The Warehouse Group is cutting hundreds of roles in its head office team as part of a drive to push down its cost of doing business, with several administrative functions set to be outsourced overseas.
In an update to the NZX, The Warehouse Group chief executive Mark Stirton said the company’s cost base was not sustainable for a value retailer.
“As one of New Zealand’s largest retail employers we must make these tough choices for our 10,000 team members and their families across the country and return the group to sustainable profitability,” Stirton said.
“Together with the non-labour cost reduction initiatives underway across the group, these changes will help strengthen profitability and allow us to deliver better value for our customers over the long term.”
The group is set to cut 270 roles from its head office, reducing headcount from roughly 990 to 720 roles.
Two small teams, one within the group’s commercial team and a corporate support function, will continue through consultation, although a spokeswoman confirmed the group is still working through feedback on this.
The restructure will result in redundancy costs of roughly $6 million for the group’s 2026 financial year, and will be recognised as an unusual item that will impact reported earnings before interest and tax (ebit) for the year.
The spokeswoman confirmed the group will be working with its teams on redeployment opportunities, as well as offering career support, including job fairs with partners and job search coaching.
“We’re supporting everyone affected with care during what we appreciate is a difficult time for them,” Stirton added.
The non-labour cost reductions the business is making are also set to continue with the group’s partner, Tata Consultancy Services, through an expanded partnership.
Under the new operating structure, Tata will support the delivery of several corporate and administrative functions, including parts of technology, accounting, call centres and payroll.
Tata will provide the group with access to modern platforms, capacity and capability, including artificial intelligence, at a scale and cost the group said would not be possible to build internally.
The group said with Tata’s support of these functions, remaining head office staff would be able to make more progress on critical areas including store experience, merchandise and supply chains.
A spokeswoman for The Warehouse Group confirmed that Tata has a small presence in New Zealand, but most roles will be overseas.
Prime Minister Christopher Luxon, Trade Minister Todd McClay and Tourism Minister Louise Upston recently visited Tata’s campus in Mumbai during their March trade trip to India.
The new structure that supports the co-source model is expected to “significantly lower” the group’s cost base, with labour cost savings of roughly $3m to $4m in the 2026 financial year, and annualised savings expected to increase to approximately $17m by the 2031 financial year.
The group said it will deliver total expected savings of approximately $70m over the initial five-year contract term with Tata.
These savings are in addition to the estimated $40m over five years announced by the group in September 2025 on its licences and managed serviced partnership with Tata.
This means over the two terms the group is expected to save approximately $110m.
The leaner head office structure forms one part of the cost reset programme signalled by the business back in November 2025.
The aim of the programme is to reduce the group’s cost of doing business (codb) to below 31% of sales.
The group’s codb increased 0.2% to $993.8m according to its 2025 annual report, although it decreased 40 basis points as a percentage of sales from 32.6% in FY24 to 32.2% in FY25.
For the business to reduce its codb from 32.2% to 31% and below, it would need to reduce costs by roughly $30m.
The Warehouse Group is set to provide a broader update on its cost reset programme as part of its 2026 half year result on March 27, 2026.
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.