Warehouse Group profits fall 19.3% amid cost of living crisis | T-10 NEWS

The Warehouse Group has posted an annual net profit of $87 million, down 19.3 per cent on last year’s $107.8m.

The company had its Auckland physical stores closed for 23 per cent of the reporting period and battled rising inflation.

For the year ended 31 July, the retail group achieved almost $3.3 billion in sales revenue across The Warehouse, Warehouse Stationery, Noel Leeming and Torpedo7 stores, despite sales at its three leading retailers decreasing over the year.

Group sales of $3.3b were down 3.5 per cent compared to $3.41b achieved in FY21.

The Warehouse said its decrease in profit could be attributed to a $11.4 million expense due to its accounting treatment of cloud computing software arrangements.

The group will pay out a final dividend of 10 cents per share, taking full-year dividends to 20 cents per share.

Sales at The Warehouse division decreased 4.3 per cent to $1.7b in the year, while sales at Warehouse Stationery decreased 9.1 per cent to $249.7m.

Noel Leeming’s golden run halted, with the electronics retailer’s sales decreasing 2.8 per cent to $1.1b.

Meanwhile, sales at outdoor equipment retailer Torpedo7 bucked the trend, increasing by 8.1 per cent to $171.5m.

Online marketplace TheMarket increased average customer spend by 14 per cent and delivered $110m in gross merchandise value.

Group online sales in the year increased 39.8 per cent to $503m in the year and now account for 15.3 per cent of total sales.

Warehouse Group chief executive Nick Grayston said the result was pleasing despite the first half of the year being “one of the most disrupted periods since the start of the Covid-19 pandemic.”

“While 2022 has been another year disrupted by Covid-19 lockdowns, we are pleased with this solid performance across the group and our momentum overall as we continue to build a world class retail ecosystem.

“I would like to acknowledge all of our team members, who once again adapted quickly to the changing and challenging times so we could be there for our customers,” Grayston said in the market update.

“The first half was the most challenging with a sales decline of 4.3 per cent year on year. The second half saw disruptions starting to ease, supply chains and networks becoming easier to navigate and our customers return to stores, albeit with continued restrictions of “orange” under the traffic light system.”

Grayston said across all brands, click and collect sales increased almost 55 per cent compared to the prior year, making up nearly half of all group online sales.

The cost of doing business for the group increased by $35.2m compared with the year, with additional costs including the SaaS computing upgrade, increased advertising in digital media and on TheMarket.com and Covid-19 non-labour costs.

Warehouse shares are trading at around $3.44 cents per share, down from a recent high of $3.75 earlier this month.