Online obsessions drive The Warehouse profit, hasten changes
Thursday, 15 October 2020
Kiwis snapped up home devices, office furniture and exercise equipment in droves during lockdown, according to the country's biggest retailer.
Posting its final annual results on Thursday, The Warehouse Group said it had seen ''exponential growth'' in online sales and click and collect, to the point where online now made up 11 per cent of all sales.
Much of that was driven by the seven weeks of the national lockdown in March to May, when The Warehouse was one of only a handful of retailers initially allowed to sell restricted items contactlessly. As restrictions eased, all of its online range became available.
Group chief executive Nick Grayston said the demand for home devices and office furniture had boosted sales for both its Warehouse Stationery and Noel Leeming brands.
**READ MORE:
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**
''Electronics, for sure, as customers have had to work from home, and home-schooling … but home products generally have done well as people have nested.
‘’The other thing that's done very well is bicycles – a lot of people cycled to get exercise and there's a worldwide shortage of bicycles.''
Outdoor apparel and water-related sporting equipment also did very well, he said.
On Thursday the company confirmed a $44.5 million net profit for the year to August 2, down 32 per cent on the previous year. Revenue was $3.2 billion, up 3.3 per cent on the previous year.
Companies that took the Government wage subsidy and later turned a profit have been urged by many commentators to pay the subsidies back.
But if The Warehouse had not taken $67.8m in subsidies, it would have made a $4.3m loss, and probably different decisions, Grayston said.
''I'd like to be really clear on this … 100 per cent of it went to our people at the time, it was not retained for profit, and that enabled us to pay our people in full.
''We were only obligated to pay 80 per cent of their salaries and so that was a great thing that enabled us to give people certainty at a time of great uncertainty.''
Sales during the seven-week lockdown dropped 67 per cent or $265m, and the subsidies had only covered half of its wage bill. ''So as far as we're concerned, we used it absolutely as it was expected.”
Covid caught The Warehouse on the cusp of a major restructure. The company has flagged up to 1080 job losses, a figure which should be firmer after staff consultations wrap up this week.
Chairwoman Joan Withers said the company was ''already well down the path of change'' when the virus struck and that it had only ''accelerated the pace at which we travelled.'’
Grayston confirmed 115 redundancies had already been made at head office, with 500 to 750 likely due to roster changes.
There would also be redundancies from several store closures over the year, and seven more Warehouse Stationery branches had been folded into the ‘’Red Sheds’’.
Changes to come include reduced hours for some workers and different tasks for others, as online orders and fulfilment became a much bigger part of retail life, Grayston said.
''This is all about serving our customers. A lot of those rosters go back 10 years and people are shopping much more in evenings and weekends. And we've got a decade's worth of e-commerce growth in just two months.''
But he was confident the cuts would not leave the company shy of workers during the Christmas rush, as suggested by First Union.
''We always employ more people at Christmas anyway … this is about fixing the core and making sure people are there when the customers need them.
''This has been a very considered, long planned and long consulted decision.''