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Warehouse affirms forecast for higher 2015 profit even amid softer trading

Warehouse Group, New Zealand's largest listed retailer, affirmed its expectation for a rise in annual earnings even as sales lag behind forecast heading into the key Christmas trading period.

"As the group's earnings are significantly influenced by the Christmas trading performance it is too early to provide specific earning guidance," chairman Ted van Arkel told the company's annual meeting in Auckland. "Trading over the last few weeks has been softer than our plan, which emphasises the importance of the upcoming Christmas trading over the next six weeks. Having said that, our plan for the full year F15 is still to deliver adjusted NPAT above that of the full year F14, as previously indicated."

The company's adjusted net profit, which excludes one-time items and is the basis for dividend payments, declined in the 2014 financial year to $60.7 million from $73.7 million in 2013. Auckland-based Warehouse expects to update its full-year guidance when it releases its first half earnings in March, van Arkel said.

Investors and analysts have said they want to see profit growth this financial year after the retailer spent hundreds of millions of dollars overhauling stores and buying new businesses in the past couple of years. Still, the retailer may have to battle unfavourable economic conditions as economic growth forecasts are pulled back amid weaker commodity prices and tamer inflation.

"The economy grew strongly in the first half of 2014, but the pace appears to be slowing, particularly with signs of some pressure in the agricultural sector. Also, households and businesses continue to be mindful of debt," van Arkel told shareholders today. "As a consequence of this we are not factoring any particular tailwinds or headwinds into our planning."

Shares in Warehouse fell 0.6 percent to $3.17, and have declined 15 percent so far this year.