Warehouse chief: We’re not for sale
Warehouse Group chief executive Nick Grayston has a message for shareholders as the company faces competition from global online retailers: “We’re not for sale”.
The mood among shareholders at the company’s annual meeting yesterday was mixed — both optimistic and concerned. One shareholder asked about the prospect of Alibaba or Amazon potentially acquiring the group.
Grayston acknowledged Amazon’s acquisition of Whole Foods. He said online giants had now recognised the benefit of bricks and mortar retail.
“Online pure-plays have recognised the customer still wants physical locations,” he said.
“Having 254 stores in New Zealand and a distribution system . . . that’s a competitive advantage . . . [but] right now, we’re not for sale.”
Group non-executive director Will Easton, managing director of Facebook for Australia and New Zealand, said he believed the group was well-placed to combat the likes of Amazon and other e-commerce giants.
“I’m a big believer in markets such as New Zealand that traditional retailers actually have the competitive advantage. If you look at research across the world at how shoppers want to shop, the retail store front has never been more important.
“The benefit we have here is that we have learnt a lot from what has happened in other markets and I can comfortably say The Warehouse is a step ahead of where traditional retailers were in other markets before Amazon entered.”
The NZX-listed company, which owns Noel Leeming, The Warehouse, Warehouse Stationery and Torpedo7, outlined its plans to combat global giants Amazon and Alibaba. It also acknowledged Kmart, which is expanding its store footprint, as a competitor.
“Amazon arrived in Australia offering a broader selection of categories than any other launch country. While their arrival doesn’t yet appear to have a significant impact, it would be unwise to underestimate their longterm potential in Australasia,” Grayston said.
“Other international e-commerce players present in the New Zealand market and traditional competitors such as Kmart are also expanding their store footprint, along with the best of international retailers such as Zara and H&M.
“In order to compete and win in the omnichannel world we need to redouble our focus on the customer, it is imperative that we have the right infrastructure to deliver what customers want.”
Trading conditions had not eased for the retailer, Grayston said. Next year, it will introduce personalised shopping features to its retail websites. In the 2018 financial year ended July 28, the group posted a $22.9 million net profit after tax, up 12 per cent from $20.7m a year earlier. Overall, total sales combined from Noel Leeming, The Warehouse, Warehouse Stationery and Torpedo7 were up 0.5 per cent.
Noel Leeming had a strong year, operating profit increased 61.8 per cent to $31.2m. Sales at the red sheds fell 2.5 per cent to $1.7 billion, which the company attributed to the shift to everyday low pricing.
The retailer paid $20.1m in shortterm incentives to staff in the financial year and paid a full-year dividend of 16c per share, equivalent to $55.4m.
The Warehouse’s share price has fallen from an all-time high of $4 over a period of 10 years.
The share price closed up 2c yesterday at $2.11.
At the meeting, chair Joan Withers said the group had aspirations for a higher share price, and that it was beginning to see “early signs of success”.