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WELLINGTON, March 14 (Reuters) - The Warehouse Group Ltd (WHS.NZ), New Zealand’s largest listed retailer and a takeover target, on Friday reported a 7 percent rise in first half net profit, lifted by a one-off gains, and increased its dividend.
But it forecast full year net profit to be up to 18 percent lower than last year at NZ$94-98 million, as the retail environment is expected to slow further over 2008.
The half year result was a resonable one given the pressure retailers are under, Chairman Keith Smith said.
“Achieving positive same store sales growth in the second quarter demonstrates an ability to respond to what has been a very challenging environment,” Smith said in a statement.
The Warehouse is the subject of interest from both of New Zealand’s main grocery chains, Australian-owned Woolworths (WOW.AX) and local co-operative Foodstuffs. Both are fighting through the courts for clearance to acquire The Warehouse, but neither have launched a formal takeover bid.
The competition regulator, the Commerce Commission, opposes any takeover because it might reduce competition in the grocery sector, which the Warehouse had been looking to enter. A court hearing is due at the end of April.
Analysts expect Woolworths to have the upper hand in any takeover battle because of its greater financial clout. Bids have been tipped to go as high as NZ$8 a share.
The Warehouse made a net profit after tax of NZ$64.3 million (NZ$52.7 million) in the six months to Jan. 28, up from NZ$60.1 million in the same period last year.
It booked a one-off gain of NZ$7.2 million from the release of expired warranty provisions, relating to the disposal of its Australian businesses in 2005.
It declared an interim dividend of 15.5 cents, compared with 12 cents a share last year. The company said its dividend payout policy had increased to 75 percent of net profit from 50 percent.
Shares in the Warehouse, closed on Thursday at NZ$6.00. The stock fell 1.5 percent since July 1, compared with a 15.4 percent drop in the benchmark top 50 index .NZ50.
Revenue in the half year was up fractionally at NZ$950.6 million, while operating profit fell 10.8 percent at NZ$83.3 million.
The Warehouse sells a broad range of merchandise through its 85 “Red Sheds”. It is about 50 percent-owned by Stephen Tindall and interests close to him, while Woolworths and Foodstuffs each have about 10 percent.
It competes against Briscoes Group Ltd BGR.NZ, KMart (WES.AX), the privately owned Farmers department stores, and a host of smaller specialist retailers, such as clothing firm Hallenstein Glasson Ltd. (HLG.NZ). ($1=NZ$1.22) (Reporting by Adrian Bathgate)