Photo: Supplied
The Warehouse Group says it has delivered a "pleasing" full-year result despite a drop in net profit, associated with the most disrupted half-year since the start of the pandemic.
"The first half was the most challenging with a sales decline of 4.3 percent year on year," chief executive Nick Grayston said.
"The second half saw disruptions starting to ease, supply chains and networks becoming easier to navigate and our customers return to stores, albeit with continued restrictions of 'Orange' under the traffic light system."
Net profit fell 19 percent, total revenue was down 3.5 percent and adjusted net profit was down 49 percent on the year earlier.
Auckland stores were closed for 23 percent of the reporting period or for a total of 84 days, while rest of New Zealand stores were closed for at least 21 days as the country moved in and out of lockdowns.
While online sales rose 40 percent to $503.3m, accounting for more than 15 percent of total group sales, it was not enough to offset the loss of in-store sales across the retailers brands, which included The Warehouse red sheds, Warehouse Stationery, Noel Leeming and Torpedo7.
The online marketplace, themarket.com attracted 390,000 active customers during the period, with the average customer spend up 14 percent to a gross merchandise value of $110m.
Key numbers for the year ended 31 July compared with a year ago:
- Net profit $87.1m vs $109.3m
- Revenue $3.29b vs $3.41b
- Underlying net profit $85.5m vs $167.2m
- Gross margin 36.1 percent vs 36.4 percent
- FY dividend 20 cents a share
Photo: RNZ / Alexander Robertson
Expansion eyed for grocery range
"We are encouraged by customer feedback over the last six months on our strong value-led range," Grayston said, adding a selection of grocery items were sold in 89 existing The Warehouse stores.
He said the company was hoping to expand its range of grocery items.
"We continue to be hopeful that the government's ongoing actions to make grocery retailing a more level playing field, and access to equitable prices, will enable us to do more.
"Equal access to supply and distribution continues to be a challenge that is not yet solved."
Cash flow decreases
The company's net cash flow decreased $201.7m over the year resulting in a net debt position of $41.2m.
Grayston said inventory levels were up $105m on last year, partially as a result of supply chain disruptions and to ensure it had sufficient inventory leading into the peak trading period.
He said cash flow was expected to improve over the current year as inventory was managed at lower levels.
Cautious outlook ahead
Grayston said the company was taking a cautious approach to the peak second quarter period, which included November and December sales, following last month, which was the quietist trading month of the year.
"Given the ongoing inconsistency of container freight arrivals into New Zealand, we have taken action to ensure we have good levels of summer stock available across all our brands for peak selling.
"Looking ahead and as in previous years, any earnings outlook for FY23 will be dependent on the critical second quarter peak trading period."