The Warehouse adds $20m to its forecast half-year profit
Friday, 8 January 2021
The Warehouse Group is doing better than expected, according to the company’s latest trading update.
On Friday afternoon, the company updated its forecast profit guidance for the half year ending January 31 to $90 million, a $20 million increase on its previous guidance, provided in December.
According to the company’s update to the New Zealand sharemarket, The Warehouse Group, which includes The Warehouse, Warehouse Stationery, Noel Leeming, Torpedo7, TheMarket and 1Day, experienced strong trading through the week leading up to Christmas and over the Boxing Day and New Year Period.
In December, the company forecast a net profit of $70m and said it would repay the $68m in wage subsidy it received.
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The forecast profit did not take into account the impact of repaying the subsidy..
This is a massive turnaround for The Warehouse Group, which posted a full-year 2020 profit of $46.2m.
However, the company has come under fire for restructuring the business during the pandemic, leading to widespread redundancies at 62 stores nationwide, as well as closures across the group.
Around 750 jobs were lost in the process.
Group chief executive Nick Grayston told the NZX in June that the company was moving to an agile business model.
Hamilton Hindin Greene investment advisor Grant Davies said the forecast report was good news for the company, and a positive sign for retail more generally.
“We have been through a tough spell as a country but consumers have been out spending pretty aggressively in the lead-up to Christmas and The Warehouse has been a beneficiary of that,” Davies said.
The Warehouse Group share price increased slightly on the announcement, selling for $2.78 at the end of trade on Friday, up 1.09 per cent.
An upgrade in forecast profit for The Warehouse wasn’t necessarily a surprise but it was interesting that the announcement came just two weeks after The Warehouse Group’s previous profit forecast, Davis said.