New Zealand retailer Warehouse has slashed its guidance on adjusted profit for the current financial year due to pressure on margins.
Group chief executive officer Mark Powell, who also specifically highlighted the apparel sector as being under particular margin pressure, 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.
“In light of margin pressures experienced in recent months the board expects adjusted group net profit after tax for the year ending 27 July 2012 to be in the range of $62.0 million to $66.0 million, compared to previous guidance of $70.0 million,” the retailer said in a statement on the New Zealand Stock Exchange. “The board expects reported group net profit after tax for the year to be in the order of $80.0 million in line with previous guidance – this remains subject to any significant change in trading conditions during the second half.”
Total sales for the quarter ended January 29 2012 were up 4.2 per cent on the same period last year, with same store sales up 3.1 per cent.
Powell said he was pleased with overall sales growth, but market conditions have resulted in pressure being brought to bear on margins in some areas.
“This has been particularly evident in the apparel category, which in the first half has offset positive underlying growth in a number of other key categories.”