Warehouse Group, the country’s biggest sharemarket listed retailer, cut its guidance on adjusted profit for the current financial year, blaming a squeeze on margins in recent months.
The retailer expects adjusted net profit of between $62 million and $66 million in the year ending July 27, down from a previous forecast of $70 million, it said in a statement. Net profit will likely be about $80 million, in line with previous guidance.
“Margin pressures experienced in recent months” was to blame for the downgrade, the retailer said.
The profit warning comes a day after Briscoe Group, the home ware and sporting goods chain, boosted fourth-quarter earnings, and flagged annual profit would be at least 25 percent higher than a year earlier.
Warehouse sales rose 4.2 percent in the three months ended Jan. 29 compared to the same period a year earlier, with same store sales up 3.1 percent. Warehouse Stationery sales gained 2.5 percent, and same-store sales gained 4.4 percent.
Chief executive Mark Powell said “trading conditions were quite challenging in the lead up to Christmas, but retail sales eventually proved buoyant through the key late December period and in January.”
He singled out the retailer’s apparel range as an area that came under particular margin pressure through period.
Retailers have had to contend with tepid consumer demand as households eschew taking on new debt in favour of repaying outstanding loans. That’s seen a major build-up in inventories, which bolstered economic growth through last year, and forced retail stores to discount their goods in an effort to shift them.
Warehouse shares rose 0.7 percent to $3.05 in trading yesterday. See The Warehouse's bond issuer page here.