9 Sep 2010

Warehouse profit predicted to stay flat

12:46 pm on 9 September 2010

An analyst expects the Warehouse's annual profit to remain flat this year, as shoppers watch their spending and competition intensifies from specialty stores like JB Hi-Fi.

The listed retailer reports it full-year results on Friday.

A senior equities analyst at Morningstar, Nachie Moghe, expects the Warehouse to report an after-tax profit of $85 million, similar to last year's result.

Mr Morghe says sales at its Warehouse Stationery stores will have improved again during the year, but sales at its Red Sheds will have suffered.

He says the retailer has cut costs and improved its buying from China during the year, which will have helped to maintain, or even improve, margins.

Mr Moghe says reduced interest costs will help this year's books, but cashflow may come under pressure in coming years as more stores are rolled out.

And he thinks it's unlikely the company will provide guidance for the 2011 financial year this week, as the outlook for the retail sector remains uncertain.