Group retail sales were up 8 percent to 1.56 billion, with the Red Sheds accounting for a little over $973 million of this.
All of TWG’s brands – The Warehouse, Warehouse Stationery, Noel Leeming, Torpedo7 and financial services – have reported positive profit growth due to strong sales and effective cost management.
The group described HY15 as a particularly difficult trading period which included a number of one-off costs. A positive retail environment and a focus on improving TWG’s customer offer, margins and cost control have contributed to HY16’s good result.
Significant projects from last year include the launch of the Warehouse Mobile and Warehouse Money brands. The financial services business reported an oprating loss of $2.7 million for the first half of FY16, which is in line with the group’s expectations.
The group’s online sales also continue to grow fast, hitting $52.8 million.
In a release, the group indicated the strong performance is the result of significant investments made over the last few years as part of the strategic transformation begun by former chief executive Mark Powell, who stepped down late last year.
In a November interview for the February / March issue of The Register’s print magazine, NZRetail, Powell described his long-term ambition for The Warehouse Group: “My vision is a 100-year company that delivers long-term, sustainable profit growth and helps Aotearoa New Zealand flourish.”
Powell said he was conscious of the work facing incoming chief executive Nick Grayston, who will reveal his vision for TWG’s strategic cycle when the full year results are announced.
“We’re allowed to celebrate success and all that but actually it’s not guaranteed,” Powell said. “I feel as though we are fighting fit but there’s still a long way to go.”
Chairman Ted van Arkel says: ““This result, building on the solid performance in the second half of last financial year, shows that the company is delivering on profit growth, and on driving returns from the investments made in past years. We are confident that the team, under Nick Grayston’s leadership, will continue to grow sustainable profitability. The outlook for the second half will build on this positive start to the financial year but recognises some of the challenges ahead; notably ongoing currency driven input cost increases and the fact that there is one week less in the trading period compared to last year.”
TWG expects FY16’s second-half profit to be in line with that of last year, indicating the expected adjusted net profit after tax for the full year will be between $61 million and $64 million. This represents year-on-year profit growth of between 7 and 12 percent.
The full year dividend is targeted to be 16 cents per share.