The Warehouse adds $20m to profit forecast

The Warehouse Group is doing better than expected, according to the company’s latest trading update.

Yesterday afternoon, the company updated its forecast profit guidance for the half-year ending January 31 to $90 million, a $20m 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, The Market 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 had received. The forecast profit did not take into account the impact of repaying the subsidy.

The Warehouse Group 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 redundancies at 62 stores as well as closures across the group. About 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 adviser 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 yesterday, up 1.09 per cent.

An upgrade in forecast profit for The Warehouse was not necessarily a surprise but it was interesting that the announcement came two weeks after The Warehouse Group’s previous profit forecast, Davies said.