Years of restructuring looks to be paying off for The Warehouse, with the retailer posting record results for the 2021 financial year in spite of Covid-19 lockdowns.
The department store chain, which also operates stationary, electronics and sporting goods, reported net profit of $117.7m in the year to August 1, 2021, up 164 per cent on the previous year's $44.5m.
Adjusting for unusual items, including $67.6m of wage subsidies repaid, the underlying profit was $175.5m – up from $32.1m the prior year. Total sales increased 7.6 per cent to $3.4 billion, with online sales gaining 5 per cent to $393.1m making up 11.5 per cent of total group sales.
Chief executive Nick Grayston said the past 12 months had provided further confidence the group's "customer-led" strategy was working.
"We are seeing the benefits of our transformation programme and we are part way through significant digital investment to improve legacy systems and set ourselves up to give our teams and customers an even better experience."
Grayston said the restructuring started in 2017 had been important to be "nimble and agile" which helped the company recognise how customers shopping habits were changing.
"Frankly, it hasn't been an easy journey," he said.
The company had axed hundreds of jobs, including many last year, drawing fire from unions who accused it of using Covid-19 to justify operational decisions already under review.
But Grayston, whose total pay slipped from $2.86m in 2020 to $2.38m in 2021, and chair Joan Withers have justified the changes in order to compete with global players like Amazon and the rapidly changing retail landscape.
The company's share price has recovered dramatically over the past year, gaining almost 100 per cent in that time. The stock recently traded at $4.15, having hit a low of $1.50 in March last year.
The company has benefited from post lockdown "pent-up demand" with soaring sales enabling it to repay the wage subsidy, albeit after some pressure from the media.
Grayston said investment in digital infrastructure, including a full revamp of its website to combine divisions like Noel Lemming, had been essential for The Warehouse.
"So all of this coming together from the customer-facing ecosystem that is designed to recognise and reward customers, enable them to shop conveniently, however, and whenever they want," he said.
Online shopping had been more than doubled since pre-Covid, which had been enhanced by some of the actions that the company had taken around click and collect.
"All of those things have enhanced that customer experience and customer Net Promoter Score has actually gone up more than 10 per cent this year.
Since the first lockdown in 2020 Grayston said the company had learned a lot in terms of operating during a lockdown and the second lockdown had been a lot easier," Grayston said.
"We actually had to respond very quickly. Because, despite the interceding 18 months or so, there wasn't very clear guidance as to what constituted the essential and, we had a lot of good conversations with MBIE on that matter.
"As soon as we got clarity, we went through and identified those items," Grayston said.
"It was as a result of the investments we've made in our website that we were able to trade at split levels, in one part of the country and essentials only and the other part in non essentials.
"Without those investments in the re-platforming and the systems, we wouldn't have been able to do that," he said.
"In terms of putting in-store fulfilment centres to gather dark stores, the ability to pivot our people, and work within safe distancing guidelines.
"We did an analysis of the first lockdown and made sure that we captured all of those things.
"And so in the latest one, it's been much, much easier, because know what to expect. It's not the same, with some different dynamics. But unfortunately, it's not one of those things that you really want to get good at." Grayston said.
Withers said the year-end results exceeded expectations. The board declared a final dividend of 17.5c a share, taking the total dividend for the year to 35.5c a share, including a special 5c payout declared in February.