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Noel Leeming stars for Warehouse Group in first half

Noel Leeming stars for Warehouse Group in first half

Online venture TheMarket.com's losses increase, damaging the group's bottom line

Credit: Rob O'Neill

Retail chain Noel Leeming delivered a strong first half within the Warehouse Group's overall results, with sales up 5.2 per cent year on year to $512.8 million.

However, the group's investment in online marketplace TheMarket.com damaged the overall group's bottom line.

The Noel Leeming brand performed well through the major trade events of the half, recordiing its best ever Black Friday and Boxing Day Sale periods.

Gross profit increased 8.1 per cent to $115.8 million through higher sales volumes and an improvement in gross profit percentage increase of 60 basis points.

Operating profit increased 22.1 per cent on to $21.4 million, a record, though there was a continued focus on managing costs and reaping the ongoing benefits of transformation initiatives

The Noel Leeming services division also delivered pleasing results with protection, store services and tech solutions all seeing revenue growth of over 20 per cent.

Tech solutions sales were up 23 per cent, online sales up 39 per cent and mobile sales up 77 per cent.

Store count reduced by one, after the closure of the Takapuna store.

Overall group sales lifted from $1.64 billion to $1.68 billion, but net profit after tax fell from $35.8 million to $29.2 million.

The operating loss of TheMarket.com was $7.6 million in the period, up from a $2.3 million loss in the same half of 2019.

Without that investment retail operating profit for the group would have been up 20 per cent.

The expected operating loss from TheMarket.com for the full year was expected to be $15 million to $17 million compared with $6 million in 2019.

The Warehouse Group said it was continuing to assess the impact of the Covid-19 outbreak on financial performance, including stock availability impacts to its supply chain offshore and operations in New Zealand.

"We currently do not expect there to be a material impact on 2020," it said today.

However, it was "heavily caveating" its guidance given the potential effect on the economy and its business of measures the government may implement to control and mitigate the spread of Covid-19.

The result included $16.3 million of costs in unusual items, $14.9 million of which related to investment in transformation which was expected to have ongoing benefits.



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