Inflation wipes 65pc off Warehouse Group profit in ‘tough year’

The Warehouse Group owns The Warehouse, Warehouse Stationery, Noel Leeming and Torpedo7 and online stores 1-day and TheMarket.

The red sheds are selling record amounts of goods amid a cost of living crisis but inflation is hurting the company’s profitability, with The Warehouse Group’s annual profit falling 65.6 per cent in the year to the end of July.

Total sales across The Warehouse Group rose 3.2 per cent on last year to $3.4 billion.

That included a record sales result at The Warehouse of $1.9b, an increase of 9.6 per cent.

However, margins were down on last year, causing net profit after tax to tumble to $29.9m, down from $87m in 2022.

“It’s been a tough year for both us and our customers,” chief executive Nick Grayston said in a written statement revealing the result.

“We’re proud to have kept the essentials affordable for families and strong sales at The Warehouse reflect this.”

The Warehouse Group is New Zealand’s largest retailer.

It owns The Warehouse, Warehouse Stationery, Noel Leeming and Torpedo7 and online store TheMarket.

It has more than 260 brick-and-mortar retail stores, online stores and distribution centres.

The Group’s share price had almost halved in the past year to $1.75 - equating to a total market valuation of $603.5m -before the market opened on Thursday.

Warehouse Group chief executive Nick Grayston. Photo / File

Grayston was paid less than last year, earning $2.79m in 2023 compared with $3.56m in 2022. $1.1m of this year’s pay packet was incentive payments.

The retailer announced it would pay shareholders a final dividend of 8 cents per share.