New Zealand’s largest retailer, the Warehouse Group, has cut its forecast for annual earnings as warmer autumn and winter weather hit sales and margins of seasonal clothing and home products.

Warehouse expects adjusted full-year profit of $NZ59 million to $NZ62 million ($A54.93 million to $A57.72 million), down from its March forecast for $NZ67m-$71m, and $NZ73.7m last year, the Auckland-based company said in a statement on Friday.

The retailer is in the process of rejuvenating its 91 distinctive large format ‘red shed’ stores.

“While sales in the Red Sheds are still above last year, sales of seasonal apparel and home products are below plan and are increasingly having to be sold at decreased margins to maintain seasonal sell-through and avoid end-of-season overstocks,” the company said.

“Over the last three weeks, there has been a material deterioration in sales and margin versus plan in the Red Sheds and it is likely the remaining winter season will see discounted trading in the market, with limited opportunity for full margin sales.

“These market conditions add further unpredictability to the remaining June and July trading environment.”

To expand group earnings, the company aims to grow the ‘non-red’ side of its business to be as large as the red sheds, having bought 11 businesses in 18 months, adding technology and appliance retailer Noel Leeming, outdoor sports chain R&R Sports and online sporting goods retailer Torpedo7.

Torpedo7, which is being integrated with R&R Sport, No.1 Fitness and Shotgun.co.nz, also failed to meet profit expectations as sales lag forecasts, Warehouse said.

The company’s Noel Leeming, Warehouse Stationery and Financial Services units were all performing in line with profit expectations, it said.

“The revised guidance is representative of a particularly difficult seasonal trading environment,” chairman Ted van Arkel said in the statement.

BusinessDesk