The Warehouse reports record profit; rewards staff with bonus payment

Wednesday, 29 September 2021

The Warehouse is seeing the benefits from a major restructuring of its business, boosting profits and dividends.

The Warehouse Group reported a record full-year profit, resuming dividend payments, paying off debt, returning the Government wage subsidy and rewarding staff with a cash bonus.

The retailer, which operates The Warehouse, Warehouse Stationery, Noel Leeming, Torpedo 7 and TheMarket.co.nz, reported an after-tax profit of $117.7 million in the year to August 1, up from $44.5m the year earlier. Sales rose 7.6 per cent to $3.4 billion.

The Warehouse and other retailers have benefited from increased spending during the Covid-19 pandemic as money normally channelled to overseas travel was instead spent locally, often on home improvements. It is also seeing the benefits of a major restructuring over the last four years to adapt the business to changing customer shopping habits.

“It is a spectacular result,” said chief executive Nick Grayston. “It’s a great validation of the customer strategy. Customers are voting with their feet.

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“It’s as a result of all the hard work and resilience our people have demonstrated since we started our transformation – we have thrown a lot at them and so has the external situation,” Grayston said. “We are massively proud of how they have responded.”

To reward staff for their efforts over the past year, The Warehouse paid a cash bonus to all permanent staff in August costing a total $8.7m. Full-time staff received $1000 and part-time staff $500.

The Warehouse boosted profits even after repaying its $67.6m Government wage subsidy in December, as it experienced a strong rebound in trading leading into Christmas last year.

The Warehouse Group chief executive Nick Grayston says he’s feeling “pretty positive” heading into the key Christmas trading period.

Chairwoman Joan Withers said the group has not applied for the Government wage subsidy for the latest lockdown, given its cash and available facilities on entering lockdown. It committed to paying staff in full until the end of September to give them certainty.

Withers said sales for the first eight weeks of the new financial year were down 22 per cent compared to the same period last year.

Despite the year starting positively, New Zealand went into a country wide level 4 Covid-19 lockdown on August 18, she said.

“Sales have traded broadly in line with expectations at the different lockdown levels we have experienced since the start of the financial year,” she said.

While the company’s cash deposits have reduced significantly since balance date as a result of the decreased sales, its bank debt facilities remain undrawn, she said.

Grayston said the pandemic continued to cause disruption to international freight but he said the company had pre-booked a lot of container capacity and already had the majority of goods it needed for Christmas.

“We are in pretty good shape and as long as we get most of the country open and are not too disturbed by further lockdowns by the end of October we are confident we will have a good Christmas, which is our golden quarter,” he said.

“We are feeling pretty positive.”

The Warehouse will pay shareholders a 17.5 cent final dividend, taking the total payment for the year to 35.5 cents. No dividends were declared the previous year due to Covid-19 uncertainty. The final dividend has been declared on the basis that New Zealand is predominantly at level 2 or below from the end of October.

The company’s shares rose 1.7 per cent to $4.15 in midday trading on the NZX, after earlier touching an eight-year high of $4.25.