The Warehouse Group's sale of its financial services business after less than two years signals a "very quick turnaround in strategy", according to an analyst.

The company, known for its flagship "red shed" discount department stores, is selling its financial services business to a subsidiary of SBS Bank for $18 million, although most of that will be offset by a $16m non-cash impairment of its software assets.

Hamilton Hindin Greene investment advisor Jeremy Sullivan said although the finance business had been viewed as a strong move by former chief executive Mark Powell, the current chief executive Nick Grayston may not have agreed.

This was coupled with the division not performing as well as hoped.

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"It's a very quick turnaround in strategy," Sullivan said.

"These particular investments are something you almost need to see as a long-term thing - a decade at least in my view," he said.

"The capital expenditure and software development is huge. Arguably the strategy was not playing out for them - they had had previous writedowns and missed expectations so the market seems to be pleased they have gone back to basics."

The sale is expected to be completed within the next five weeks, The Warehouse Group said.

"This transaction will enable the group to focus its capital and people resources on the transformation of its retail business which is our current top priority and will remain so over the next few years," said chairwoman Joan Withers.

Castle Point Funds Management's Stephen Bennie said the decision to sell the division was a good one.

"It was essentially losing $10m a year as of the interim result," Bennie said. "In addition to that they had to writedown the value of the division by $40m in the last few months. Basically it had become an untenable mess."

"Now, Joan Withers and Nick Grayston can focus solely on rejuvenating the business model and integrating their big four retail chains, as they seek to make the offering relevant and at the same time strip out costs from the business," he said.

"That is a big ask in anyone's book and there is clearly no room for loss-making distractions in that mix."

The company's share price closed up 5c yesterday at $2.28.

Sullivan said the market had reacted positively to the sale.

"The share price was north of $3 at the start of the year so the company has had a tough 2017 - this is a bit of a relief really," Sullivan said.

"It is a very short time and not something you would normally like to see with multi-million dollar layouts that the strategy can turn on a dime.

"It does usually take a number of years for these things to work out and perhaps if they had stuck at it they may have been able to turn things around but at least in the short term the market is happy with what they're doing," Sullivan said.

The company acquired 100 per cent ownership of the financial services business in September 2015 by buying out joint venture partner Westpac Banking Corp for $7.3m, only to face a weaker-than-expected transition and below-target card spending.

In March, the company reported a 76 per cent drop in first-half profit to $13.6m after it took a $22.7m impairment charge against the financial services unit, recognised restructuring costs and earned less from its Red Shed stores.

Financial services recorded an operating loss of $5.2m in the 26 weeks ended January 29, up from a loss of $2.7m a year earlier.

At the time, the company said the board was reviewing the outlook for the segment "and looking at various alternative strategies to gain the scale necessary for the business to achieve profitability".