The Warehouse Group has booked a post-tax loss of $54.2 million after sales fell 6.2 per cent to $3 billion.
“Our FY24 performance is disappointing, and we’ve simply scored too many own goals,” conceded interim CEO John Journee.
“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.”
Flagship brand The Warehouse saw a 5.3 per cent decline in sales to $1.8 billion, which the company attributes to a misdirected category strategy, poor execution, and an inconsistent customer offering.
“Our winter range didn’t resonate sufficiently with customers and we needed to discount heavily as a result,” said Journee.
“This, along with increased promotional activity, caused the 250 bps gross margin gains achieved in the first half to be eroded in the second half, ultimately delivering a modest gross profit margin of 10 bps year on year.”
Warehouse Stationery’s sales decreased 6.7 per cent to $231.9 million and Noel Leeming’s sales dropped 5.3 per cent to $1.0 billion.
However, despite all that, the group’s gross profit margin was stable at 33.6 per cent.
The FY24 net loss compared with a profit of $29.8 million for the previous year. A “significant impact” in the loss was the sale of the Torpedo7 sportsgoods business in March of this year for just $1. The group’s operating profit (EBIT) was $28.9 million, and adjusted net profit after tax was $18.9 million, compared to $57.4 million in FY23.
“We have reset the group strategy, divested unprofitable businesses, and moved away from the ecosystem strategy to a retail-led strategy focused on trading our core brands, The Warehouse, Warehouse Stationery and Noel Leeming,” said Journee.
“The shift to a brand-led strategy is centred on strengthening each brand’s specific customer value propositions to enable them to more effectively compete.”
Chair Dame Joan Withers said the past year was one of the most challenging in the company’s 42-year history.
“The economic climate in Aotearoa New Zealand has been difficult for most retailers, with inflation, high interest rates, and a weak economy significantly reducing consumer demand. However, our trading performance and operational execution have fallen short and exacerbated these challenges,” she said in a statement.
“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.”
