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Warehouse Group profits up 22%

By Shannon Williams
Mon 14 Mar 2016
FYI, this story is more than a year old

The Warehouse Group is reporting boosted revenues following strong sales performance, with profit up 22% for the half to $45.6 million.

According to the company, Noel Leeming and The Warehouse are doing particularly well, with Noel Lemming continuing to increase its market share, while The Warehouse recorded positive same store sales growth for the 20th quarter.

The strong performance that was reported in H2 FY15 has continued into the first half of FY16, with all retail brands recording positive profit growth off the back of strong sales and effective cost management, the company says.

Reported Net Profit After Tax for the period was $57.2 million compared to $43.3M in HY15. Group retail sales for the period were $1,560.4 million, up 8.0% compared to HY15.

“The Warehouse Group has invested significantly over the last few years as part of its strategic transformation journey,” the company says in a statement.

“This year is focused on consolidating and leveraging those investments to unlock profit growth. 

“The HY16 result is a positive sign that profit growth is now being realised, reversing the declines in recent years.”

Noel Leeming reported sales of $379.8M for HY16, a 15.% increase on the same period the year before.

Noel Leeming continues to increase market share in the highly competitive technology and appliances market. Profit was significantly improved over HY15, a combination of cycling a tough trading period and one-off rebranding costs, with a stronger overall business performance across sales, margin and cost of doing business.

Gross Profit margin was impacted by a change in mix, notably a standout sales performance around cellular which has a comparatively lower margin than other products.

The Warehouse reported sales of $973.1M for HY16, an increase of 4.8% or $44.4M compared to the same period last year.

The ‘Red Sheds’ have now recorded 20 quarters of positive same store sales growth.

Group chief financial officer Mark Yeoman says new initiatives in the first half included the launch of Warehouse Mobile, and distribution of the new Warehouse Money credit cards.

“The team at The Warehouse has delivered a strong first half result. While the favourable trading environment has certainly helped, we still need to ensure that we have the right offer for our customers, continue to support our people well, and execute our trading plans and change initiatives,” Yeoman says.

“The profit leverage that has been achieved indicates that we are doing well across the business.”

The Warehouse Stationery reported sales of $137.8M for HY16, an increase of 10.7% on HY15, while the Torpedo7 Group reported sales of $76.1M for HY16, up 18.5% on the HY15. Online, group group sales were up 24.1% to $52.8m.

“This result, building on the solid performance in the second half of last financial year, shows that the company is delivering on profit growth, and on driving returns from the investments made in past years,” says  chairman Ted van Arkel.

“The outlook for the second half will build on this positive start to the financial year but recognises some of the challenges ahead; notably ongoing currency driven input cost increases and the fact that there is one week less in the trading period compared to last year,” he says.

According to a company statement, the Group results are a significant improvement on the comparative period last year.

“While HY15 was a particularly difficult trading period and included a number of one-off costs, the HY16 performance has been achieved by a positive retail environment, and changes that we have made to the businesses; focusing on improving our customer offer, margins and cost control.

“These changes are expected to continue to deliver benefits into the future.”

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