from its Stationery division when it releases its interim results tomorrow.In its post Christmas trading update, the retailer concede

Robert Smith
Thu, 11 Mar 2010

Two years of flat sales at The Warehouse may be a big concern for the country’s biggest retailer, but should be good news from its Stationery division when it releases its interim results tomorrow.

In its post Christmas trading update, the retailer conceded that the expected continued steady sales growth failed to materialise with total sales over the crucial Christmas period flat on last year.

It said its net profit after tax for the six months ending January would be similar to last years adjusted NPAT of $56.8 million.

Forsyth Barr analyst Guy Hallwright was a little more optimistic in his result forecast, predicting a 2.3% increase to $57.5 million.

But while sales are trending downwards in the big red sheds, the Warehouse Stationery division is seeing a turnaround, with a same-store sales rise of 4.7% for the nine weeks ended January 3.

That result for the Christmas period built on encouraging signs in the previous quarter although the retailer is still some way from hitting a target margin of 5-6%.

While the Stationery result will be encouraging, its gains have effectively been wiped out by the slipping of sales at the main Warehouse stores.

The company has built its reputation on budget goods but failed to capitalise during the squeeze on discretionary spending, with sales failing to rise throughout the recession.

With its Stationery business heading in the right direction, a focus back on its core business is surely the next step.

Robert Smith
Thu, 11 Mar 2010
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All flat at the big red shed
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