The Warehouse Group has made several changes over the past year to its organisational and operational structure, but will it deliver a positive result amid a tough retail environment? Photo / Supplied
Sales and margin pressures at the Warehouse Group will be under close scrutiny by analysts when the retailer releases its full-year results this week.
There will also be a focus on how the company plans to respond to new competition from Swedish retailer Ikea, which opens in December.
In its last update to the market, Warehouse Group said it expected its 2025 full-year earnings before interest and tax (ebit or operating profit), to be between a $5 million loss and a $5m profit.
That’s a large downgrade from 2024, for which it reported an operating profit of $28.9m.
The group said the timing of New Zealand’s economic recovery remained uncertain and was weighing on discretionary consumer spending.
“A delayed winter and continued subdued consumer confidence also led to a highly promotional retail environment, resulting in greater than expected trading variability across The Warehouse, Noel Leeming and Warehouse Stationery,” the group said.
Chairwoman Dame Joan Withers said the 12-month period covered in last year’s result was “one of the most challenging in the business’ 42-year history”.
In its 2024 result, the group’s total sales fell from $3.4 billion to $3b, with The Warehouse down 5.3% year-on-year, Warehouse Stationery down 6.7% and Noel Leeming down 5.3%.
The group had a net loss of $54.2m for the 2024 financial year, significantly lower than the $29.9m profit in the year prior, although impairments had an impact on the result.
After the result, interim chief executive John Journee said the group’s focus would be on re-evaluating its product ranges, growing its business customer base and a return to an individual strategy for each of its brands.
“What our customers were missing from us was the newness in fashion, which we had downplayed in that move to the focus on essentials. That was a misstep, and that’s what we’re fixing,” Journee said.
“I’m a career retailer, so I love retail. I love this company, and I love the people, but now we’ve got a really good team, and I’m clear my job is to set us back on our feet.”
Journee went straight to work, shifting the group back to a brand-led strategy, reducing its cost of doing business, modernising and upgrading legacy IT systems, and beginning efforts to re-evaluate inventory and categories across the business.
The turnaround strategy appeared to have helped lift the group at its half-year result in March earlier this year, when it reported a net profit of $11.8m, up from the first half of 2024’s $23.7m loss, but growth in revenue remained a challenge.
Journee said at the time that market conditions and overcoming legacy challenges continued to impact progress.
A few months later, the business ended its year-long search for a permanent chief executive, appointing its chief financial officer Mark Stirton to the top role.
Stirton spent almost a decade rising through the ranks of Mr Price Group, the largest value-fashion retailer in South Africa, before becoming its chief financial officer.
At the time, Stirton said he hoped to revive the “warrior spirit” instilled in the business by founder Sir Stephen Tindall, and said his goal was to put the business back at the forefront of Kiwi culture.
Since taking the helm at the Red Sheds at the start of September, Stirton has been quick to keep the pace of change in the lead-up to the result.
The group appointed a new chief digital and transformation officer, and a new acting executive general manager of merchandise after Tania Benyon resigned following 18 years with the business.
The group also partnered with Tata Consultancy Services to support its digital transformation. The group estimates the partnership will reduce costs for licences and managed services by up to $40m over five years.
While all moves were seemingly of benefit to the business, it’s unlikely they will have any impact on this year’s result.
Forsyth Barr analyst Paul Koraua said analysts were expecting either sales or margins to be down, or a mixed result between the two aspects, with pressure to the downside.
“They guided to an ebit of basically zero, so the bar is very low. At the same time, any sort of significant leverage or positivity would be to the upside as well,” Koraua said.
Koraua said the recent results for Briscoe Group, KMD Brands and Hallenstein Glasson were good indicators for the group, but stressed that if a few of them are winning, someone has to be losing.
The three results Koraua mentioned reflected very different outcomes for the sector: stalling, falling and the situation where business is better across the Ditch.
In Briscoe Group’s half-year result, it reported total revenue of $371.27m, equivalent to 99.8% of sales compared with the same period last year.
Its net profit after tax fell from $33.2m in the first half of 2024 to $29.3m in the first half of 2025, a drop of 11.8%.
Briscoe Group managing director Rod Duke remained cautious and signalled that the ongoing economic environment may impact the group’s full-year performance, which will be released early next year.
Meanwhile, KMD Brands posted a $93.4m loss for the 2025 financial year, driven by continuing difficult trading conditions and an intensive promotional environment.
The group reported total sales of $989m, up 1% from the year prior at $979.4m, but gross margins fell from 58.4% in 2024 to 56.5% in 2025.
New group chief executive Brent Scrimshaw said he was confident in the potential of the group’s brands, but acknowledged the impact of warmer weather and the US tariffs on the business’ performance.
Hallenstein Glasson reported a 14.4% lift in net profit to $39.4m in its full-year result, challenging the market trend through steady gross margin management across the year.
Total group revenue also grew, up 8.1% to $470.7m in 2025 compared with $435.6m in 2024.
However, the devil was in the detail, the result largely being driven by growth in Australia. New Zealand, and particularly Hallensteins, had much tougher results.
Generate investment specialist Greg Smith said the Warehouse Group’s Noel Leeming stores might have an increase in sales given improving consumer confidence figures.
“Margins at the Red Sheds will be watched, they were getting people through the doors but at what cost?” Smith said.
“It would be also interesting to know how they are positioning themselves in context of Ikea’s imminent opening in New Zealand – a credible new competitor for the coming Christmas sales period."
Smith said the “Home” category, in which Ikea operates, accounts for roughly one-seventh of The Warehouse’s sales.
The Warehouse Group will report its full-year results on Thursday.
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.