9 Mar 2017

Profit down $47.5 million at The Warehouse

11:00 am on 9 March 2017

The Warehouse has seen its first-half net profit fall sharply from $61.1 million to $13.6m in the six months ending January.

A worker scans items at The Warehouse in Lyall Bay, Wellington

Sales at The Warehouse's big red sheds have been flat in the past six months. Photo: RNZ / Alexander Robertson

Group sales at the country's biggest retailer were up 3.3 percent to $1.6 billion, with the company attributing the fall in profit to restructuring costs and asset writedowns.

The company recently confirmed it plans to axe about 130 jobs in a bid to shore up its profits, with most of the jobs going from the Auckland support office.

The retailer said today that performance across its portfolio was mixed in the past six months, with a flat result for the Red Sheds and Warehouse Stationery, losses in the financial services division, and growth in Noel Leeming and Torpedo7.

It said online growth was also strong, but more work was needed to improve delivery times.

The warehouse blamed intense competition for driving down its profit margins, with weaker demand for seasonal and promotional products.

Chief executive Nick Grayston said a new operating model would improve the group's performance.

"The second half of this financial year will therefore represent a period of transition as we prepare the organisation for future success, whilst at the same time ensuring we stabilise current performance trends," he said.

The company has forecasted that the second half of the financial year will be 10 to 15 percent down on last year, with a full-year net profit in the range of between $54m and $58m.

The full year dividend was expected to be 15 cents per share, including a 10 cents interim dividend and a final dividend of 5 cents.

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