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The Warehouse Group has revealed its latest annual results, with sales falling from $3.4 billion to $3 billion.
Sales for The Warehouse were $1.8b, down 5.3% year-on-year, Warehouse Stationery was down 6.7% to $231.9m and Noel Leeming was down 5.3% to $1b.
The group had a net loss after tax of $54.2 million in FY24, significantly lower than the $29.9 million profit in FY23.
Chair of The Warehouse Group Dame Joan Withers said the result was one of the most challenging in the business’s 42-year history.
“The poor financial performance we’ve reported this year is not acceptable. The board and executive leadership team are acutely aware of the disappointment shareholders will be experiencing and the big job ahead of us to get the company back on track.”
Warehouse Group interim chief executive John Journee said the result was disappointing and there had been “too many own goals”.
“Our ecosystem strategy was too ambitious, and we took our eye off the ball on product. We held onto Torpedo7 and TheMarket.com too long, reacted too slowly to changing customer spending, and fell out of step with what Kiwi families want.
“We’ve made mistakes and we own that. But we know where we went wrong, and we’re already working hard to fix it.”
Back in May, The Warehouse chief executive Nick Grayston stepped down with the company citing the need for a change in direction.
Withers said Grayston led the company through a period of significant change in the retail industry from 2016.
“His focus on sustainability, adopting agile ways of working, navigating the challenges of Covid and initiating the significant and successful programme of critical infrastructure upgrades have been hallmarks of transformation of The Warehouse Group in the last five years.
“However, as we look to the future, we have agreed a change in direction is necessary for the company and that it needs fresh energy to execute.”
Warehouse Group former CEO Nick Grayston who stepped down from the company in May. Photo / Jason Oxenham
Kmart’s expansion to hurt
Earlier this month, Kmart announced it would open its largest New Zealand store, and an analyst said that was likely to eat into earnings for The Warehouse and nearby US wholesale store Costco,
The outlet spanning more than half a hectare is to be built in Auckland’s northwest at Westgate.
That will be almost nearly opposite the American-owned Costco Wholesale, in a street yet to be created: Maki Place, off the Maki St thoroughfare.
At 6700sq m, the new big-box Westgate store will be larger than the almost half-hectare shop of just under 5000sq m, Kmart Manukau, which opened last year.
Forsyth Barr equity analyst Paul Koraua expected Wesfarmers-owned Kmart to do roughly $50 million in sales when the new store opens based on the size of the store.
“That $50m of sales is going to have to come out of its competitors in the area. So The Warehouse, and potentially Costco in Westgate are going to have to give up a little bit of share to make room,” Koraua said.
Tim Morris, director of food, FMCG, and retail at Coriolis, said Kmart had needed to increase its physical presence in New Zealand for some time.
“My hot take is Kmart makes a great store offer and has always been under-stored in New Zealand, and it could easily have quite as many stores. One of the things that has benefited The Warehouse is the failure of Kmart to expand over the last 20 years.”
