The Warehouse Group chairwoman has described the last financial year as one of the most challenging in the company’s 42-year history.
Today, it announced a net loss after tax of $52.2 million. Last year it had a net profit of $29.8 million.
The group said the loss was “significantly impacted” by the disposal of the Torpedo7 brand in March 2024, when it was sold for $1 to Tahua Partners.
However, even without the loss from the Torpedo7 sale, it said underlying profits were still down on the previous year.
The group said the financial result reflects one of its toughest years on record.
In May, the group announced the closure of online retailer TheMarket.com. Its then chief executive officer, Nick Grayston, announced his departure in the same month. He had been at the company since 2016.
In June, The Warehouse Group forecast a drop in earnings and predicted sales to be between 6-7% lower than the previous financial year. Today, it was announced sales were down 6.2%.
The Warehouse Group chairwoman Dame Joan Withers said the poor financial performance “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.”
‘Scored too many own goals’ – interim CEO
Interim chief executive officer John Journee said company’s performance is “disappointing” and “we’ve simply scored 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.”
Retail sales at The Warehouse fall
The greatest impact on sales came from the decline in The Warehouse division’s retail sales which were down 5.3% to $1.8 billion.
Warehouse Stationery sales were $231.9 million, down 6.7%, and Noel Leeming sales were $1.0 billion, down 5.3%.
Looking ahead
Its chairwoman described the last financial year as one of the most challenging in its 42-year history. (Source: 1News)
Journee said the company strategy had been reset, and they have divested in “unprofitable” businesses.
He added the company will now shift to a brand-led strategy, focusing on The Warehouse and “getting back to basics” by focusing on core retail strengths.
“We’ve begun resetting our categories to bring in more trend and newness, and better merchandising. This will strengthen our market position and improve profitability.”
Journee said the company expects market conditions to continue to be challenging, and they remain “cautious” about when they may see an increase in retail spending.
“We’re under no illusions of the challenges ahead of us. While we’ve been able to regain market share in our core retail segment in the first six weeks of FY25, our sales have been soft and our gross profit remains under pressure as we clear the last of our winter stock and continue to reset our product offer.”
“With our strategic focus firmly back on trading our brands and on renewing and energising our product ranges, the team and I look forward to being able to demonstrate progress in the year ahead.”
In early August it was announced The Warehouse Group would not be progressing talks with founder Sir Stephen Tindall and Australian investment manager Adamantem over a proposed takeover.
The group will report their FY25 Q1 trading update on November 8, 2024.
