The Warehouse Group FY22 Q3 Sales Update

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To: NZX Limited
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Auckland, 13 May 2022
The Warehouse Group FY22 Third Quarter Trading Update

Sales up compared to pre-COVID levels as online and grocery continue to grow

Highlights
• Group sales for the 13 weeks to 1 May 2022 (“FY22 Q3”) were $771.6 million, down 2.5%
compared to FY21 Q3, up 31.6% compared to FY20 Q3 and up 8.0% compared to FY19 Q3.
• Online sales were $86.6 million, an increase of 7.4% compared to FY21 Q3, and representing
11.2% of total Group sales.
• Click and collect sales continued to grow as a preferred choice for our online customers with
$36.9 million in the quarter, up 17.7% compared to FY21 Q3, and representing 47.3% of Group
online sales.
• Group gross profit margin was 35.6% in FY22 Q3, in line with 35.5% gross profit margin in
FY21 Q3, and up 90 bps from 34.7% in the FY22 H1.

The Warehouse Group Limited (“the Group”) today reported total Group sales for the third quarter
ending 1 May 2022 of $771.6 million, down 2.5% on the same quarter in FY21, up 31.6% on the same
quarter in FY20 which was severely impacted by the first COVID-19 Level 4 lockdown, and up 8.0% on
FY19 pre-COVID-19 levels.

Online sales continued to grow, with Group online sales of $86.6 million in FY22 Q3, an increase of
7.4% compared to FY21 Q3, and representing 11.2% of total sales. Year to date Group online sales
were $422.2 million, up 50.2% compared to YTD FY21 and making up 16.9% of total sales, increasing
from 10.8% of total sales in FY21.

Click and collect sales continued to grow as a convenient way for customers to receive their online
orders. Total click and collect sales were $36.9 million in FY22 Q3, making up 47.3% of online sales,
and totalling $188.7 million year to date making up 49.5% of year to date online sales.

Group-wide in-store foot traffic was down 13.0% in the quarter compared to last year and was impacted
significantly by New Zealand being at the Red setting of the COVID-19 Protection Framework for 74
out of 91 days during the quarter. Since the move to Orange setting on 14 April, we have seen an
improvement in foot traffic numbers, but this is still down compared to prior year.

The increased freight costs and the sales mix which impacted gross profit margin in the first half, have
been a key area of focus in the last quarter with various initiatives implemented across the Group to
address these challenges. Gross profit margin increased 10 basis points to 35.6% in FY22 Q3
compared to FY21 Q3, and increased 90 basis points compared to FY22 H1.

Group CEO Nick Grayston said, “The trading environment continues to be very challenging with high
inflation impacting consumer spending, shipping delays affecting the Group’s stock availability, and
some customers remaining hesitant to return to stores in person. Despite these factors, Q3 has held up
relatively well with a solid performance across the Group.

Brand performance

The Warehouse recorded sales of $401.9 million, a decline of 2.0% compared to FY21 Q3 due to the
impacts of COVID-19 omicron on store traffic. The sales result was however up 35.2% compared to
FY20 Q3. While The Warehouse in-store foot traffic reduced by 11.4%, online sales increased 25.8%
in the quarter with continued strong uptake in click and collect increasing 35.4% in the quarter. Grocery
was a standout category, specifically in Health & Wellbeing, Pantry & Chilled, and Petcare. The
Warehouse Mosgiel store was closed during the period.

Warehouse Stationery recorded sales of $67.4 million, a decline of 6.1% compared to FY21 Q3, and
up 4.5% compared to FY20 Q3. Warehouse Stationery online sales decreased 14.2% compared to the
same quarter last year, due to softer back to school sales, a decline in online traffic and some stock
availability issues. The Warehouse Stationery store-within-a-store (SWAS) integration programme
continues, with four new SWAS conversions during the quarter, bringing the total SWAS to 31 stores.

Noel Leeming recorded sales of $256.5 million, a decline of 2.5% compared to FY21 Q3, however
these sales were up 32.5% compared to the same quarter in FY20. Noel Leeming online sales saw
growth of 13.1%, with continued uptake in 1-hour click and collect fulfilment, increasing 14.6% in the
quarter. During the quarter we closed two stores, St Luke’s Westfield and Queen Street, Auckland.

Torpedo7 recorded sales of $36.5 million in the quarter, growth of 3.1% to compared to FY21 Q3
predominantly due to online sales, and up 65.9% compared to FY20 Q3. Torpedo7 online sales
increased 9.1% and click and collect sales increased 7.2% in the quarter. Torpedo7 store sales were
also impacted by COVID-19, with store footfall decreasing 12.0% compared to the same quarter last
year. Torpedo7 continues to expand its national footprint, with Whangārei opening late in the quarter
in April 2022, bringing the total number of Torpedo7 stores to 23.

TheMarket.com continues to grow with more than 565,000 active customers who engaged with more
than 52 million online sessions in the last 12 months – up 13.7% from the half year. With over 3.5
million active products now on offer, TheMarket.com remains on track to deliver more than $100 million
in Gross Transaction Value for FY22.

MarketClub loyalty programme continued to gather momentum in the quarter, as we move towards a
consolidated Group-wide customer loyalty programme. Member acquisition accelerated in the quarter
as we more than tripled the number of active members compared to the first half of the year, and with
more customers joining the programme to save even more across our range of everyday low-priced
items at The Warehouse. MarketClub members are more engaged shoppers, with higher spend, higher
frequency, and higher average order value, as well as higher in-store and in-app net promoter scores
(NPS) compared to non-members.

The Warehouse continues to provide value by lowering prices despite inflation

CEO Nick Grayston said, “Our customers trust us to provide the best value for money and we're
committed to this. Kiwis know they can come to The Warehouse for the best deals on their household
essentials. Value isn’t just about low prices – by providing quality products that last across all of our
categories, our customers can feel confident that the range of options we provide will offer better value
for their money in the long run.

“The response to our $4 butter has been fantastic and we’ll continue to maintain this price as long as
we can. Making sure Kiwi families can afford a great breakfast is something we’re very committed to
and our breakfast basket is still more than $6 cheaper
1

than the major supermarkets, despite their recent
price drop announcements.


1
Based on average full-price basket of eggs, bread, milk, coffee, butter, oats and Weet-Bix on 12 May 2022 costing $25.87 at
The Warehouse, $35.83 at Pak n Save and $35.42 at Countdown.

“While the cost of goods continues to increase, we’re holding or dropping prices where we can across
essential grocery and pantry items like bread, milk, cereal and pasta as well as essentials to keep
families warm such as children's flannelette pyjamas and merino clothing.

“For some products there will be unavoidable cost increases, but you can expect to see us continue to
look after our customers through the winter with everyday low prices. Kiwi families tell us that they’re
not getting good value from supermarkets and they want to have more grocery options available at The
Warehouse. It’s something we’re seriously considering and we’re watching with interest to see what
steps the Government will take to make a difference to New Zealanders and allow other players like us
to enter the grocery market in a bigger way.

Managing our product supply chain

Product supply was disrupted in Q3 due to ongoing challenges in the supply chain. While stock
continues to flow, shipping costs remain very high and there is an increase in the time it takes for product
to get to the shelf, which together with COVID-19 driven team member absences, have contributed to
some availability gaps in store. We expect shipping schedules will remain constrained through Q4 and
into FY23.

FY22 Annual Results

The Group’s FY22 year-end will be Sunday 31 July 2022, with the annual results to be announced on
Wednesday 28 September 2022.


ENDS

Contact details regarding this announcement:

Investors and Analysts: Jonathan Oram, Chief Financial Officer
To be contacted via Kim Russell +64 9 488 3285 or +64 21 452 860
kim.russell@thewarehouse.co.nz

Media: Jordan Schuler, Corporate Affairs Partner
+64211436930
media.enquiries@thewarehouse.co.nz

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Quarterly Sales
Reporting Period 39 weeks to 1 May 2022
Previous Reporting Period (2021) 39 weeks to 2 May 2021
Previous Reporting Period (2020) 39 weeks to 26 April 2020
Previous Reporting Period (2019) 39 weeks to 28 April 2019
Quarterly Retail Sales information:
First half sales
SalesSalesSalesSales
(2 August 2021 to 30 January 2022)
2022202120202019
($ Million)($ Million)($ Million)($ Million)
The Warehouse
895.4 967.3 938.8 929.5
- 7.4 % - 4.6 % - 3.7 %
Warehouse Stationery122.0 136.6 133.8 132.8
- 10.6 % - 8.8 % - 8.1 %
Noel Leeming582.7 593.2 512.8 487.3
- 1.8 % + 13.6 % + 19.6 %
Torpedo797.5 84.9 65.8 46.7
+ 14.9 % + 48.2 % + 108.8 %
Total Group
1
1,730.0 1,808.3 1,683.4 1,640.5
- 4.3 % + 2.8 % + 5.5 %
Third quarter sales
SalesSalesSalesSales
(31 January 2022 to 1 May 2022)
2022202120202019
($ Million)($ Million)($ Million)($ Million)
The Warehouse
401.9 409.9 297.3 386.3
- 2.0 % + 35.2 % + 4.0 %
Warehouse Stationery67.4 71.8 64.5 71.5
- 6.1 % + 4.5 % - 5.7 %
Noel Leeming256.5 263.0 193.6 217.0
- 2.5 % + 32.5 % + 18.2 %
Torpedo736.5 35.4 22.0 16.5
+ 3.1 % + 65.9 % + 121.2 %
Total Group
1
771.6 791.2 586.3 714.4
- 2.5 % + 31.6 % + 8.0 %
Year to date sales
SalesSalesSalesSales
(2 August 2021 to 1 May 2022)
2022202120202019
($ Million)($ Million)($ Million)($ Million)
The Warehouse
1,297.3 1,377.2 1,236.1 1,315.8
- 5.8 % + 5.0 % - 1.4 %
Warehouse Stationery189.4 208.4 198.3 204.3
- 9.1 % - 4.5 % - 7.3 %
Noel Leeming839.2 856.2 706.3 704.3
- 2.0 % + 18.8 % + 19.2 %
Torpedo7134.0 120.2 87.8 63.2
+ 11.5 % + 52.6 % + 112.0 %
Total Group
1
2,501.6 2,599.5 2,269.7 2,354.9
- 3.8 % + 10.2 % + 6.2 %
Store Numbers
20222021202220212022202120222021
Start Quarter 3
909071 73 70 71 22 20
End Quarter 3
899069 72 70 71 23 21
20222021202220212022202120222021
Start Quarter 3
486,051 487,884 85,541 77,795 62,867 65,849 28,319 27,030
End Quarter 3
481,518 488,201 84,516 78,021 61,245 65,805 29,900 28,230
- - 1 4
- 4 - -
- - 2 -
1 - - -
Note:
The Warehouse Group Limited
The Warehouse
Warehouse Stationery
Store
extension/
reduction
Store footprint (Square
Metres)
The WarehouseNoel Leeming
Warehouse StationeryTorpedo7
Noel Leeming
Torpedo7
1) Total Group sales includes TheMarket segment, eliminations and other Group operations in addition to the 4 main retail operations detailed above.
Change in
sales
vs 2021
Change in
sales
vs 2020
Store changes during the quarter
New
store
Replacement
store
Store
closure
Change in
sales
vs 2020
The WarehouseNoel Leeming
Warehouse StationeryTorpedo7
Change in
sales
vs 2019
Change in
sales
vs 2020
Change in
sales
vs 2021
Change in
sales
vs 2019
Change in
sales
vs 2019
Change in
sales
vs 2021