New Zealand retailer still in recovery mode.

 

The Warehouse Group expects to report another weak financial result, with first-half underlying profit to be down on the year earlier.

 

The retail group, which underwent a major management change last year,  said a “sluggish economic recovery and lower customer demand” had created a highly promotional retail environment, which was putting pressure on gross margins across The Warehouse, Warehouse Stationery and Noel Leeming.

 

The underlying profit for the six months to the end of January was expected to be in a range of about NZ$18-$20 million, or more than a third down on NZ$62.8m reported the year earlier, with a full report available on 21 March.

 

Sales were down 1.6 percent to NZ$1.6 billion and profit margins under pressure.

 

Chief executive John Journee told RNZ the retail group's year-on-year sales had improved in January and February, but gross margins remained constrained.

 

"We're encouraged by the positive customer response when we get our product and pricing right, and this will underpin our performance recovery as we deliver these improvements at scale," he said.