Middle East war interrupts positive momentum at The Warehouse Group

Friday, 27 March 2026

The second half year at the Warehouse Group may not be able to sustain the upwards momentum of the first half year, thanks to war in the Middle East.

While sales grew by 0.3% in the first half of its current financial year, and profitability made large leaps, the first six weeks of its second half saw sales decrease 0.2%, as impacts from the fuel crisis impacted the company.

The owner of retail chains The Warehouse, Warehouse Stationery and Noel Leeming made sales revenue of $1.61 million in the six months ending February 1.

Executives at the company said the improved first half year, particularly for profitability, had been achieved through disciplined cost control and improved working capital with lower inventory.

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After-tax profit for the period increased 33.6% to $15.7m, compared with $11.8m in the same period a year earlier.

Sales at the red shed The Warehouse rose 0.5% to $949.5m and Warehouse Stationery sales rose 5.7% to $116.1m.

Meanwhile, sales at Noel Leeming declined 1.2% to $542.2m.

The group will not pay a dividend for the period.

Chair John Journee said there was “clear evidence” that the retail company was now on the right path.

“Consumer confidence is volatile and retail conditions remain extremely competitive. Against that backdrop, this is a solid result,” Journee said in a NZX market update.

“We have held sales and improved profitability, while continuing to rebuild the foundations of good retailing. New leadership and a new operating model are now in place, and we are seeing the benefit through stronger cost discipline and execution. There is still more to do, and it will take time to restore sustainable returns.”

The group’s cost of doing business reduced by $8.6m, down 1.7%, improving to 30.6% of sales in the six months period.

Gross profit margins improved in Warehouse Stationery and Noel Leeming, while The Warehouse continued to face pressure.

Warehouse Group chief executive Mark Stirton said there was encouraging signs that the work underway was resonating with customers.

“We are seeing customers respond as we get the basics right and deliver clearer value through better ranges and a stronger experience in stores.

“Our Black Friday, Christmas and Back to School events performed well across the half, while severe weather events in January impacted retail spending overall and affected summer seasonal and outdoor categories at The Warehouse,” Stirton said.

He said the group would continue its cost reset programme by simplifying the business, reducing overheads and controlling spend.

“Group gross profit margin declined in the first quarter, driven largely by The Warehouse, where we deliberately cleared aged and seasonal stock, saw softer sales in higher‑margin categories, and faced freight pressures.

“Positively, gross profit margin momentum grew in the second quarter,” Stirton said.

He said disciplined cost control was a key driver of the improved result in the six months.

“Tight cost control flowed through to a good improvement in profitability.”

The group plans to open new The Warehouse and Noel Leeming stores in Mangawhai in 2027.

Outlook, Middle East conflict impacts

The Warehouse Group saw its sales decline 0.2% in the first six weeks of the second half of the financial year.

Journee said economic recovery remained slow and, amid ongoing global volatility, trading conditions continue to be challenging for the group.

He said the US and Israel war on Iran had created further uncertainty.

“Rising fuel prices and potential disruption, along with congestion across key shipping routes, are expected to push freight costs higher in the period ahead,” he said.

“While the full impact on supply chain and consumers remains uncertain, management is closely monitoring conditions with planning underway. We are working with external stakeholders to seek to mitigate and manage these pressures as the situation evolves.”