Warehouse profit slumps after ‘every day low prices’ strategy | Otago Daily Times

The Warehouse Group today announced an adjusted net profit after tax result of $37.7 million for the first six months of the 2018 financial year (to January) – down 16 percent on the $45m posted in 2017.
This profit was above the recent guidance range of $32-$35m, and delivered 9.2 cents per share dividend versus 3.9 cents per share in 2017.

The overall group, which includes the The Warehouse, Warehouse Stationery, Torpedo 7 and Noel Leeming, saw operating revenue drop 0.9 percent to $1.598 billion from last year.

This result follows a number of significant strategic moves by The Warehouse, including a reduction in sales in favour of an “every day low prices” policy.

The Red Sheds – the colloquial name for the Warehouse – reported sales of $940m, which was down from $975.1m in half-year 2017 due to the transition in pricing and product strategy resulting in a reduction in average selling price.

Profit for the Red Sheds was down 17.6 percent compared with the corresponding period last year, while same-store sales decreased 3.6 percent in the half.

“Notwithstanding the absolute decline year on year in profit generated from the Red Sheds division, overall the first half performance has been encouraging given the degree of change that has been absorbed by the business,” the Warehouse Group said in its results announcement.

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Warehouse profit slumps after ‘every day low prices’ strategy | Otago Daily Times Online News.