'Non-red' sheds to drive Warehouse growth

Warehouse Group, New Zealand's largest listed retailer, expects earnings to rise this financial year following an 18 per cent drop in 2014.

Adjusted profit fell to $60.7 million, or 18.6 cents a share, in the year to July 27, which was down from $73.7m a year earlier, the owner of the red sheds said on Friday.

Net profit fell 46 per cent to $77.8m.

The company has increased spending on its 91 distinctive large-format red shed stores to drive future growth in the unit that accounts for about two thirds of its retail sales.

To expand group earnings, the company aims to grow the "non-red" side of its business to be as large as the red sheds, adding technology and appliance retailer Noel Leeming, sports foods retailers R&R Sports and Torpedo7 and finance company Diners Club New Zealand.

The company says earnings growth will resume in the current year.

"While our adjusted profit has reduced from the previous year, the company has been significantly reshaped and is well positioned for the future," chairman Ted van Arkel said.

The company expects to provide more detail on its earnings expectations for the 2015 financial year with the release of its first-half earnings in March.

In the 2014 year, group sales rose 18 per cent to $2.65 billion.

In 2014, operating profit at The Warehouse stores fell 9.7 per cent to $76.9m as revenue rose 4.7 per cent to $1.67b. The operating margin slipped to 4.6 per cent from 5.4 per cent the year earlier.

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'Non-red' sheds to drive Warehouse growth