The Warehouse Group Reports $54.2M Loss
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- The Warehouse Group reports a $54.2 million loss, down from a $29.8 million profit.
- Retail sales fell across the board, with The Warehouse sales down 5.3% to $1.8 billion.
- Management acknowledges missteps and pledges to focus on core retail strengths moving forward.
The Warehouse Group has reported a significant net loss of $54.2 million for the year ending July 2024, compared to a $29.8 million profit the previous year. Sales dropped from $3.24 billion to $3 billion, reflecting one of the most challenging years in the company’s 42-year history.
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A major factor in the loss was the sale of outdoor goods retailer Torpedo7, which was sold for just $1 in March. The disposal resulted in a $60 million loss for the group. However, even when excluding the Torpedo7 sale, the group's adjusted profit fell sharply to $18.9 million, compared to $57.4 million last year. Consequently, no final dividend will be paid, in contrast to the 8 cents per share dividend in FY23.
The group's various retail divisions all suffered declines. The Warehouse saw a 5.3% drop in sales to $1.8 billion, Warehouse Stationery fell by 6.7% to $231.9 million, and Noel Leeming's sales were down 5.3% to $1 billion. Total group sales fell 6.2%, reflecting reduced consumer demand in the tough economic environment.
Chair Dame Joan Withers described the financial results as “not acceptable” and acknowledged the disappointment felt by shareholders. "The big job ahead of us is to get the company back on track," she said.
Interim CEO John Journee, who replaced Nick Grayston earlier in the year, admitted that the company had made significant errors in its strategy and execution. "We scored too many own goals," he said, explaining that the group held onto Torpedo7 and TheMarket.com for too long and reacted too slowly to changing consumer behaviour. Journee noted that the group's "ecosystem strategy" was too ambitious, causing the business to lose focus on product.
Looking forward, Journee said the company was now focused on simplifying its operations and returning to its core retail strengths. He highlighted that the team is already working hard to fix past mistakes and revitalise the company's product offerings. This includes bringing in more trend-driven items and improving merchandising to strengthen the group's market position.
However, despite these efforts, Journee said the retail environment remained challenging. Although the company had regained some market share in the first six weeks of FY25, overall sales remained weak, and profit margins were still under pressure as the company worked to clear excess winter stock.
A first-quarter trading update is expected in early November.