KEY POINTS:
Warehouse shareholders spoken to by the Business Herald say they want maximum value from their investment but will not pressure the company into holding an extraordinary general meeting.
Media reports have speculated that shareholders unhappy with the company's expansion into groceries were threatening to call an extraordinary general meeting to force the board to account for its strategy.
The Warehouse board could call an extraordinary general meeting on the written request of shareholders holding 5 per cent of the voting rights.
One institutional shareholder told the Business Herald such a meeting would not be required as the company was aware of shareholder concerns.
Brook Asset Management's Simon Botherway said value maximisation was a matter of considerable shareholder interest.
"Shareholders are particularly interested in the value proposition that is represented by grocery and how that can be justified."
Tyndall Investment domestic equities manager Rickey Ward denied agitating for a meeting. He said he had questioned the move into the low margin groceries business.
"Now we understand the 'halo effect' that they're trying to create to get a bigger basket size," said Ward.
The Warehouse has two Warehouse Extra stores offering groceries alongside general merchandise - in Whangarei and Sylvia Park - and another at Te Rapa in Hamilton is scheduled to open later this month. The company has a long-term plan to expand to 15 Extra stores nationwide.
The goal of the grocery offering is to increase general merchandise sales at The Warehouse, although the success of the strategy is unproven.
Ward said the fact that The Warehouse would not be rolling out groceries to all its 85 stores mitigated some of the concerns he had.
He said it was hard to judge the success of the move into groceries because the company had tried different approaches at the existing Warehouse Extra outlets.
"I don't think it's ever going to be the big winner for them," said Ward.
Last week, The Warehouse Group joined High Court appeals from Woolworths and Foodstuffs over the Commerce Commission's decision to prevent them buying the Red Sheds. Woolworths and Foodstuffs had sought commission approval in advance to buy up to 100 per cent of The Warehouse Group.
The commission ruled in June that they would not be able to buy, saying it would harm competition. Shares in The Warehouse closed down 1c at $6.19 yesterday.
