The Warehouse Group plans to build a simpler, faster and lower-cost supply chain as part of its strategy to lift annual operating profit to $100 million within three to five years.
The NZX-listed retailer unveiled the strategy at its 2026 Investor Day, setting a target more than four times the $22.6m operating profit recorded in FY26.
Its plans include creating a more responsive integrated supply chain to improve stock availability, reduce aged inventory and markdowns, respond more quickly to customer demand and lower the cost of serving customers.
The group operates a nationwide store and distribution network supporting The Warehouse, Warehouse Stationery and Noel Leeming.
Group chief executive Mark Stirton says the company has a strong platform to build from, with about 1.7 million customer visits across its three retail brands each week.
“We welcome around 1.7 million customer visits to our three iconic retail brands every week, and we have a national store and distribution network that is enviable,” Stirton says.
“Over time the business lost sight of what customers wanted from us and, as a result, has not performed to its potential.”
The company says a more disciplined approach to inventory and product availability will support improvements across its existing store network.
“Our new strategy is grounded in knowing our customers better, offering the right products, making our stores more exciting to shop and running the business with much greater discipline,” Stirton says.
The Warehouse Group will initially focus on improving its existing operations before seeking to regain market share and generate growth through new stores and additional profit streams.
It plans to open four to five stores annually across its three retail brands.
Stirton says the pathway to the $100m operating profit target does not depend on a single initiative or a near-term economic recovery.
“We will first improve our existing business, then regain market share while pursuing growth through new stores and new profit streams,” he says.
“Importantly, much of what we need to execute is within our control and does not rely primarily on near-term economic recovery.”
A new capital management framework will guide the allocation of cash across the group.
The board has also revised the dividend policy, targeting an annual ordinary dividend payout equivalent to between 50% and 70% of adjusted net profit after tax.
It intends to consider resuming dividends for FY27, subject to the company’s performance, financial position and board approval.
First-quarter trading remains constrained by subdued retail conditions, with group sales broadly in line with the same period last year.
However, margin performance was ahead of the previous corresponding period.
The Warehouse Group is due to provide further details in its first-quarter trading update on November 13.
Financial performance
The Warehouse Group reported operating profit of $22.6m for the 52 weeks ended August 2, up from $1.3m in FY25.
Reported net profit after tax improved to $11.2m from a $2.8m loss in the previous financial year.
Sales fell 1.9% to $3b on a reported basis, reflecting that FY25 contained an additional trading week. On a comparable 52-week same-store basis, sales increased 0.4%.
Gross profit margin increased by 40 basis points to 32.6%, while the cost of doing business fell by $29.8m and represented 31.8% of sales.
Operating cash flow improved by $121.2m to $193.5m, while capital expenditure increased from $12.4m to $21.1m as the company directed more investment towards its stores.
Net debt declined from $96.1m to $17m. No final dividend was declared for FY26.
