15 Sep 2008

Economic climate hits The Warehouse's profits

9:02 pm on 15 September 2008

Rising costs and consumers' reluctance to spend have helped to shave 17% off The Warehouse Group's annual profit for the year to the end of July.

Excluding one-off items, the discount retailer made a profit of $80.9 million compared with $97.5 million the previous year.

Sales in the group, including those of Warehouse Stationery, fell 1.5% to $1.7 billion.

The Warehouse chief executive Ian Morrice says the company is feeling the fall in sales most acutely in general merchandising, with sales down 4.7% year on year.

However, broader grocery, pharmacy and health and beauty sales all increased.

Mr Morrice says the focus will be on reducing costs in the coming year.

Meanwhile, the future of The Warehouse's grocery arm is up in the air because Mr Morrice says the rate of return may be too low to justify further investment.

An announcement on its future in expected by the end of October.