The Warehouse Group Limited Analysis

Overview

The Warehouse Group Limited (WHS) was established in 1982 by Stephen Tindall, initially selling imported and manufactured clearance lines in Takapuna, Auckland. The Warehouse has subsequently grown to become one of New Zealand's largest general merchandise retailer. The company also owns The Warehouse Stationery chain.

The group was listed in November 1994 following a public issue of 23.6 million ordinary shares at $2.50.

In 2000 it bought two Australian discount variety chains with 126 stores, Clint's and Silly Solly's, for A$118m, incorporating them into a division called The Warehouse Australia. In November 2005, it agreed to sell its Australian business.

On 31 July 2008 the Court of Appeal announced that it had set aside a clearance granted by the High Court for Woolworths and Foodstuffs to acquire up to 100% of the shares in WHS. Both Woolworths and Foodstuffs hold 10% each of WHS.

On October 9, 2008, WHS announced that, after a review, it had decided to discontinue its plan to roll out the Warehouse Extra format as it did not meet its investment criteria.

Performance

The following information was extracted from The Warehouse Group Limited's half year, released on 21 March 2025:

Highlights

• Group sales $1.6 billion, down 1.6% on FY24 H1 with same store sales down 1.1% in the same period
• Gross Profit Margin at 32.5%, down 180 bps on FY24 H1
• Cost of doing business down 2.8% on FY24 H1
• Operating Profit1 $19.5 million, compared to $43.0 million in FY24 H1
• Net Profit After Tax of $11.8 million, up from Reported Net Loss of $23.7 million in FY24 H1
• Net Cash Position of $19.0 million compared to $50.7 million net debt in FY24 year end with cash conversion at 106.1%.

The Warehouse Group reported a 1.6% decline in sales for the first half of FY25, representing a significant improvement on the decline experienced in the last two years. The Group’s Operating Profit (EBIT pre-IFRS16) is $19.5 million which is in line with the trading update provided on 3 March 2025.

Sales were down 2.5% in the first quarter of the financial year but an improved trend in the second quarter resulted in a smaller decline of 0.9%. After a slower November and December, sales picked up in January with positive sales growth year-on-year and this trend has continued into the start of the second half.

While sales momentum is building, gross margins remain under pressure, decreasing 180 bps to 32.5% in FY25 H1. A strategic intent to reset our Every Day Low Prices, combined with a highly competitive retail environment and cautious consumer spending leading to increased promotional activity across the sector, has compressed margins in the half year.

The Warehouse Group Chair Dame Joan Withers said while the retail sector remains under sustained pressure, the Group is taking decisive action to strengthen its position.