29 Sep 2021

The Warehouse bounces back with strong lift in sales

11:17 am on 29 September 2021

The Warehouse has more than doubled its full-year profit on the back of sales growth and higher margins.

The Warehouse store in Auckland.

Photo: 123rf

Key highlights (for the year to August vs year ago)

  • Net profit $117.6m vs $44.5m
  • Adjusted profit $175.5m vs $32.1m (adjusted for wage subsidy repayment/restructuring)
  • Revenue $3.4bn vs $3.2bn
  • Gross margin 36.4 pct vs 32.6 pct
  • Final dividend 17.5 cps vs Nil
  • The country's biggest retailer has bounced back strongly from the previous year's Covid-ravaged performance with a strong lift in sales across the business, supported by increasing on line and click and collect shopping.

    "Pent up demand after lockdowns, strong operational performance and a robust financial position enabled the Group to repay the Covid-19 wage subsidy of $67.6m for our 11,000 employees in December 2020," Group chair Joan Withers said.

    The solid lift in margins underpinned profit growth as the company sold more stock, reducing its need for clearance sales and marketing, with the cost of doing business a smaller percentage of revenue than the year before.

    The big Red Shed stores had a 6 percent rise in sales, 10 percent margin growth, and accounted for just over half of group sales. It was followed by the Noel Leeming appliance and electronics chain, which had sales rise 12 percent and made up a third of group sales.

    The Warehouse Stationery had a modest rise in sales and Torpedo 7 outdoor goods chain returned to profitability on higher sales and margins.

    Chief executive Nick Grayston said its technology upgrade had allowed it to operate more efficiently during Covid restrictions, and allowed consumers to shop more easily on line, which accounted for 11.5 percent of group sales.

    He said supply disruptions and shipping shortages have delayed products getting into the country, but expected to be in a better position than last Christmas.

    Warehouse staff have been given a bonus - $1,000 for full time staff and $500 for part timers.

    Last year the company restructured operations resulting in several hundred jobs being axed, while it was heavily criticised for taking the government wage subsidy, which it has since repaid.

    Last month it invested in an online pharmacy company as it tentatively branches out into the healthcare sector.

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