Warehouse Group posts $23.7m half-year loss
The Warehouse Group made a loss of $23.7 million in the six months to January 28.
The owner of The Warehouse, Warehouse Stationery, Noel Leeming and TheMarket.com said it expected tough retail conditions to continue throughout the rest of the financial year. It has also signalled it plans to sell or close down TheMarket.com.
The half-year loss was attributed to the $55.5m operating loss of Torpedo7 and non-cash impairment of assets from the sale of Torpedo7, along with restructuring costs.
In the same period last year, the group made an after tax profit of $17.3m.
The group made total sales of $1.6 billion in the first half of its financial year, down 4.9%, compared with $1.7b in the same period a year earlier.
Sales declined across all three of its retail brands. Sales at The Warehouse declined by 4.7% to $965m, Warehouse Stationery sales decreased 5% to $117.9m and Noel Leeming sales slipped by 2.2% to $544.4m.
Despite the loss and a decline in sales, The Warehouse Group declared an interim dividend of 5 cents per share.
The Warehouse Group chief executive Nick Grayston called the half-year result a “sobering outcome” for the group.
“The sale of Torpedo7 has had a severe impact on the group's financial performance this half. While the disposal of Torpedo7 means we have incurred significant write-downs, it allows us to redirect our focus towards our core brands and build on the $30.7m in adjusted net profit after tax from our continuing operations,” Grayston said.
“As a further part of our strategic reset, we intend to sell or close TheMarket. com by the end of the financial year. We are redirecting our focus and learnings into growing Group Marketplace on The Warehouse site and app, where we are now seeing improved profitability.”
Grayston said said It was time to draw a line under TheMarket as a separate entity and shift the marketplace focus to The Warehouse.
“When we launched TheMarket. com in 2019, it represented a strategic diversification of our business, allowing us to expand our supplier partnerships and offer customers a broader product range. We have, however, been unable to achieve the organic growth required to sustain the platform profitably.
“In making these choices to simplify our business, we’re acknowledging that we didn’t create the growth or profitability that we wanted to, or in the timeframe we needed in these businesses. These calls are needed to set us up to be a much leaner, sharperfocused Group in the future.”
The Warehouse Group shares were trading at about $1.39 yesterday morning, down from $1.60 at the end of last year.
Greg Smith, head of retail at Devon Funds, said the Warehouse Group’s result was slightly better than what the market had expected.
“Expectations were very low given they had sold Torpedo7 for $1 and we’ve got the cost of living challenges impacting the consumer, and their shares have been trading at around record lows.
“I think the result is slightly better than expected,” Smith said.