Friday, September 10, 2010

Warehouse Group Ltd: 2010 Full Year Profit Analysis

The Warehouse Group Ltd [WHS.NZX] 2010 full year profit result of $83.2 million million was expected. It compares with the 2009 full year profit of $85.2 million.

Profit was down more than 20% on flat revenue figures of $1.67 billion, down around 3% on 2009. Much of the revenue decrease is due to the dropping of the grocery offering by the company. A good result in these tough economic conditions but nothing there to indicate increased numbers are coming any time soon.

The most important point I think of the result is that the company managed to increase margins by 0.1% in a retail environment of seemingly perpetual sales. Management have done well to maintain margins in this tough retail environment. As their competitors have dumped stock on the market just to release cash. This is a good indicator that management are taking the recession seriously.

Key Points

Revenue of $1,672.695 million versus $1,720.755 million in 2009, a decrease of 2.8 %

Operating profit of $124.049 million versus $124.952 million in 2009, a decrease of 0.7 %

EBIT of $126.575 million versus $116.128 million in 2009, an increase of 9.0 %

Profit pre tax of $119.166 million versus $109.291 million in 2009, an increase of 9.0 %

Net profit of $60.185 million versus $76.782 million in 2009, a decrease of 21.6 %* - Adjusted figures for abnormals and the change in depreciation and tax charges imposed by Government in 2010.

Margins increased by 0.1% to 7.4%.

Earnings per share of 19.5 cents per share versus 24.9 cents per share in 2009, a decrease of 21.7 %

Final Dividend: 8.5 cps and Special Dividend: 5.0 cps.

Looking ahead to 2011 WHS management are unable to accurately forecast any key indicators but safe to say they don't see a vast improvement on 2010. They are indicating they will give a better indication of 2011 full year performance in March 2011.

I don't see much, if any improvement in 2011 apart from savings in business costs. The Christmas trading period, while important to every retailer and especially to the Warehouse is going to be all important this year.

Keep your eyes peeled for the 2010 half year result for Briscoe Group Ltd [BGR.NZX] out latter today for comparison.

* The Interview with WHS CEO Ian Morrice has been delayed due to time spent by him organising his Christchurch WHS crew during the earthquake.

Disclosure: I own WHS shares in the Share Investor Portfolio.

WHS 2010 Profit Detail

2010 Full Year Results Documents
Warehouse Group 2010 Profit Presentation
AUDIO: Warehouse Group 2010 Profit Presentation & Questions

The Warehouse Group @ Share Investor

Share Investor Q & A: The Warehouse' Ian Morrice 
Share Investor Q & A: Questions to The Warehouse' Ian Morrice
Long Term View: The Warehouse Group Ltd
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The Warehouse Group: 2010 Interim Profit Review
The Warehouse: Big Brands, Big Opportunities
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WHS Court of Appeal case could be dismissed next week
Commerce Commission impacts on the Warehouse bottom line
The Warehouse in play
Outcomes of Commerce Commission decision
The fight for control begins soon

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Toughen Up: What I've Learned About Surviving Tough Times

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c Share Investor 2010


  1. Hi Darren,

    I think the Warehouse Div has been superb for this year and last.


  2. Indeed. It has turned from a growth stock into a mature dividend powerhouse. It has returned a good $4800 plus net for me this year.

    About 10% net return before tax credits are factored.


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