The Warehouse Group has reported a 33% lift in its net profit for its first half result. Photo / Jason Oxenham
The Warehouse Group has reported a lift in revenue and profit for the first half of the 2026 financial year, with continued momentum on its drive to reduce the cost of doing business.
However, margin pressure at The Warehouse and uncertainty about the impact of global events has put pressure on the company’s second half outlook.
For the 26 weeks ended February 1, 2026, The Warehouse Group reported total group sales of $1.612 billion, up 0.3% compared to $1.607b in the first half of 2025.
Like-for-like store sales also grew, lifting 0.5% over the period.
The group’s earnings before interest and tax (ebit) rose strongly, up 37.7% from $19.5m in the first half of 2025 to $26.9m in the first half of 2026.
Group gross profit margin contracted to support the cycling through of old inventory, dropping 20 basis points to 32.3%.
Overall, the group reported a net profit after tax of $15.7m, up 33.6% from $11.8m in the prior corresponding period.
The Warehouse Group chairman John Journee said the company’s board sees clear evidence the group is on the right path.
“Consumer confidence is volatile and retail conditions remain extremely competitive. Against that backdrop, this is a solid result. We have held sales and improved profitability, while continuing to rebuild the foundations of good retailing.
“New leadership and a new operating model are now in place, and we are seeing the benefit through stronger cost discipline and execution. There is still more to do, and it will take time to restore sustainable returns.”
The Warehouse lifted its total sales by 0.5% over the half to $949.5 million, with like-for-like same-store sales up 1.2%.
Store foot traffic increased 0.5%,and conversion, the number of visitors who end up making a purchase, improved 1.0%.
Sales growth for the business’ fast-moving consumer goods growth (fmcg) categories continued, with sales in health and beauty up 3.7%, toys up 3.2% and leisure up 2.7%.
Gross profit margin for The Warehouse was down 110 basis points, with the group pointing to softer sales in higher margin categories, higher freight costs and increased provisions for aged stock as reasons behind the decline.
The Warehouse Group chief executive Mark Stirton said the business was stepping up its work to revitalise its home and apparel offer.
“We are also investing in our store experience, including visual merchandising upgrades and remodelling plans are underway for our first new flagship store format.”
The cost of doing business (codb) also remains a concern for The Warehouse, with the brand’s operating profit or ebit falling by 27.2%.
Warehouse Stationery recorded the best individual performance, with sales up 5.7% in the half to $116.1m, with like-for-like same-store sales up 1.8%.
Price resets and lower clearance led to gross profit growing faster than sales, with Warehouse Stationery’s gross profit margin up 170 basis points back to 2023 levels.
Stirton said the group needed to apply the same lessons learned at Warehouse Stationery and apply them at scale within The Warehouse.
Noel Leeming’s sales dropped by 1.2% in the half to $542.2m, with like-for-like same-store sales falling by 1.3%.
Despite the drop in sales, the brand was able to lift its gross profit margin by 90 basis points.
While the brand had lower in-store sales, online sales grew by 14.2%.
Noel Leeming’s operating profit lifted 52% compared to the prior corresponding period.
“The improvement in margin and profit is excellent to see and evidence the Noel Leeming team are doing the retail basics well while building a strong service and commercial offering,” Stirton added.
The group also announced its plans to open its first new Warehouse store since 2023 with a launch in Mangawhai alongside a new Noel Leeming in mid-2027.
Stirton said Mangawhai was a fast-growing area with strong demand from families for great value shopping.
The first six weeks of the second half has resulted in sales down 0.2% on the same period last year.
Journee said the economic recovery remains slow and, amid ongoing global volatility, trading conditions continue to be challenging.
“International conflict has created further uncertainty for New Zealanders. Rising fuel prices and potential disruption, along with congestion across key shipping routes, are expected to push freight costs higher in the period ahead.
“While the full impact on supply chain and consumers remains uncertain, management is closely monitoring conditions with planning underway. We are working with external stakeholders to seek to mitigate and manage these pressures as the situation evolves.”
Stirton said the group was acting decisively on what it could control.
“In the second half, we will continue the work to turn around performance. In this environment, the mission doesn’t change at The Warehouse, we will continue to strive to deliver value for Kiwis every day.”
The board elected not to declare an interim dividend given the group’s half year result and uncertain outlook.
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.