Photo: RNZ / Nate McKinnon
The Warehouse Group says first quarter sales have dropped 2.5 percent, but the rate of decline has improved over last year.
The Red Shed, Stationery and Noel Leeming retail group reported total group sales of $668 million for the 13 weeks ended in October, with three fewer stores over last year's first quarter, when year-on-year sales fell 5.9 percent.
"The current highly promotional retail environment is placing pressure on gross margins across all three brands," the company said in a market update.
"The Warehouse margin was the most challenged during the quarter, as lower margin product mix changes year on year, and higher than planned markdowns occurred within the apparel department post-winter."
Online sales fell 13 percent in the quarter, accounting for 6.3 percent of total retail sales, compared with 7.0 percent the year before. Group same store foot traffic also fell 0.8 percent on the year earlier.
"Pleasingly, group customer conversion was up 242 basis points to 58 percent on the same period, but basket sizes remain constrained as customers shopped strongly into essential categories and clearance," it said.
Overall average retail selling prices were down 7.9 percent on the same period last year, as the company focused on resetting key price points across its categories.
"More competitive pricing has resulted in the number of units sold being up 6.4 percent on the prior period," it said.
Group interim chief executive John Journee said trading conditions remained challenging, though were some positive signs.
"We're seeing an encouraging response from customers to our new summer ranges as they land at The Warehouse, especially in homeware and apparel," he said.
While we're making progress, we expect our near term results to remain mixed as the benefits of our improved product offer are muted by challenging market conditions.
"We remain cautious as we look ahead to Christmas and expect the trading environment to remain tight and highly competitive."
Retail segments
The Red Shed sales were down 2 percent to $386.3m.
"At Noel Leeming we're holding market share in a contracting market which speaks to the strength of the value proposition and the performance of our team in tough trading conditions," Journee said.
Noel Leeming's retail sales were down 2.1 percent to $229.1m, supported by a "strong performance from the commercial division", amid continued soft demand for discretionary goods.
Warehouse Stationery sales fell 6.8 percent to $50.9m, with a downturn in demand from small and medium businesses.
Journee said the company's focus on core brands and better value products was underway, but it would take time for the changes to deliver sales growth.
"We're mindful that a sustained improvement in performance also relies on the broader economy bouncing back."
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