Coronavirus: Lockdown pushes up online sales at The Warehouse

Monday, 11 May 2020

The Warehouse saw sales spike ahead of lockdown, with one-in, one-out policies at some stores.

Online sales at big-box retailer The Warehouse Group have jumped enormously but not enough to prevent a big slump in its third quarter sales.

The retailer's online sales rose jumped nearly 75 per cent on the same period last year, with its The Warehouse, Warehouse Stationery and Noel Leeming businesses able to sell essential supplies online during alert level 4.

Prior to Level 4 lockdown, the group reported a spike in sales as people rushed to get supplies, pushing third quarter sales at that point up more than 18 per cent on the previous year.

But online shopping still only made up 16 per cent of the group's total sales, not enough to offset the near 18 per cent decline in third quarter sales overall.

* The Warehouse net profit down 20%

* The seismic rise of online shopping in coronavirus times

The company made $586.3 million in the three months to April 26. Its half year profit, reported in March, was down 20 per cent.

The Warehouse figures mirror new retail sales data out on Monday which shows a 47 per cent fall in card spending over April.

Analysts have suggested that there are rough times ahead for retailers as consumers tighten the purse strings.

'You are going to see people pull back on purchases, particularly discretionary purchases. The Warehouse has a lot of consumer staples and that might pull them through, but across the board you are going to see a pull back in retail sales and that will effect The Warehouse,' Hamilton Hindin Greene investment adviser Tom McBride said in March.

Ahead of anticipation that New Zealand will move to Alert Level 2 this week, The Warehouse told shareholders on Monday that plans were well advanced to reopen physically with social distancing measures in place.

A shopper makes a dash for the stores in the final hours to shop before lockdown.

'However, 'while we expect that the opening of stores will see a significant increase in sales, significant uncertainty remains around the impact of operating constraints, customer demand levels and the longer term impacts of COVID-19 on the economy and consumers,'' it told the NZX.

The company, which also owns outdoor goods retailer Torpedo 7 and online marketplace The Market brands, has reduced salaries for staff earning over $60,000 and received a $67m Govenrment wage subsidy for those under.

In addition, the group said it had been talking to landlords over ''fair occupancy costs'' and with creditors to manage the timing of payments due for trade and non-trade related spending.

Sales at the group's core The Warehouse stores fell 23 per cent to $297.3m, and almost 10 per cent to $64.5m at its Warehouse Stationery stores.

Noel Leeming sales fall 11 per cent to $193.5m, and outdoor goods retailer Torpedo7 dropped 18.3 per cent to $32m.

Other retailers are also feeling the pinch. Briscoe Group, which has also been trading online over lockdown, saw online demand double during the period.

But it announced earlier this month that its first quarter sales to April 26 were $97 million, nearly 36 per cent lower than the same quarter last year.