Apparel sales up at The Warehouse

AUCKLAND: New Zealand value retailer The Warehouse Group has reported a half year net profit after tax of $64.3 million compared to $60.1 million last year, with apparel sales continuing to "outperform" other categories.

The result, covering the six months ended 27 January 2008, included a $7.2 million reversal of warranty provisions relating to the sale of Warehouse Australia in 2005.

Chairman Keith Smith and managing director Ian Morrice said despite group sales flat on the previous corresponding period – at $950.6 million - the apparel business continued to outperform other categories. The Warehouse Group also operates businesses in the grocery, homewares and stationary sectors.

"Modest gains in market share are being achieved due to an improving [fashion] range, the development of brands including the introduction of international brands, as well as improvements in style and quality," the executives said in the official half-year review.

Smith and Morrice said the group was not considering a major shift in its apparel strategy but would continue to introduce new products and services over the next year.

"Retail activity is likely to continue slowing over the remainder of 2008 as discretionary spending comes under further pressure from macro economic factors and inflation. [However], the group continues to have a strong balance sheet and cash flows and the management team is committed to improving returns."

The directors expect net profit after tax for the full year to be in the range of $94 million to $98 million including the reversal of warranty provisions of up to $8 million relating to the sales of its Australian operations.