The Warehouse Group says it is on track to become New Zealand’s “most successful retail company”, and is open to acquiring new chains for its portfolio.
While not actively looking for chain retailers to acquire, Warehouse Group chief executive Nick Grayston said the company had the money to do so, and was open to the possibility.
“I’d never say that we weren’t going to acquire,” Grayston told the Herald.
“When I came in we had 23 constituent companies, we’ve consolidated those. The first thing you do is fix the businesses we have. If you look at our portfolio, Noel Leeming’s fairly mature, the hard one – that makes all the difference to profit – is The Warehouse and we’re really starting to see benefits. [Warehouse Stationery] is going well, but a lot more work to get to scale with Torpedo7.
“Should the right opportunity present itself, we have capital capability.”
He could not say what chain retailers the group was eyeing or could work well with its stable of brands, which includes The Warehouse, Noel Leeming, Warehouse Stationery, Torpedo7 and TheMarket.
Warehouse Group’s first-quarter sales improved by 4 per cent, compared to the same period a year ago, to $694.8 million and had sales growth of 3.6 per cent for the same quarter last year.
The group posted its highest annual result since 2011 in the 2019 year.
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It posted an adjusted net profit after tax, which outstrips one-off costs and other expenses, of $74m in the year ended July 28, an increase of 26 per cent, and posted an annual turnover of $3.1 billion – up 2.6 per cent.
Its share price has increased by 32 per cent so far this year.
Grayston said the group continued to reap the rewards of its transformation programme following its move to everyday low pricing in FY18.
At the company’s annual meeting this morning, chair Joan Withers said the group’s cash flow and balance sheets were “in good shape to support further investment” in its recently launched online marketplace TheMarket, and other technologies to “enable the business to accelerate” growth.
“It’s no overstatement to say our improvement has been significant,” Withers told shareholders.
Grayston said Warehouse Group had continued its transition to a “21st century retailer”.
“Powered by data and leveraging personalisation, we are building a broader platform that will become a customer-centric ecosystem. This will leverage our improved stores and logistic capability but will also include a marketplace to increase our reach – this is why we launched TheMarket,” Grayston said.
Earlier this month, TheMarket launched a subscription service as part of its online shopping platform TheMarket, offering Amazon Prime-type perks including free trials to streaming platforms.
Commenting on subscription, Grayston said the loyalty programme would grow to feature a mobile wallet and messaging that would “help and reward customers”.
“This will be first choice for Kiwis to solve their needs and wants, much like Amazon and its Prime ecosystem has become in the US and other markets.”
During the meeting, increased violence within its stores, including against its staff, was flagged as a growing concern the board was looking to address.
Grayston said the group had moved away from thinking of bricks and mortar and e-commerce separately. The Torpedo7 brand was expanding its physical store footprint, but about half of its business was conducted online, he said.
“Increasingly, the discussion is not about online or stores, it’s really about omnichannel, and being able to give the shopper convenience … we are by no means at the point where we have universal coverage around New Zealand so there are some clear opportunities.”
Online sales make up 7.8 per cent of total group sales.
Warehouse paid out a dividend of 17 cents per share in FY19.
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