KEY POINTS:
Just as The Warehouse Group has cleared away the wreckage of its failed Australian general goods chain it is looking at new retail ventures across the Tasman.
The future of the Red Sheds in this country is up in the air with the Commerce Commission scheduled to decide next week whether Foodstuffs and Woolworths Australia are clear to buy The Warehouse.
And that could set off a bidding war or shut one of the parties out.
In the meantime the company is considering whether it might make its own acquisition and venture back into the Australia market.
Chief executive Ian Morrice told shareholders yesterday he was looking at acquisitions including retail assets that might come available from the possible break-up of Australia's largest retailer, the Coles Group.
He confirmed that two Coles assets - apparel-based chain Target and Officeworks - presented "opportunities" for The Warehouse.
The board of directors at The Warehouse had been looking at either an acquisition or returning money to shareholders, he said.
"We are not yet at the stage we can say that either course is correct. We have created a lot of capacity in our balance sheets with better operating performance through removing debt.
"That has given us the opportunity to consider reasonably significant acquisitions.
"We don't know whether [the break-up of Coles] will happen or not but if that did happen there are assets at Coles that would and should be of interest to The Warehouse.
"Target and Office Works represent very different opportunities compared to the business we had previously. We never said we were opposed to business in Australia, but the business we did have was not right."
In the 2006 annual report chairman Keith Smith said the loss from the Australian operation was "obviously disappointing".
"The board considers that focusing on the group's resources on developing its New Zealand assets was the responsible way to continue to generate attractive outcomes for shareholders," Smith said in the report.
The Warehouse paid A$105 million for two discount chains in Australia in 2000. It is estimated to have poured more than $200 million into the business and wrote off $88.8 million in the year to July 30, 2006.
It sold the business for A$92 million in November 2005.
Coles is expected to announce the sale process for the company on Monday, with one option being the sale of Officeworks and Target. Other assets could be incorporated into a new shareholding with private equity firm Kohlberg Kravis Roberts.
Unlike its rival Woolworths Australia, which has made an aggressive push into New Zealand, Coles is not heavily represented in this country.
Macquarie Equities senior analyst Warren Doak said both Target and Officeworks were operating in different markets than The Warehouse's previous acquisitions.
Morrice's comments might attract scepticism from some investors but they should be kept in proportion, Doak said.
He said the debate over ownership of The Warehouse, which started in September when Stephen Tindall and Pacific Equity Partners made a bid to privatise the company, was now six months old and had been a distraction. But the company was still looking at opportunities.
"I am sure Stephen Tindall has been informed that it is is a distraction for the company and that it would not want to be in the same situation in, say, three years' time," Doak said.
Shares in The Warehouse closed down 6c at $6.67.
Both ways
* Regulators may decide next week whether Woolworths Australia and Foodstuffs are allowed to buy The Warehouse Group.
* Both are poised for a takeover of the Red Sheds.
* The Warehouse is looking at Coles Group retail chains Officeworks and Target.
* In the year to July 30, 2006 The Warehouse wrote off $89 million from its failed Australian venture.
