Warehouse firstquarter sales rise 3.6% to $668.3m

AUCKLAND: Warehouse Group says it is encouraged by a 3.6% increase in firstquarter sales and improved margins at its core Warehouse chain and stationery outlets.

The company said the rise in group sales to $668.3 million was particularly encouraging given sales in the firstquarter last year fell 1.7%.

The biggest improvement within the group was at Noel Leeming, where sales rose $14.5 million, or 7.4%, to $209.6 million. They rose 3.2% on a samestore basis.

Sales at the Red Sheds increased $7.2 million to $360.1 million, up 2% or 2.7% on a samestore basis.

Volumes of product sold increased 2%, the rest of the growth due to higher average selling prices, the company said.

‘‘There has been some good early demand for some of the spring seasonal categories such as outdoor furniture. Our gross margin percentage improved slightly compared to Q1 last year,’’ the company said.

‘‘The overall market remains very competitive for both general merchandise and apparel. We are focused on continuing to improve our gross margin and maintaining the positive momentum in sales as we go into our largest sales quarter with Christmas and summer seasonal products.’’

The quarterly result will be heartening for the company, which reported a 13% decline in profit from continuing operations for the year to July. It also wrote $25.6 million off the value of the fiveyearold Torpedo7 business in what it called a period of ‘‘significant change’’.

Torpedo7 sales for the quarter fell 5.6% to $37 million and were down 2.7% on a samestore basis.

The company said the decline reflected closures during the past year, including the sale of its Shotgun brand and the closure of the Number 1 Fitness website as a separate fitness equipment channel.

Sales from the continuing business were up 14.1%, driven by new outlets opened during the quarter in Palmerston North, Te Rapa, Manukau and New Plymouth.

Warehouse said it was continuing to focus on improving the gross margins within Blue Shed stationery chain.

Sales there increased 4.4% to $61.7 million and were up 4.1% on a samestore basis. The company noted trading a year earlier was disrupted by integration projects between the red and blue chains.

Warehouse said Noel Leeming benefited from continued focus on ‘‘passionate experts’’ and endtoend service in the

its extremely competitive appliances and technology market.

Key areas of growth included communications, wireless audio and computer accessories categories. During the quarter, Noel Leeming acquired the assets of the Appliance Shed, including leased stores in Auckland. Three of those have been converted into additional clearance stores for Noel Leeming.

Online sales across the group rose 5.3% to $49.3 million, and now account for 7.4% of group sales. Excluding Torpedo7, quarterly online sales were 27% higher. — BusinessDesk