The New Zealand sharemarket was lower on another downgrade from The Warehouse Group, which sees its operating earnings plunging nearly 65% in 12 months.

The S&P/NZX 50 Index had a lunchtime rise but couldn’t maintain
the momentum and closed at 11,627.86, down 54.52 points or 0.47% after reaching an intraday high of 11,698.97. The index has now fallen nearly 1.2% so far this year.

There were 93 decliners and 37 gainers over the whole market on volumes of 31.37 million share transactions worth $138.69 million.

The Warehouse Group fell 9c or 8.41% to a new all-time low of 98c after telling the market that full-year operating earnings (before interest and tax) are likely to be $22m-$30m compared with $83.4m in the previous year – a fall of 64%.

The latest guidance excludes the loss from discontinued operations such as TheMarket.com and any potential restructuring costs.

The Warehouse said retail trading continued to be challenging with increasingly subdued consumer demand further compounded by mild winter, resulting in lower-than-expected fourth-quarter sales.

The ‘big red’ retailer now expects full-year group sales from continuing operations to be 6-7% lower than the previous year.

The consumer discretionary sector fell 2.62% on the NZX index. KMD Brands was down 3.5c or 8.75% to a new all-time low of 36.5c; Michael Hill declined 1.5c or 3.03% to 48c; Hallenstein Glasson decreased 2c to $5.58; and Briscoe Group eased 5c to $4.

The Warehouse has fallen 41.6% over the past 12 months, KMD 63.8% and Michael Hill nearly 53%.

Jeremy Sullivan, investment adviser with Hamilton Hindin Greene, said The Warehouse update reflected the weak economy and competition from Temu and AliExpress, both online direct consumer Chinese plays.

“When you look at The Warehouse business model, the pathways of importing cheaper products, particularly clothing, from China and Indonesia and on-selling them has changed – because of the likes of Temu and AliExpress.”

Sullivan said consumer confidence had fallen to levels below the Global Financial Crisis. “Stripping out the increase in population, the New Zealand economy has shrunk 3% with six successive quarters of negative gross domestic growth per capita.”

The local market was dragged down by the healthcare sector with heavyweight Fisher and Paykel falling 56c or 1.85% to $29.73. The sector itself was down 1.47%.

Sullivan said American competitor Eli Lilly reported a new treatment for sleep apnea and Fisher and Paykel’s rival ResMed was down more than 13% (to A$27.75) on the Australian market.

Mercury Energy, declining 7c to $6.62, has launched a $300m capital bonds offer with the ability to accept a further $50m in oversubscriptions. Elsewhere in the energy sector, Contact was up 12c to $8.90; Meridian gained 54c to $6.15; Manawa was down 9c or 2.07% to $4.25; and Vector shed 7c or 1.84% to $3.73.

Fletcher Building, down 5c to a 22-year low of $2.90, announced a further director departure with Rob McDonald stepping down at the end of the week, instead of at the annual meeting in October. Fletcher said McDonald’s move accelerates the board renewal.

Spark was down 8c or 1.97% to $3.98; Freightways shed 16c or 2.06% to $7.60; Ryman Healthcare decreased 13c or 3.41% to $3.68; SkyCity declined 3c or 2.04% to $1.44; and Seeka fell 8c or 3.28% to $2.36;

Turners Automotive was down 12c or 2.93% to $3.98; Sanford fell 19c or 4.52% to $4.01; Tourism Holdings eased 5c or 2.7% to $1.80. Stride Property declined 4c or 3.23% to $1.20; and Investore was down 2c or 1.94% to $1.01;

Other decliners were My Food Bag down 1.3c or 7.98% to 15c; Winton Land shedding 4c or 2.05% to $1.91; Green Cross Health down 2c or 2.53% to 77c; and Being AI falling 0.006% or 7.89% to 7c.

Infratil was up 36c or 3.38% to $11; Gentrack gained 15c to $10.30; Steel & Tube increased 3c or 3.57% to 87c; AFT Pharmaceuticals rose 15c or 5.26% to $3; and Ventia Services improved 14c or 3.54% to $4.09.

Other gainers were Accordant Group rising 3.5c or 8.43% to 45c; Radius Residential Care increasing 2.7c or 16.56% to 19c; Synlait Milk improving 1.5c or 5.45% to 29c; and Tower up 2c or 2.35% to 87c.