The Warehouse Group has made a strong first half profit, but the second half of its financial year is uncertain with the spread of Covid-19 threatening to derail momentum.
The Red Shed retailer's first half net profit dropped 19.6 percent to $28.8 million, which reflects a loss from discontinued operations and a tax adjustment.
Otherwise the adjusted net profit rose 16.7 percent on the year earlier to $46.2m.
Group retail sales were up 2.6 percent to $1.68 billion, while online sales grew 7 percent, accounting for 7.9 percent of total group sales.
Group chief executive Nick Grayston said the result was a positive start to full year, despite some issues around the completion of online purchases.
"While there were some operational challenges from an initiative to centralise fulfilment operations and deploy a warehouse management system, a recovery team was deployed to address these challenges and early fixes have alleviated major issues.
"The expectation is that by the end of March most issues will be rectified, and online sales growth is expected to return for The Warehouse and Warehouse Stationery by the first half of the of the next financial year."
Despite those challenges, he said the company had good trading momentum, which had continued to date.
The Warehouse Red Shed sales grew 1 percent to $938.8m. Warehouse Stationery sales were up 0.8 percent with an improvement in gross margins.
Noel Leeming's sales rose 5.2 percent while Torpedo7 Group sales grew 9.4 percent.
He said the adjusted net profit was expected to be in a range of $75m - $77m, subject to no material changes in trading conditions.
"However the uncertainty around the impact of the Covid-19 measures put in place by government creates significant uncertainty for the second half of the year.
"We are heavily caveating this expectation given the potential effect on the economy and our business of necessary measures the government may implement to control and mitigate the spread of Covid-19."