The Warehouse Group made a $23.7 million net loss in six months amid some grim retail conditions and a poor performance from the now-discarded Torpedo7.
And it planned to sell its underperforming online shopping platform TheMarket.
Announcing results for the half-year to January 28, The Warehouse Group said it would simplify more to focus on core brands.
”It’s time to draw a line under TheMarket.com as a separate entity and shift our marketplace focus to The Warehouse,” the company said.
Total group sales were $1.633 billion, down 4.9 per cent on a year earlier.
The Warehouse itself had sales of $965.6 million, down 4.7 per cent on the 2023 first half. But its gross profit was up 1.6 per cent to $374.3m.
The Warehouse Group says it will focus on its core brands now. Photo / Jason Oxenham
Noel Leeming sales were $544.4 million, down 2.2 per cent.
Warehouse Stationery sales were also down, falling 5 per cent to $117.9 million.
The group’s total net loss of $23.7m included the impairment of Torpedo7 assets and restructuring costs.
Torpedo7 was sold last month for $1 to a consortium that included former Breakers basketball team owners Paul and Liz Blackwell.
The Warehouse Group chief executive Nick Grayston said the company was making choices to simplify its business.
“These calls are needed to set us up to be a much leaner, sharper-focused group in the future. Our core brands are the bedrock of the group and now have our undivided attention.
“The sale of Torpedo7 has had a severe impact on the group’s financial performance this half,” he added.
“While the disposal of Torpedo7 means we have incurred significant write-downs, it allows us to redirect our focus towards our core brands and build on the $30.7 million in adjusted NPAT (net profit after tax) from our continuing operations.”
Outlook
“We’re seeing customers seek out value on the essentials, which is putting pressure on big-ticket items, impacting our brands across the board,” Grayston said.
In an investor presentation, the company said it expected tough retail market conditions to persist.
“We believe the macroeconomic climate will remain difficult, and it is challenging to predict how cautious consumer spending will impact sales across all our brands,” the company said.
“And we’ve seen much tougher trade in February with [a] sales decline in the low teens. In March, we’ve seen some improvement with our sales decline returning to be more in line with the level of decline experienced in our first half.”
Flailing outdoor gear shop was a drag: analyst
Before the result, Craigs in an analyst report said TWG did a smart thing getting rid of Torpedo7.
“Given Torpedo7′s poor track record of performance ... the group’s decision to divest the brand comes as little surprise.”
The move would rid The Warehouse Group of an earnings drag and distraction, Craigs said.
That was especially prudent considering the challenging macroeconomic conditions for retailers.
Sales trends worsened quarter on quarter across several of The Warehouse Group’s key categories, Craigs said.
Retail sales fell in the last three months of 2023, with recreational goods and fashion hit hard, according to Stats NZ figures released last month.
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