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UPDATED: The Warehouse Group reports big profit drop

  • News
  • March 9, 2015
  • Sarah Dunn
UPDATED: The Warehouse Group reports big profit drop

The group announced on Friday that its adjusted net profit after tax for the first half of the 2015 financial year was $37.2 million, down from $46.2 million over the same period last year. Group retail sales, on the other hand, were up by 1.7 percent at $1,444.7 million.

The Warehouse Group includes The Warehouse itself, plus bricks-and-mortar retailers Noel Leeming Group, Warehouse Stationery, Torpedo7 and No 1. Fitness. It also offers a stable of pure online retailers which includes pet.co.nz, baby.co.nz and Shotgun Supplements.

The James Pascoe group doubled its stake in The Warehouse Group last week, paying $87.1 million for 30.55 million shares which had been formerly owned by Woolworths.

The group’s trading performance was impacted by a late start to summer seasonal trading, and cycling around New Zealand’s switch to digital-only television broadcasts which affected sales in the entertainment and consumer electronics categories.
Planned one-off costs also affected the financial result, with both Noel Leeming and Torpedo7 undergoing rebranding.

Group CEO Mark Powell says The Warehouse Group had to play "catch-up" on a lot of investments during this half of the year. He says the second-half profits are expected to be equal to or better than those of last year.

"We want to get back on a trend of proper growth."

Within The Warehouse itself, online sales are growing strongly – Nielsen’s 2014 online report places it as New Zealand’s most popular online retailer. Powell says The Warehouse's online store sees about 1.3 million unique visits per month. He says this compares favourably with Amazon, which receives about 700,000 unique visitors from New Zealand, and is not too far behind Trade Me's 1.6 million.

The Warehouse's online sales saw a 30 percent boost in the second quarter, and ‘click and collect’ purchases now represent 20 percent of the red sheds' online sales. Click and collect accounts for 10 percent of Torpedo7's online sales.

Powell says rising click and collect sales are a result of consumer dissatisfaction with the courier-delivery model: "Often people can get very frustrated when they come home and see that dreaded courier note saying 'We tried to deliver to you but you were away.'"

He says people working in offices commonly ask for their packages to be delivered to them at work, but the increasing volume of such deliveries has meant some offices have banned them.

The Warehouse Group will open its new Sir Stephen Tindall Learning Centre for retail students in Northcote next week.

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