Noel Leeming shines in The Warehouse result

Noel Leeming shines in The Warehouse result

Revenue up at Noel Leeming, but down overall for The Warehouse Group

Nick Grayston (The Warehouse Group)

Nick Grayston (The Warehouse Group)

Credit: The Warehouse Group

Technology and appliance chain Noel Leeming outperformed in The Warehouse Group's results reported today, recording a lift in sales and margins.

“Noel Leeming had a standout year and continued to benefit from execution of consistent strategies and the expertise offered through the assisted sales and service model, delivering annual revenue growth of 8.6 per cent to $880.5 million in 2018," said Nick Grayston, CEO of The Warehouse Group.

Operating profit increased by 61.8 per cent from the previous year to $31.2 million, while operating margins increased from 2.4 per cent to 3.5 per cent.

The Warehouse Group announced overall adjusted net profit (NPAT) of $59 million in what it said was a "significant year of change for the business".

Adjusted NPAT from continuing operations reflects the normal operating performance of the business and was 13.4 per cent down on last year’s adjusted NPAT of $68.2 million - that result was up on the previous guidance given in March 2018 due to a stronger than expected finish to the financial year.

Reported NPAT attributable to shareholders, however, was $22.9 million, up 12 per cent - the reported net profit includes a number of one-off items, notably a $25.6 million write down in the value of goodwill relating to the Torpedo7 business.

According to Joan Withers - chair of The Warehouse Group - the business had delivered an encouraging result, particularly given the context of the year.

"2018 was a challenging year," she said. "We began a transformation programme to accelerate our strategy, made a major change to our operations with the move to every day low prices (EDLP) in the core The Warehouse business, and continued to integrate our businesses across the Group.

"Given the significance of these changes, our result ahead of guidance is pleasing."

Withers said while there was still clearly more work to do, she was heartened by the progress made in 2018.

"We developed a plan to strengthen EBIT, and we’re on plan," she added.

Delving deeper, capex increased from $64 million to $72 million, driven by investment required to deliver transformation - that is expected to increase again in 2019, to between $80 million and $100 million.

The largest capex demands over next few years are directed towards technology and store improvements.

Grayston said the transition to EDLP in The Warehouse impacted sales less than expected.

"While revenue dropped 2.5 per cent to $1.7 billion in 2018, units sold increased by 6.6 er cent and gross margin was up from 36.8 per cent to 37.4 per cent," he added.

Shareholders will receive a final dividend of six cents per share, taking the overall dividend for the year to 16 cents per share fully imputed.

Meanwhile, group online sales in New Zealand were $221.1 million, up 6.6 per cent on the prior year and 7.4 per cent as a percentage of total sales.

The Group is part-way through a major transformation programme, Grayston said.

“We are looking forward to realising some of the benefits of this programme in 2019 and beyond," he added.

“We will also continue to invest in building a competent digital and fulfilment capability and improving our infrastructure, systems, supply chain and distribution processes, setting the foundation for our future.”

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