The chairwoman of The Warehouse Group details her plan to save the woeful retailer. Video | Corey Fleming
Shareholders have given their criticism and ideas for The Warehouse Group at its annual shareholder meeting, but its grocery offering may be dividing opinions between its leadership and the company’s shareholders.
Dame Joan Withers and interim chief executive John Journee, alongside board directors, faced questions on the company’s poor performancein FY24, which had them report a net loss after tax of $54.2 million.
Shareholders had a range of concerns to address the board about, whether it was the quality of the customer experience, staff incentives for quality of service, or what went so wrong for it in H2 FY24.
However, the growing voice of support for The Warehouse’s grocery product offering continues to rise. Multiple shareholders shared their wishes for the group to seriously engage the market, one arguing they could challenge the duopoly of Foodstuffs and Woolworths.
Grocery accounted for 25% of The Warehouse’s annual sales in FY24, up 12.5% year-on-year, but its gross margin remains an area of weakness. Although, the well-known business pressure doesn’t appear to have swayed its shareholders.
Dame Joan Withers was firm on the company's position as a mixed choice retailer, resisting the feedback from shareholders who shared their support for further entry into grocery, even one who referenced Sir Stephen Tindall's bid earlier this year.
Withers confirmed that the grocery category within the Warehouse includes health and beauty products, arguably inflating the proportion of its newly introduced food and beverage options to contribute to wider sales.
Especially considering the brand is set to release its new skincare brand Poppi aimed at teens and young women soon.
Journee affirmed that grocery is a key driver of foot traffic within stores and said they are continuing to invest in the segment, but perhaps not to the level that would be wanted.
One shareholder made reference to Sir Stephen Tindall, founder of The Warehouse, and his bid earlier this year to regain ownership of the business, suggesting if Tindall saw interest in grocery, so should the current leadership, although Withers questioned what operating model Tindall would operate under for it to work.
Homegrown leadership
Another key issue for shareholders in attendance was the need for the company’s next chief executive to be a New Zealander, with many showing support for the cause in the room.
Journee said cultural nuances are important to people, and it’s something he understands will be crucial.
“New Zealand has unique aspects to it, it’s a relatively small economy. We have different desires and priorities, and we look outwards,” Journee said.
“I think people stop when a company, especially a company they regard as a Kiwi company, talks off tone. I think as a board we’re conscious that that’s important, and it’s strongly part of our brief.”
The company is anticipating being at the candidate shortlist stage early in the new year, with members of The Warehouse Group suggesting its new leader could come from either within the team or externally, but expect a lot of interest in the role.
One shareholder raised the issue of the cost-of-doing-business, and wanted to ensure the company’s substantial technology investment had been completed.
The Warehouse Group chief financial officer Mark Stirton said those investments were akin to “heart surgery”, and its completion had reduced the forward view of capital expenditure significantly.
The share price for The Warehouse Group was also a concern, one shareholder pointing out how its price had fallen from over $4 in 2022, to $1.03 as of writing.
Withers said the board shared their dismay at the current price, but did not comment further.
Toughest result in 42 years
The Warehouse Group revealed its latest annual results in September, with sales falling from $3.4 billion to $3b.
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 $29.9m profit in FY23.
At the time, 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.”
Tom Raynel is a multimedia business journalist for the Herald, covering small business and retail.
