Torpedo7 planning to open new stores
Outdoor equipment retailer Torpedo7, once an onlineonly operation, is to open new stores despite shrinking operating margins. The retailer — owned by The Warehouse Group — had an operating margin of 0.9 per cent for the 26 weeks ended January 2018, according to its interim report. This was down from 2.8 per cent a year earlier. Torpedo7 sales delivered revenue of $36.5 million in the third quarter, up 6 per cent on the previous period, with same-store sales growth up 4.4 per cent. But revenue growth has been decreasing over the past three years.
Craigs Investment Partners senior research analyst Mohandeep Singh said the retailer had continued to grow sales but its margins were falling.
“Margins have come down from 2.8 per cent to 0.9 per cent which is a quite a big swing,” he said. “They’ve flagged that as product mix and clearance of aged inven- tory — that’s something we’ve seen a couple of times now, which to me says they haven’t quite got their sales cycles right.” Torpedo7 revenue was $157.7m for the year ended July 31, 2017, compared with $148.7m the year earlier.
A spokeswoman for The Warehouse Group said Torpedo7’s operating margins had been “slightly affected” as it executed its strategy.
“We are investing in the brand with a view to ensuring it is the leading authority in outdoor adventure in New Zealand,” she said.