Profits Tumble 60% @ The Warehouse Group…

Quite a feat from Cheapies members. All our deals have caused sales to jump but the profit margin to go down.

The Warehouse Group includes The Warehouse, Warehouse Stationary, NL, T7 and The Market.


  • The company said gross profit was hit by increased clearance activity as well as the “purposeful investment in the group MarketClub membership programme, which now has more than 1 million members”.

    I don't think that is correct.
    There might be 1 million accounts with The Market but I bet they are not all from unique members.
    I may possibly have more than one account….

    • +1

      A new 5 off birthday every week? Lol

      • Always handy to have a birthday code on standby!

  • I'm starting to see lots of their fresh fruit and vege on clearance too, well in Auckland anyways. I wish they would put more effort and thought into new roll outs like these (to avoid failures).

    • +1

      Doesn't look like their venture into groceries (again) is executed well, probably going to be another failure. For some reason, TWH has lost it competitive edge, don't know what's changed internally, I hardly have the desire to step into their stores now.

      • +1

        The product range is poor these days. They are also bringing in their own home brands of food, rather than selling brands people want such as Oak baked bean rather than their own brand. They can probably make better margins on their own brand, but they aren't the same quality or taste and are similar to what they sell far cheaper in overseas supermarkets.

    • Which auckland stores have groceries?

      • +1


        The stores involved in the trial are located at Whangārei, Auckland's Westgate, Wellington's Lyall Bay, Christchurch's Riccarton, Timaru and Invercargill.

        • So many competition in westgate with costco

  • I heard on the news that they are axing some 300+ jobs because of this

    • yeah the article mentioned this too

      He confirmed restructuring plans would see up to 340 jobs cut and said the company was moving forward with the closure of its 1-day daily deal site operations.

      And a second mention about where they would be cut from

      We have made some difficult cost-cutting decisions across the group including reducing labour costs at our Auckland Store Support Office, which will, unfortunately, see a reduction of up to 340 roles.

  • worked for noel leeming for a couple of years. It doesn't suprise me. People were a lot more spendy when I started.

    But also I wonder if it's a bit of poor management. Sales guys would rather lose sales with no spiv / no sevices on them than take them because that was their kpi.

    Warehouse seems to be up though. Wonder how themarket contributes

  • +1

    The Warehouse Group announced half year results for the six months ending 29 January 2023, with Group sales of $1.813 billion, up 4.8% compared to FY22 half year.

    The FY23 first quarter saw strong sales compared to the COVID-19 impacted FY22 first quarter, with sales up 21.2%. Sales slowed in the FY23 second quarter, down 4.6% compared to FY22 Q2 which had seen sales surge as customers returned to store after periods of extended lockdowns.

    Gross profit was $592.4 million, down 1.2% or $7.2 million from $599.6 million in FY22 H1. Gross profit was adversely impacted by product category mix particularly in The Warehouse, increased clearance activity following slower than expected sell through during the Q2 period, and purposeful investment in the Group MarketClub membership programme, which now has more than 1 million members across the Group. Gross profit margin decreased 200 basis points to 32.7% from 34.7% in FY22 H1 and from the highs of 36.2% in FY21 H1.

    The gross profit decline in combination with a 3.5%, $19.1m increase in costs of doing business, and unusual expenses of $6.3million resulted in Reported Net Profit After Tax (NPAT) decreasing 60.9% to $17.4 million in FY23 H1 against $44.4 million in FY22 H1.

    Group CEO Nick Grayston commented, “It has been a challenging trading environment. With high inflation and continuing cost of living pressures, we remain committed to offering Kiwis great value. We are purposefully keeping our prices as low as possible on key essentials for Kiwi families, and we have further invested in value for our customers by offering discounts on key items for our MarketClub members.”

    Sales performance

    “We’ve had two quite different quarters – sales in the first quarter of FY22 were strong against a COVID-19 impacted FY22 Q1, while the second quarter was noticeably softer.

    “While we saw pleasing sales at The Warehouse with 13.2% growth in sales in the half year, Noel Leeming is coming off prior peak years’ performance with customers slowing their spending on big ticket items and working from home products. We’ve also seen Torpedo7 impacted by the global decline in bike and fitness sales and more locally, a decrease in camping and water-related sporting products due to the poor summer weather in the North Island,” said Mr Grayston.

    During the half, customers returned to shopping in-store, with foot traffic increasing, and online sales decreasing compared to FY22 H1. Online sales made up 11.0% of total Group sales, compared to 19.6% in FY22 H1, while click and collect sales3 were broadly in line with prior period at 51.7% of online sales, compared to 50.1% of online sales in FY22 H1.

    Grocery growth

    The Warehouse grocery category saw sales growth of 34.0% compared to prior period, now making up 22.2% of The Warehouse total sales, compared to 18.8% in the prior period. Pantry and chilled products are now in nearly 20% of The Warehouse customer shopping baskets in terms of units, compared to 10% two years ago.

    “Over the last six months we have continued to expand our grocery range, and recently launched a fresh fruit and vegetable trial in six stores, which has been well received by our customers.”

    Gross Profit Margins impacted

    As previously noted, Group gross profit margin decreased 200 basis points to 32.7% in the half year.The result was impacted by driving sales at value price points for our customers, decreased seasonal sales due to adverse weather in the North Island, investment in the form of increased promotions and member discounts in our Group membership programme, MarketClub, and investment in grocery providing customers with value at a time of unfavourable cost increases.

    Container detention costs4 also contributed to margin decline in the half year. Due to shipping delays and congestion, a container backlog was experienced at the Group’s distribution centreswhich significantly increased detention costs.

    Cost of doing business

    Group cost of doing business (“CODB”) increased 3.5% largely due to planned core systems development, for which a large proportion of these previously capitalised costs are now treated as operating expenses under SaaS accounting standards. With this investment has also come an increase in recurring operating costs in licence fees, continuous improvement and support. In addition, deprecation has increased 18% with the higher capital expenditure levels over the last couple of years.

    “Whilst we have reprioritised some digital initiatives, in response to more challenging conditions, we remain committed to our long-term ecosystem strategy,” said Mr Grayston.

    Key brand performance

    The Warehouse sales increased 13.2% against the prior COVID-19 impacted period to $1,013.7 million. After a very strong first quarter which saw sales increase 39.0%, we saw softer trading in the second quarter with sales up marginally at 0.3%. Operating Profit for the half year came in at $41.3 million, up $4.0 million (10.7%) on prior period, but at a lower growth rate than the increase in sales.Warehouse Stationery sales increased 1.7% to $124.1 million, up 18.0% in Q1 and down 8.9% in Q2, with transactions up 17%.

    Warehouse Stationery Operating Profit was $8.9 million in FY23 H1, down
    8.0% due to a change in sales mix with a decrease in higher margin work/study from home productsand increased operating costs.

    Noel Leeming sales decreased 4.5% compared to the prior period, to $556.7 million. Whilst there was a modest improvement in FY23 Q1 with sales up 3.3% as we cycled against a lockdown period, FY23 Q2 was impacted by the decline in consumer spending, with sales 9.9% down on the prior period. Competitive trading, change in category mix of sales and increased cost of doing business resulted in a decline in Operating Profit of 41.4% to $17.2 million.

    Torpedo7 sales were down 1.1% in the first half to $96.4 million. While FY23 Q1 sales were strong with 9.4% growth against the prior period, FY23 Q2 sales declined 6.8% as we lapped strong consumer demand for outdoor adventure goods in FY22 Q2. Slower demand across bike and fitness categories (also a global trend), and a weather-related decline in demand for camping and water related sporting products. Combined with increased cost of doing business due to a larger store network and investment in our newERP system these factors have resulted in an Operating Loss of $6.5 million in FY23 H1, compared to an Operating Profit of $1.5 million in FY22 H1. now has more than 4 million products available online, with 400,000 active customers. The launch of Group Marketplace onto in November 2022 has meant thousands of third-party products are now available to The Warehouse online customers. Total Group Gross Merchandise Value (including GMV and sales on Group Marketplace in was $49.8 million in the half year. made a loss of $16.0 million in FY23 H1, compared to a loss of $12.0 million in FY22 H1.

    Cash and liquidity

    Net cash flow decreased by $31.7 million resulting in cash outflow of $42.2 million, and a net debt position at half year end of $83.4 million. Month end creditor payments of $80.2 million were paid post balance date on 29 January and pre-31 January 2023.

    Committed bank facilities were $465.0 million at January 2023 (July 2022: $420.0 million), providing the Group with total liquidity of $381.6 million at January 2023 (July 2022: $378.8 million) and $301.4 million, adjusted for pre-31 January creditor payments.


    Due to the challenging economic outlook, financial performance remaining uncertain, and currently heightened capital expenditure, the Board has decided not to pay an interim dividend and is reserving its decision in relation to the payment of a dividend on the full year result.

    Taking action

    “We have experienced a very challenging retail trading environment in the last six months, and we are taking decisive action to improve financial performance and operational efficiency across the Group. This includes rebalancing capital expenditure to focus on operational performance and reprioritising transformation projects to concentrate on EBIT delivery,” said Mr Grayston.

    “We have made some difficult cost cutting decisions across the Group including reducing labour costs at our Auckland Store Support Office, which will unfortunately see a reduction of up to 340 roles. We are also moving forward with the closure of 1-day operations and bringing and Torpedo7 into our Group operating structure. In particular, the closure of 1-day operations and bringing into our Group operating structure will significantly improve the cost efficiencies of business.

    “Gross profit margin management will be particularly important in the second half, with a focus on maintaining value for our customers while recalibrating some of the investment in margin that was made in the first half,” said Mr Grayston.


    “We expect the remainder of FY23 to be challenging as we continue to face into the headwinds of increasing cost of living pressures and rising interest rates which are impacting customer spend, as well as increases to our own cost of doing business, including wage increases.

    “While the macroeconomic outlook remains unpredictable, we are taking action to ensure the ongoing improvement in operational performance. We are committed to our strategy to create a future fit retailer to deliver great value for our customers, as well as completing existing major programmes of work to deliver operational efficiencies,” said Mr Grayston.

  • +2

    Not sure about others but I used to spent about $4k each year at The Warehouse for the past few years but since they removed pricebeat and $5 off etc i think i spent about $300 last year

    • $170 for me. Their range and prices have become such rubbish. Even on clearance a lot of their stock just isn't worth buying

    • I can’t even remember the last time I went into The Warehouse.
      Anything I get these days from The Warehouse Group tends to be via The Market, but that too seems to be decreasing.

  • Not sure about others but I used to spent about $4k each year at The Warehouse for the past few years but since they put all the price up a few time, removed pricebeat and $5 off etc i think i spent about $300 last year

    • Similar here. I used to click and collect at my local multiple times a week. Now maybe once a month?

      The lackluster Market Club offers have also killed the incentive to spend a lot there.

  • +1

    kmart is overflowing with people…. warehouse beside it is empty.

    • Yep and the queues to pay can get long, but my local Kmarts seem to be low on stock.

      • we went through ashburton and were pleasantly surprised by how modern the kmart there feels and how much stuff they had available. Our local warehouse put up new signs with english + tereo to replace the old signs around the departments and they look 30 years old.

  • +1

    There is no incentive to shop at their stores there be it in-store or online

    Prices aren't very good . Actually pretty bad overall now

    The Market website is crap and not good to navigate and search . Online chat through their websites is awful too

    In-store there are never staff around , half the staff aren't helpful when you find one and don't wanna be there.

    Many times they don't have the item needed in stock .. plus it's very drab and stores are incredibly boring..

    Many well known Warranty debacles with Noel Leeming etc not putting the consumer first rather just not honouring their obligations

    All things considered I barely shop at any of their companies these days . Stuff them they've had it coming for a long time

    • +1

      Many well known Warranty debacles with Noel Leeming etc not putting the consumer first rather just not honouring their obligations

      They've introduced the 'protections' into the warehouse and warehouse stationery too. Yuck.

      There's probably a way to graph the number of items bought against the likelihood of failure against the amount spent… I was of the opinion that the more stuff I buy, the less likely I am to benefit overall from buying the warranties… afterall, wouldn't even the 15% gst im paying in the extended warranty be a 15% weight against me? Noels have a LOT of markup in assurant warranties too.

      Also regarding the market.

      They ran some 10% and 11% coupons through the site and some things were as cheap as i've ever seen them. My partner has an iphone SE and it is borderline impossible to search for and find a case for that phone on the website. But for bigger items you can just circumvent the market, discover the item through the market and order elsewhere.

      The usecase of the market makes zero sense to me. If you order from different stores than shipping isnt always combined. I can't collect expensive items at marketpoints, but can collect cheap items. From the TWG perspective it's let's leverage our well built-out online marketing tools to get eyes on third party stores and take a cut. Every store on there is probably already using another commerce platform so the payment-handling part just isnt a selling point.

      Unless it's an immediate need or I know that NL are making a loss on my sale, I just don't shop there. I worked for NL for three years… The company has distilled getting extended warranties into sales down to some kinda cult-like obsession… And the obsession with growing that area meant that they cut remuneration.. twice… for sales staff and I honestly wouldn't be suprised if it's responsible in-part for the recent poor performance, I think that I'd be saying too much if i get into the nitty gritty. But if the company is threatening you if you do not get x% of your sales as warranties, then maybe, if someone comes in and wants to buy a washing machine with no incentive… you might tell them there's no stock and open up pricespy and show them where it's cheaper…. maybe…. lol.

  • Did kmart take all their customers?
    I never see the warehouse busy since they stopped the bargains.

    • We only use them if we need something late at night (no kmart where I live) and we consistently find that they don't have what we want or that the things they have feel very or look very low quality.

    • +1

      Yes, Kmart does a lot of what Warehouse does but better

    • Their toy section sux. No new waves of transformer toys. And since they've collapsed warehouse stationary into the shops it is a confused mess offering.

  • +1

    Their shipping strategy makes me despair.
    Of the 10 items I ordered yesterday, they seem to be preparing two parcels so far.:
    1 - 1x $1 wafer biscuits
    2 - 1x $4 blanket for pet

    Unless they are as efficient as an Amazon distribution centre, they have just about consumed any profit from my sale already.

    • Yep I did about 20 different kids craft supplies for 30 bucks and got 6 parcels one time.

      Even worse for the market with marketclub from multiple retailers

    • That's actually good.
      I have had an order in the past with about the same number of items delivered over four separate deliveries. To cap it off they gave me a refund on one item they couldn't supply and provided a free shipping coupon for a future purchase.
      All the delivered items came in relatively large boxes.
      Seems really inefficient.

      • Yeah I sometimes check the cheapest online clearance items for stuff that does not have stock in all the major stores in the hopes of getting free shipping codes in return. Often they forget to mark the sku out if stock so it works a few times.

        • +1

          Yep - Oreos was one of my favourites that worked a few times.

    • yep, everything at NL was item-by-item not invoice-by-invoice. Makes no sense.

      Having worked for them I could easily cut the expenses at my former store by north of $500 pw. Shipping and really wasteful delivery schedules are the two big ones

    • You reading Warehouse financial reports on a Sat night? 😆

      • 😄 they tend to come up in one of my bookmarked Google searches. Think it's for trying to find member promo codes.

    • All total sales down slightly except for warehouse which is up quiet a bit yoy.

      I wonder how warehouse stationery gets calculated now that almost all of the south island ones are inside warehouses and you can buy from either at any of the counters.

      I am somewhat surprised to see such a small dip at NL given the ever creeping price of goods and the lessening need for their big ticket items (apple mac shipments are down something like 40% yoy).

      It makes sense that the warehouse would go up, but Im sure temu eats into a lot of their cheap offerings now. Why would I buy generic living and co items when temu sellers have the same products cheaper ?

      All they've said over profit was 'about the same' …. which is too far in for me to read

  • I wonder if things are about to change or if they don't want customers anymore; I went in to return an unopened product with original receipt under their 60 day change of mind policy and was treated like a criminal and it was really hard to get what should have been a straight forward return. I hope the staff is not penalised or disincentivised in some way for processing returns as that is the only reason I can come up with for a treatment I received.
    In two minds whether to complain or not.

    • What were you returning? 60 days change of mind seems generous policy

      • I was returning a toy that I ended not gifting in the end. The return was made 2 weeks after the purchase.

  • +1

    The only thing we bought from Warehouse is their $3 2L milk once a week. Everything else is overpriced and poorer quality item compared to AliExpress, Temu and Kmart. Their product selection range is poor and really outdated.

    • the $3 milk is pretty good. We normally start our groceries there but outside of a couple of clearance items the stuff there is almost universally more expensive than supermarkets, even the hero products are just ordinary prices elsewhere. They do veges at our local now and none of them are chilled so by the evening they're old and manky.

      Even If I wanted to impulse buy at the warehouse… there's nothing worth getting… It's all cheap stuff that feels cheap. At least with kmart I actually have a bit of confidence in the products they sell.

      And now they've introduced their pretty clearly anti-consumer extended warranty bullshit to the warehouse. Fun fact too, you can book a noel leeming tech solutions tv install for ~$100 cheaper through the warehouse than NL and as an installer there was almost no difference in the actual job we did… If it was a wall mount then one person would just set the tv up while the other installs the bracket

      On the website side of things, I genuinely wonder if the market integration has decreased the overall basket size… It's certainly meant that I've just shopped elsewhere.

      I get the impression that the warehouse is being setup as a 'what people who wouldn't want to be seen at the warehouse think poor people want' sort of thing

  • They just released their own butter.

    The new Market Kitchen 500g salted butter will be $5 at all The Warehouse locations.



    • Interesting, wonder who's the manufacturer.

    • Nice find. I wonder who the manufacturer is? Should see some good discounts coming up for this butter.

  • Looks like no more free shipping for us after next year lol

    Hi there,
    We’re just getting in touch to let you know that our partnership with One New Zealand is coming to an end on 30 June 2023.

    During this partnership, you were able to redeem a free MarketClub+ membership through One NZ Rewards – which you did. Unfortunately, with this partnership ending, you are no longer eligible for this free MarketClub+ membership.

    Since we know the awesome-ness of free shipping, we’re gonna let you keep your MarketClub+ membership on us for one more year! That means free shipping until 30 June 2024 and there’s absolutely nothing you need to do to get it.

    And as a final hoo-rah, One NZ are giving you a chance to win a $1000 shopping spree with us. Check it out below!

    • Yeah I had that prediction in another thread a while back when themarket changed their terms for marketclub+ that they could cancel your benefit if you were no longer an active voda subscriber and it had gone away from voda rewards.

      Nice of them to offer it for a year but I wonder what the original terms were given they gave everyone a blanket 10 years at first.

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