Warehouse first quarter sales lift 3.9%

The Warehouse stores  increased revenue 1% to $377.5 million.

The Warehouse Group increased first-quarter sales with uplifts across all its brands ahead of the key Christmas trading period.

The Auckland-based company says group sales rose 3.9% to $655.9 million in the quarter ended October, from the year earlier quarter when sales increased 7.7%.

The company's red shed The Warehouse stores, which make up more than half of its total sales, increased revenue 1% to $377.5 million in the quarter as weaker sales in areas such as entertainment, stationery and craft, and gardening, were offset by sales growth in the home, leisure and apparel divisions.

It added one store during the quarter. Gross margins for the stores were consistent with last year as the business absorbed the impacts of currency volatility in a bid to keep prices competitive to customers, it says.

"The competitive environment is tougher every year, and with more international players focusing on our domestic market, both physically and online, it is more important for us to execute our plans well, to ensure we are relevant, competitive and profitable in the future," chief executive Nick Grayston says.

"We are focused on improving the fundamentals of the business and still have a lot of work to do to achieve the levels of profitability that we see are possible."

Mr Grayston noted the second quarter of the company's financial year generates most of its sales and profit for first half earnings.

Noel Leeming, its second-largest unit, boosted first-quarter sales 12% to $183.6 million, and the company says it continues to gain market share in an "extremely competitive" appliances and technology market. During the quarter, it opened new stores in Takapuna and Tauranga Crossing and relocated its Gisborne outlet.

Warehouse Stationery sales advanced 1.4% to $63.7 million, as it also opened a new store in Tauranga Crossing.

Torpedo7 sales rose 12% to $37.8 million as television advertising campaigns brought in high levels of subscribers and new customers, and it benefited from strong early season bike sales.

The group says its online sales rose 22% to $42.7 million, and now make up 6.7% of total sales as its 'click and collect' service benefits Noel Leeming and The Warehouse.

On a same-store sales basis, The Warehouse lifted sales 1.7%, Warehouse Stationery sales gained 2.3% and Noel Leeming sales advanced 11%.

Warehouse shares last traded at $3, and have gained 12% this year.


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