Wellington, June 27 NZPA - Retailer The Warehouse Group has revised downwards expected annual after-tax earnings by about 10 percent.

The key contributing factor was a marked downturn in consumer spending since the latter part of May, which had significantly reduced the company's sales and margin expectations for the remainder of this financial year, the company said today.

After-tax earnings for the year ending July 27 were now expected to be between $84 million and $88 million, including reversal of warranty provisions of $7.2 million. The previous range was $94 million to $98 million.

For The Warehouse stores, sales for the month of May were 4.8 percent ahead of last year on a same store basis, reflecting an expected improvement in performance following a difficult third quarter.

Customers responded well during the period to a strong seasonal offer in both apparel and home products, the company said.

But consumer confidence and retail spending had deteriorated markedly in recent weeks in response to increasing inflationary pressures on fuel and cost of living.

The company's June and July sales were now forecast to fall well below previous expectations.

At Warehouse Stationery sales for May and June month to date were 7.7 percent below the same period last year.

The guidance excluded gains on property divestments expected to be around $1.9m and fair value adjustments associated with electricity derivatives which could only be determined at balance date.

NZPA WGT mjd nb