Woolies still keen on Red Sheds

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Australian retail giant Woolworths says it remains "interested" in The Warehouse but a local analyst says any possible takeover deal would remain a challenge because of the blocking stake owned by rival Foodstuffs.

The pending resignation of Warehouse chief executive Ian Morrice has sparked talk of majority owner Stephen Tindall renewing plans to privatise or sell the business.

In 2008 the Commerce Commission prevented the two grocers acquiring The Warehouse over competition concerns stemming from The Warehouse's Extra supermarket stores.

The Warehouse has since scrapped its Extra foray.

Asked if Woolworths would be interested in another tilt at The Warehouse if Tindall wants to sell stakes that give him 53 per cent control, a spokeswoman said: "Woolworths continues to be an interested and committed shareholder of The Warehouse."

She would not comment further.

Foodstuffs NZ managing director Steve Anderson said he did not comment on speculation.

But retail analyst Tim Morris, managing director of Coriolis Research, said shares in The Warehouse were under tight control.

"It's not just Tindall but Foodstuffs would have to decide to sell. Both supermarkets are very competitive. I can't imagine one is going to give a concession to the other."

Morris said The Warehouse would be of most advantage to Woolworths.

He said it would make more sense for The Warehouse to get in a new chief executive to fix the business to drive its share price up before selling it.

"We are a long way from the heady days of $7 or $8 a share," he said, referring to the $7.50 a share which Woolworths was believed to have offered in 2006. The Warehouse yesterday closed at $3.62

Morris said he believed The Warehouse was losing market share because its prices were too high and the stores disorganised. "They are a discounter and I'm just not sure about the level of discounting provided."

He was pretty sure the United States equivalent, Wal-Mart, was the cheapest but it was not always the case with The Warehouse any more.

"There are too many instances where something is cheaper elsewhere."

The stores lacked the discipline and organisation of most supermarkets.

Despite that, Morris said The Warehouse still had a very strong market share in New Zealand.

Deutsche Bank analyst Chris Byrne said there were a couple of catalysts which could encourage change at The Warehouse but any sale or privatisation talk was just speculation at the moment.

"We just have to wait and see if anything comes out of it."

A spokesman for Tindall said on Friday that he had no comment to make on any sale talk.