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 8 May 2025:

The Warehouse Group maintains momentum with Q3 sales growth

The Warehouse Group ("the Group") has today provided a trading update for the 13 weeks ending 27 April 2025 ("FY25 Q3").

• Group sales were $710.5 million, up 2.2% compared to $695.5 million in the same period last year being the 13 weeks ending 28 April 2024 (“FY24 Q3”)

• Group same store sales(1) up 2.4% on the prior period

• Group market share of core retail grew 50 basis points on the prior period(2)

• The Warehouse sales were $415.9 million, up 1.9% compared to the same period last year, with same store sales up 3.4%

• Warehouse Stationery sales were $58.8 million, down 3.3% compared to the same period last year

• Noel Leeming sales were $234.9 million, up 4.5% compared to the same period last year

The Warehouse Group Interim CEO, John Journee described the Group’s sales growth of 2.2% as an encouraging result, continuing the momentum delivered towards the end of the first half. “The Group’s February sales performance was strong, while March and April sales showed softer trends however still exceeded the same period last year. This positive headway is a direct result of our team’s dedication to winning back customers with enhanced products and value.” said Mr Journee.

“At The Warehouse, improved everyday essentials and refreshed homeware and apparel ranges are showing good promise. Noel Leeming delivered a strong sales result considering the discretionary nature of its products and the current economic climate. Warehouse Stationery had a strong February sales performance boosted by a successful back to school campaign; however, its core small to medium business customer base continues to struggle which was evident in March and April.”

The Group’s market share of core retail spend grew 50 basis points, reaching 15.8% this quarter. This gain is supported by Group same store foot traffic up 1.4% and same store conversion increase of 140 basis points on the prior period to 53.5%.

Group average retail selling prices declined 4.3% versus the prior period, impacted largely by the investment into price as the Group resets ranges and the value it provides to customers. This investment has resulted in units sold increasing 7.2% on the prior period.

Online sales as a percentage of Group sales increased 10 basis points year on year, making up 6.7% of total Group sales, strengthened by 15.6% online sales growth in Noel Leeming.

Group gross profit was $223.3 million, down 2.0% on FY24 Q3, as a result of a lower Group gross profit margin of 31.4%, down 140 basis points. Mr Journee acknowledged, “Whilst in part this was due to brand mix across the Group, the retail landscape continues to see high promotional activity which, combined with our own strategic pricing reset across key product lines and markdowns required to clear seasonal merchandise, is placing pressure on our gross margin performance.”