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Warehouse Expects Lower First-Half Profit on Sales

Jan. 5 (Bloomberg) -- Warehouse Group Ltd., New Zealand’s largest discount retailer, said first-half profit will be as much as 11 percent less than a year earlier after Christmas sales fell.

Profit excluding one-time items will be between NZ$51 million ($39 million) and NZ$54 million in the six months ending Jan. 30, from NZ$57 million a year earlier, the Auckland-based company said in a statement today. Sales in the two months ended Jan. 2 fell 2.7 percent from a year earlier.

Spending has slowed in New Zealand as falling house prices and a drought reduce consumers’ confidence and prompt them to reduce debt. Christmas gift shopping and vacation spending in the three months ending January account for a third of Warehouse Group’s revenue.

“Retail sales in general have been very soft over this key seasonal trading period,” Chief Executive Officer Ian Morrice said in the statement. “Whilst apparel, footwear and other seasonal categories traded in line with last year, spending on consumer electronics, gaming, CDs and DVDs was well down.”

Warehouse shares fell 8 cents, or 2.3 percent, to NZ$3.42 at the 5 p.m. market close in Wellington. The benchmark NSX 50 Index was 0.5 percent higher.

“We expected the sector to remain difficult and promotionally driven over the course of our 2011 financial year” ending July 31, Morrice said. “Consumers clearly remain even more focused than we predicted on strengthening household balance sheets.”

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.

To contact the editor responsible for this story: Ed Johnson at ejohnson28@bloomberg.net

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