Restructuring at The Warehouse Group comes as the listed retailer faces more aggressive competition from rivals like Kmart and Farmers, says one fund manager.

"Mass layoffs" are feared to be on the cards at The Warehouse's Group head office, as it seeks to streamline its operations, according to First Union.

The Warehouse Group, which encompasses The Warehouse, Noel Leeming, Warehouse Stationery and Torpedo7, last month announced to the NZX that it was making a series of changes to its business operating model.

The Warehouse Group head of media and PR, Tanya Henderson, would not confirm job losses and said the organisation was going through a consultation process.


"We've put some proposals forward and staff are currently providing feedback before any structure is announced or anything like that. So that's where the process is at," she said yesterday.

But First Union retail, finance and commerce divisional secretary Maxine Gay told the Herald that it sounded like jobs were going to go at the Warehouse Group's head office on Akoranga Dr in Northcote.

"Union delegates and team leaders have said to the union that there will be mass layoffs at the head office," she said.

At this stage there was no indication that there would be any layoffs at the shops themselves.

"The union itself has not heard anything formally from the company," Gay said.

An institutional investor, who asked not to be named, said the issue had been bubbling away for a while.

"There's a lot of change going on in retail -- there's always lots of change -- but unfortunately The Warehouse has been caught in the pinch-point between some structural changes like online sales and things like CDs not being sold in stores anymore. There's also been more aggressive competition from companies like Kmart, even Farmers and others.

"Unfortunately it's definitely put pressure on the company's profitability and addressing where people are and what they're doing is unfortunately part of that process."

Forsyth Barr senior analyst Chelsea Leadbetter was waiting for The Warehouse Group to announce its plans.

"All that we know so far is that they've had profit going down 10 - 15 per cent on the prior year for the first half, so certainly not a good performance from the company this year."

Meanwhile, The Group today announced it is planning to open three new shops in a new retail centre at Rolleston, south of Christchurch, and said it would employ an extra 60 staff.

New Warehouse, Warehouse Stationery and Noel Leeming stores would be open on Masefield Dr later in 2017.

The site on Masefield Dr would be developed jointly by Eldamos Investments and Rolleston Retail and have the three stores in a range of other new outlets planned for the site.

Last month, The Warehouse Group chief executive Nick Grayston told the NZX that there would be changes to the company involving "simplification to reduce complexities, drive efficiencies and increase business agility, while removing significant cost".

The company would consolidate its support service functions "to drive synergy benefits, deliver efficiencies and reduce complexity across all Group brands", he said.

The operating structures and executive leadership of The Warehouse and Warehouse Stationery would also be integrated. The same would occur for Noel Leeming and Torpedo7.

As a result of the changes, The Warehouse Limited chief executive Simon Turner stood down from his role.

In December the Warehouse Group said its performance in the lead up to Christmas had been below expectations and it was unlikely that the shortfall would be fully offset.

It told the NZX that net profit for the first half to January 29 was expected to be $38.5 million to $41m - representing a 10 to 15 per cent fall from the same period last year.

It will release its complete first-half earnings on March 9, and provide an update on its strategy and plans to reduce costs.

- additional reporting by Anne Gibson