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 market update, released on 10 May 2024:

The Warehouse Group (“the Group”) has today provided a trading update for the 13 weeks ending 28 April 2024 (“FY24 Q3”) and the 39 weeks year to date.

The Group reported total sales of $695.5 million in FY24 Q3, a decline of 9.2% compared to the same period in FY23 Q3, resulting in total sales of $2.3 billion in FY24 year to date (“YTD”), down 6.2% compared to FY23 YTD.

• The Warehouse sales were $408.3 million in FY24 Q3, down 8.1% compared to prior year;
• Warehouse Stationery sales were $60.8 million in FY24 Q3, down 7.5% compared to prior year; and
• Noel Leeming sales were $224.7 million in FY24 Q3, down 9.3% compared to prior year.

The comparative period in FY23 saw an unusual upward sales trend following the Auckland floods and Cyclone Gabrielle where there was increased demand for household items, apparel and appliances from The Warehouse.

Group gross profit was $227.9 million in FY24 Q3, down 12.8% compared to FY23 Q3, with Group gross profit margin decreasing 130 basis points to 32.8% in FY24 Q3. Year to date, Group gross profit margin increased 60 basis points to 33.8% in FY24 YTD.