Warehouse Group Cuts Costs And Lifts Profit
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- The Warehouse Group cut digital spending by $26.6 million, reducing overall project costs.
- Net profit rose to $11.8 million, reversing a $23.7 million loss the previous year.
- Sales declined 1.6%, but improved trends were noted in the second quarter.
The Warehouse Group has significantly reduced its investment in systems and digital projects, contributing to an improved financial position. The company cut its spending on these initiatives by $26.6 million in the first half of 2025, reducing total project costs by 82%.
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Investment in core systems, other information systems, and digital projects fell to $6.8 million, down from $33.4 million in the same period of 2024. In November 2023, the company deferred $30 million of planned digital investment due to challenging trading conditions.
Chair Dame Joan Withers said the retail sector remains under pressure. “Consumers are facing tough and uncertain economic conditions and demand remains subdued,” she said. Despite this, Withers said the company was making progress with an improved sales trend, cost reductions, and tighter capital spending.
The group's cost-saving measures included slashing core system investment from $22.5 million to $4 million. Other information system spending dropped from $8.9 million to $2.8 million, while digital investment was cut entirely.
Total project spending, including non-digital initiatives, was $8.9 million for the half-year, down from $50.2 million in 2024. The company now expects full-year project costs to range between $23 million and $28 million, a reduction from the previous forecast of $32 million to $39 million.
The Warehouse Group reported net sales of $1.6 billion for the six months ending January 26, 2025, down 1.6% year-on-year. However, net profit improved to $11.8 million, a significant recovery from the $23.7 million loss in the same period the previous year.
Interim Chief Executive John Journee described the company’s latest results as a reflection of its turnaround strategy. “Consumers are being cautious with their spending and competition is fierce, but we’re fighting to make sure Kiwis continue to see value in shopping with us,” he said.
Among the company’s brands, Noel Leeming recorded a slight sales increase of 0.8%, reaching $548.9 million. Meanwhile, Warehouse stores reported $944.7 million in sales, down 2.2%, while Warehouse Stationery sales fell 6.8% to $109.8 million.
Withers said the company’s improved cash position, reduced spending, and disciplined approach provided confidence in the company’s future performance. “Retail is cyclical, and while we believe we’re at the bottom of the cycle now, our disciplined approach, positive cash position and liquidity give us confidence that we will emerge stronger,” she said.
The Warehouse Group’s market share remained stable at 15.5% of New Zealand’s core retail spend. The company is aiming to reduce its cost of doing business to below 31% of sales.