The Warehouse Group is gearing up to cut its staff count by at least 1000 roles.

The group is proposing to close six stores, in addition to three earlier announced, in its network resulting in up to 950 job losses and an additional 130 cuts from its head office.

In a NZX announcement this morning, the country's largest listed retail company said it was moving to an agile business model, which would "likely see a reduction of around 100-130 roles" in its Northcote head office.

Covid 19 coronavirus: Warehouse Group asks staff to take pay cut
Covid 19 coronavirus: Warehouse Group proposes axing more than 1000 jobs
Premium - The Warehouse gets almost $70 million in wage subsidies


In addition to this, it plans to close six The Warehouse, Noel Leeming and Warehouse Stationery stores. The stores that face closure include: Noel Leeming Henderson Clearance Centre and Tokoroa store, The Warehouse Whangaparaoa, Johnsonville and Dunedin Central stores and the Warehouse Stationery Te Awamutu store.

This follows earlier announcements that it will close its The Warehouse store in Birkenhead in July, and Noel Leeming stores in Papanui and The Palms in Christchurch.

"The proposed changes to our footprint consider factors including proximity to our other stores, shopping habits of those in the area, store profitability and lease arrangements. The group will continue to assess its store network and has flexibility in its lease renewal profile with approximately one quarter of its network coming up for renewal within the next 15 months," Warehouse Group chief executive Nick Grayston said in the market announcement.

The company said the proposals would see approximately 700-950 roles or 410 fewer full time equivalent store roles as a result of store closures.

The group has already commenced the consultation process for job cuts in its head office as it powers on with its plans to go agile from August 31.

Grayston said the impact from Covid-19 over the past couple of months had "made it even more clear that Agile is the right model for the group".

"We are confident that agile principles will support the business by improving speed to market, collaboration, innovation and productivity, enabling us further to increase our focus on serving New Zealanders' needs in this uncertain environment," Grayston said in the market announcement.

"Based on our insights into changing shopping habits and the anticipated economic impacts caused by COVID-19, we are accelerating some changes that had already been planned.


"Value for money has never been more important to our customers and in order to continue to deliver this, we need to manage our costs and run our business more efficiently."

The Warehouse said its stores have experience strong trading since the country moved to alert level 2, but it said this was "a consequence of pent up demand" and it was not expected to continue as the economic impacts of the pandemic are realised.

The Warehouse Group received almost $70m in wage subsidies for its sum 11,000 staff.

Retail NZ chief executive Greg Harford said the coronavirus pandemic would have accelerated many retailers' plans for consolidation within their store networks.

"We've seen a number of retailers announce fairly significant changes over the last few weeks; there's been Smiths City, there's been H&J Smith, Michael Hill jeweller, Bunnings and now The Warehouse is looking closely at its business model.

"A lot of what we're seeing is an acceleration of trends that were here pre-Covid, but the reality is that retailers are looking very much at a world were customers are moving online, where there's a significant contraction of consumer confidence and that they need to re-cut their business models in order to position themselves for the future," Harford said.


Retailers were bracing for substantial change across the sector over the next few years as a result of the pandemic, Harford said.

"We need to see some more economic stimulus kicking in so that customers can feel a bit more confident about getting out and hitting the shops."

Retail analyst Chris Wilkinson said the mass redundancies and store closures at the Warehouse Group

"It's a sad situation, however, it does reflect the current dynamics that we've had in the retail sector," Wilkinson said. "Businesses like The Warehouse will be looking to concentrate spending and goodwill in their more efficient sites."

Roading and infrastructure development in recent years would have likely influenced the group's decision to close some of its stores with close proximity to others, Wilkinson said.

Some of the store closures would have likely been in the pipeline but prioritised due to the impact from Covid-19, he said: "Much of this is about efficiencies in certain stores."