NZ sharemarket holds up despite Warehouse result

The Warehouse Group plunged nearly 12% on a weak first-half result but the New Zealand sharemarket held up well in the face of further falls offshore.

Thursday, March 23rd 2023, 9:13PM

by BusinessDesk

The S&P/NZX 50 Index bounced back from a lunchtime low of 11,481.08 and closed with a small gain of 8.01 points or 0.07% to 11,594.94.

There were 47 gainers and 79 decliners on the main board with 34.42 million shares worth $105.71 million changing hands.

The US Federal Reserve increased its rate 25 basis points, as expected, to a range of 4.75 to 5% and indicated there was just one more rate hike this year.

But Wall Street was again rattled when Treasury Secretary Janet Yellen told a Senate subcommittee that the US was not currently working on blanket insurance for bank deposits, and Fed chair Jerome Powell said financial conditions seemed to have tightened.

“We’ll be looking to see how serious is this and does it look like it’s going to be sustained. And if it is, it could easily have a significant macroeconomic effect,” said Powell.

The Dow Jones Industrial Average was down 1.63% to 32,030.11 points; S&P 500 fell 1.65% to 3936.97; and Nasdaq Composite declined 1.6% to 11,669.96.

Across the Tasman, the S&P/ASX 200 Index had fallen 0.61% to 6972.5 points at 6pm NZ time.

Matt Goodson, managing director of Salt Funds Management, said it hasn’t been a great month, but the local market closing just ahead compared with a 1.6% fall in the US was a solid effort.

“The Federal Reserve is trying to thread the needle by maintaining quantitative tightening while at the same providing liquidity. I hope they succeed.”

At home, The Warehouse Group tumbled 28c or 11.67% to $2.12 after reporting a 60.9% fall in net profit to $17.36m on revenue of $1.81 billion, up 4.8%, for the six months ending January, with a slowdown in the second quarter. The retailer is not paying an interim dividend.

The Warehouse told the market that the cost of doing business increased by 3.5% and it expects trading will continue to be challenging for the remainder of the financial year. It is cutting 340 jobs at the Auckland Store Support Office.

Noel Leeming and Torpedo7 sales decreased, while The Warehouse and Warehouse Stationery were up 13.2% and 1.7% respectively.

Goodson said it was a poor half-year result. “You will see a round of downgrades from analysts, and The Warehouse really needs to cut costs. The gross profit margin is getting uncomfortably close to the cost of doing business.

“The market will start focusing on the state of its balance sheet and The Warehouse may need to review some of its unprofitable businesses, such as online and Torpedo7,” he said.

Other retailers' results included Briscoe Group down 7c to $4.49; Hallenstein Glasson declined 7c to $5.32; and KMD Brands up 2c or 1.98% to $1.03.

The property sector fell 1.46%. Goodman Trust declined 5c or 2.42% to $2.015; Investore was down 3c or 2.11% to $1.39; Argosy decreased 2c or 1.82% to $1.08; Property for Industry shed 3c to $2.20.

Amongst the leading stocks, Fisher and Paykel Healthcare was up 23c to $25.98; Mainfreight climbed $1.70 or 2.51% to $69.50; Infratil gained 18c or 2.09% to $8.80; and Port of Tauranga added 15c or 2.46%to $6.25.

Mercury NZ decreased 7c to $6.01; Contact was down 6c to $7.33; a2 Milk shed 10c to $6.29; and Summerset Group declined 10c to $8.55.

Other gainers were Serko up 8c or 3.64% to $2.28; Tourism Holdings adding 6c to $3.88; Embark Education up 3c or 5.56% to 57c; NZ Oil & Gas improving 1.5c or 3.9% to 40c; and TradeWindow adding 1.5c or 4.76% to 33c.

Synlait Milk was down 5c or 2.05% to $2.39 following the resignation of its director of operation Nigel Macdonald who leaves at the end of May. Goodson said the market was concerned over whether the resignation would impact the China re-registration process.

Westpac declined 48c or 2.04% to $23; Heartland Group fell 7c or 4.46% to $1.50; Restaurant Brands was down 12c or 1.85% to $6.38; Vulcan Steel shed 24c or 2.92% to $7.98; and My Food Bag decreased 1.5c or 6.12% to 23c.

Other decliners were Bremworth falling 3.5c or 10% to 31.5c; Allied Farmers shedding 2c or 2.7% to 72c; and Accordant Group down 5c or 2.94% to $1.65.

Eroad was up 3c or 4% to 78c. Long-time director Tony Gibson, formerly Ports of Auckland chief executive, is stepping down from the Eroad board at the next annual meeting.

Software company Blackpearl Group, unchanged at 38c, is introducing a new product to the US market. The product provides businesses with unique visibility into their website visitors.

Tags: Market Close