Supermarket plans? Sir Stephen Tindall and private equity firm make offer for shares in The Warehouse

• The Warehouse Group in January proposed about 190 job cuts across six retail brands in Auckland and further job cuts at its head office last month.
• The group decided in May to sell TheMarket.com.
• The group including The Warehouse, Noel Leeming, and Warehouse Stationery posted a net loss of $23.7 million in its half-year results.

Sir Stephen Tindall, founder of the retail giant The Warehouse, and a private equity firm have approached the company to buy up shares in the business.

In the notice to the NZX, The Warehouse told shareholders and other stakeholders it had received the approach from Tindall and Adamantem Capital Partners

It told shareholders not to sell their shares.

The board of directors said the approach received did not constitute an offer by anyone to acquire the business of the company or shares of the company.

“The company will update the market as appropriate of relevant developments.”

The offer came after speculation in The Australian’s Dataroom column that Adamentem and Tindall were working on a possible buyout of The Warehouse.

The Australian reported that it understood Tindall wanted to move The Warehouse towards becoming a third player in the supermarket industry.

Adamantem is an Australian investment manager which was founded in 2016. It has investments in a range of businesses in New Zealand and Australia including sausage and bacon business Hellers.

Tindall owned 27.01% of The Warehouse directly while The Tindall Foundation had 21.31% as of July 30 last year, The Warehouse’s annual report shows.

Tindall started The Warehouse in 1982.

The Warehouse Group has been in cost-cutting mode amid a difficult time for retailers.

Last month it revealed plans to thin out its management structure as it refocuses on its three core brands - The Warehouse, Warehouse Stationery and Noel Leeming.

The move came after the sudden departure of its chief executive Nick Grayston in May after profits plunged.

Torpedo7 was sold in February for $1 to a consortium. Photo / Dean Purcell

The Warehouse Group made a $23.7 million net loss in six months to January 28.

Total group sales were $1.633 billion, down 4.9% on a year earlier.

The Warehouse itself had sales of $965.6m, down 4.7% on the 2023 first half. But its gross profit was up 1.6% to $374.3m.

The group’s total net loss of $23.7m included the impairment of Torpedo7 assets and restructuring costs.

Torpedo7 was sold in February for $1 to a consortium that included former Breakers basketball team owners Paul and Liz Blackwell.

Supermarket move

The Warehouse already sells some supermarket food items. Grocery sales at The Warehouse in the half-year were up 11.7% and now comprise just over one-fifth of all sales.

Retail analyst Chris Wilkinson welcomed any move by the retailer to push harder into the supermarket space.

“I think it’s the most encouraging news in a long while for the brand and signals an opportunity for The Warehouse to get back to its original ‘challenger’ mindset and culture.

“That’s what had the stores at the heart of NZ and really the only way it can find its new niche in a vastly different retail landscape. The combination of brand, audience and evolutionary knowledge from the founder, and a laser focus on commercial performance from private equity players would deliver a strong chance of repositioning the brand, stores and culture in this new world.

“There’s lots of work to do, but by focusing on areas where the company can win, this combination gives it its best chance.”

But Tex Edwards, founder of 2Degrees and a spokesman for Monopoly Watch NZ, warned the incumbent supermarkets would use it as an excuse to argue against greater regulation of the sector.

“Incumbent supermarkets will use this as an excuse to plead with policymakers, politicians and regulators to go easy on the fact that competition is coming.”

He said regulators and politicians should stay steadfast on breaking up the supermarket duopoly by forcing accounting separation of distribution away from retail stores.

Foodstuffs and Woolworths are the major players. Foodstuffs is currently seeking clearance from the Commerce Commission to merge its North and South Island divisions.

Last week the commission released a statement of unresolved issues and noted that it continued to have concerns that a merger would substantially lessen competition.

The commission is due to make a final determination on the matter on October 1.

Shares in the Warehouse are up nearly 26% today to $1.46. But are down 17.5% over the year.