6 Mar 2014

The Warehouse profit falls

3:28 pm on 6 March 2014

The Warehouse is raising $115 million to build a finance business even as it reports an almost 45 percent slump in first-half profit.

The discount retailer says the profit decline reflects margin pressure and smaller gains on property sales.

The Warehouse says net profit fell to nearly $58.7 million for the six months to the end of January, a drop of 44.8% on the $106.3 million profit made in the same six months a year earlier.

Excluding one-off items, the Warehouse's underlying profit fell 12.5 percent to $46.2 million due to higher costs.

Sales rose 30 percent to $1.4 billion with gains in its general merchandise, stationery and Noel Leeming stores.

Chief executive Mark Powell says sales were solid across all brands and the company is making good progress on implementing its strategy.

The expansion into finance includes paying $3 million for the Diners Club New Zealand business and taking on its more than 50 staff.

Looking ahead, the Warehouse is picking a full year profit of between $67 million and $71 million. It will pay a dividend of 13 cents a share.