First Quarter Sales Update

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TO: Market Information Services Section
NZX Limited

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THE WAREHOUSE GROUP FIRST QUARTER SALES UPDATE

Group Sales in Q1 of $645 million (down 1.7% compared to Q1 FY17)
1,2

The Warehouse (Red Sheds) Same Store Sales down 4.0%
1

Warehouse Stationery (Blue Sheds) Same Store Sales down 8.2%
1

Noel Leeming Same Store Sales up 5.1%
1
Torpedo7 Group Same Store Sales up 2.0%
1



Auckland, 9 November 2017
The Board of The Warehouse Group (TWG) today reported retail sales for the first quarter ending 29
October 2017 of $645.0
2
million, down 1.7% from the same quarter last year.

The Warehouse
The Warehouse reported sales for the first quarter (Q1) of $357.9 million, a decrease of 5.2% or $19.6
million compared to the same quarter last year. Same store sales decreased 4.0% in the quarter.

The transition to an Everyday Low Pricing strategy (EDLP) continued during the quarter. By the end of the
quarter almost all categories are now using the EDLP model. The Warehouse will continue to use different
pricing structures for selected categories and for some seasonal events.

The reduction of Sales revenue in Q1 was an anticipated effect from the transition to EDLP as The
Warehouse lowered prices across its ranges. Volumes of product sold increased 7%. In part this reflected
the success of the ‘Dollar Deals’ programme in the Grocery categories.

The Warehouse continued to trade well in the apparel category with sales and margin increases over Q1
last year. However, some seasonal outdoor categories such as Gardening, Outdoor furniture and BBQs
were impacted by the wet weather experienced in the early part of Spring.

Gross margins were similar to Q1 last year. This reflects a mix of generally higher margins on EDLP ranges
combined with clearance activity as discontinued ranges were exited.


Warehouse Stationery
Warehouse Stationery reported sales for the first quarter of $59.1 million, a decrease of 7.2% or $4.6 million
compared to the same quarter last year. Same store sales decreased 8.2% in the quarter.

The Stationery business underwent significant change during the quarter as it completed the systems
integration between The Warehouse and Warehouse Stationery. This change caused some disruption to the
business, particularly in stock availability which impacted sales in the quarter.

In addition, some high value sales categories including computer products and communications
underperformed during the quarter and contributed to the sales decline.

Gross margins increased as the sales mix changed towards higher margin categories.

While it has been a difficult quarter for the Stationery business, it is expected to return to normal trading
levels as the business heads into the critical Christmas and Back to School periods.

Noel Leeming
Noel Leeming reported sales for the first quarter of $195.1 million, an increase of 6.3% compared to the
same quarter last year. Quarterly same store sales increased 5.1%.

Continued focus on leading the technology segment in customer service through passionate experts in store
resulted in continued sales growth in the extremely competitive appliances and technology market. Q1 saw
strong growth in the communications, audio and whiteware categories.

Within the quarter, Noel Leeming opened its 78th store at Royal Oak, Auckland.

Torpedo7 Group
Torpedo7 Group reported sales for the first quarter of $39.2 million, up 3.7% compared to the same quarter
last year. Quarterly same store sales increased 2.0%. This was driven by strong sales in the Torpedo 7
physical stores and through the 1-day segment, and was partially offset by declining online sales,
particularly in the Australian market. Bikes continues to be the standout category.

Within the quarter, Torpedo 7 opened a pop-up store at Westgate, Auckland. The Penrose, Auckland
Number 1 Fitness store was also closed and relocated within the Mount Wellington Torpedo 7 store.
Quarterly same store sales were a positive 2.0%.

Online
Group online sales (NZ) were $46.6 million, up 9.2% compared to the same quarter last year. Online sales
as a % of total Group sales has increased to 7.2% with all brands experiencing growth.

The Warehouse Group
Announcing the result, Nick Grayston, Group Chief Executive Officer, said: “The reduction in first quarter
Group sales was anticipated under the EDLP strategy in The Warehouse which continues to show
encouraging results at gross margin level. However, we were disappointed with the performance in
Warehouse Stationery as it was partly driven by internal operating changes. Our attention is now on the
critical second quarter trading performance, while continuing to advance our retail transformation strategy
with urgency.”

The Annual Meeting of shareholders will take place on Friday 24
th
November 2017.

Note 1: Compared to the same period last year
Note 2: Total Group sales is net of intercompany eliminations



ENDS

Contact details regarding this announcement:

Investors and Analysts: Mark Yeoman, Group Chief Financial Officer
To be contacted via Kim Russell +64 9 488 3285 or +64 21 452 860

Media: Nick Grayston, Group Chief Executive Officer
To be contacted via Julia Morton on +64 9 489 8900 Ext. 96258 or +64 21 875 388

Background: The Warehouse Group Limited

The Warehouse Group Limited comprises 93 Warehouse stores, 69 Warehouse Stationery stores, 78 Noel Leeming stores and 11
Torpedo7 stores in New Zealand plus several online businesses. The Group had an annual turnover of $3.0 billion in FY17 and
employs over 12,000 people.

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Reporting Period31 July 2017 to 29 October 2017
Previous Reporting Period 1 August 2016 to 30 October 2016
Quarterly Retail Sales information:
SalesSales
(31 July 2017 to 29 October 2017)
20182017
(NZ$ Million) (NZ$ Million)
The Warehouse 357.9 377.5 - 5.2 %
- 4.0 %
Warehouse Stationery59.1 63.7 - 7.2 % - 8.2 %
Noel Leeming (NLG)195.1 183.6 + 6.3 % + 5.1 %
Torpedo739.2 37.8 + 3.7 % + 2.0 %
Store Numbers
20182017201820172018201720182017
Start Quarter 192 92 77 75 69 66 12 11
End Quarter 193 93 78 77 69 67 11 11
Store footprint (Square Metres)
20182017201820172018201720182017
Start Quarter 1501,807 499,547 73,591 71,927 73,216 71,169 10,826 10,109
End Quarter 1503,970 504,551 74,591 73,472 73,216 71,959 12,652 10,109
1 - - -
- - - -
1 - - -
- - 1 1
Store
Extension/
Reduction
The Warehouse
Warehouse Stationery
Noel Leeming
Noel LeemingWarehouse StationeryTorpedo7
Store changes during the quarterNew Stores
Replacement
stores
Store Closures
Noel LeemingWarehouse Stationery
The Warehouse
Torpedo7
THE WAREHOUSE GROUP LIMITED
First Quarter Sales
First quarter sales
Change in
sales
Change in
same store
sales
Torpedo7The Warehouse