The Warehouse Group Investor Day Strategy Update

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TO: Market Information Services Section
NZX Limited

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THE WAREHOUSE GROUP INVESTOR DAY STRATEGY UPDATE



Auckland, 9 November 2017


The Warehouse Group (TWG) is today holding an Investor Day for analysts and institutional investors to
provide an update on progress against our strategy.

The key messages include:
• The ‘new rules of retail’ mean retailers must evolve to utilise new technologies and platforms in order to
remain relevant;
• This fundamental transformation of the retail business will ensure a sustainable business in this new
retail environment;
• We have established a world class leadership team which includes global expertise and local
knowledge;
• The Board and Leadership team are focused on successful execution and risk management.

A copy of the presentation is attached.

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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THE WAREHOUSE GROUPLIMITED
Investor Day
9 November 2017

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This presentation is given on behalf of The Warehouse Group Limited (‘the Group’). Information in this
presentation:
•Is for general information purposes only, and is not an offer or invitation for subscription,
purchase, or recommendation of securities in the Group. Readers should take their own independent
professional advice in respect of their objectives, financial position or needs;
•Should be read in conjunction with, and is subject to, the Group’s Annual Report, market releases,
and information published on The Warehouse Group website (www.thewarehousegroup.co.nz);
•Includes forward-looking statements about the Group and the environment in which the Group operates,
which are subject to uncertainties and contingencies outside of the Group’s control –the Group’s actual
results or performance may differ materially from these statements;
•Includes statements relating to past performance, which should not be regarded as a reliable indicator of
future performance;
•May contain information from third parties believed to be reliable; however, no representations or warranties
are made as to the accuracy or completeness of such information; and
•Has not been subject to audit or review by an independent third party of the assumptions, data, calculations
and forecasts contained in or referred to in this presentation.
All information in this presentation is current at the date of this presentation, unless otherwise stated. All
currency amounts are in NZ dollars unless stated otherwise.
Important disclaimer
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Agenda
—
SubjectPresenter
WelcomeMarkYeoman, Group CFO
OverviewNick Grayston, Group CEO
The Warehouse and Warehouse StationeryPejman Okhovat, CEO The Warehouseand Warehouse
Stationery
Tania Benyon, CEO Group Sourcing
Noel Leeming Groupand Topedo7 GroupTim Edwards, CEO Noel Leeming Groupand Topedo7 Group
Logistics & Fulfilment,Technology and DigitalTimothy Kasbe, Chief Information &Digital Officer
Customer Experience,CSRDavid Benattar, Chief Experience Officer
Data Analytics and Customer InsightsMichelle Anderson, EGM Data & TWL/WSL Marketing
People and CultureAnna Campbell, Chief People Officer
FinanceMark Yeoman, Group CFO
A Board PerspectiveJoan Withers, Chair, The Warehouse Group
Summaryand Closing CommentsNick Grayston, Group CEO
Q&A

TheWarehouseGroup

•The ‘new rules of retail’ mean retailers must evolve to utilise new technologies
and platforms in order to remain relevant
•This fundamental transformation will ensure a sustainable business in this new
globally competitive retail environment
•We have established a world class leadership team which includes global
expertise and local knowledge
•The Board and ExecutiveTeamare focused on successful execution and risk
management
—
Key takeaways
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•Performance over the past 7-10 years
characterisedby declining operating margins in
The Warehouse
•Inorganic M&A driven revenue growth has not off-
set the decline in The Warehouse profitability
•Acquisition has been funded by asset sales
rather than operating cash flow
•The Warehouse business represents 60% of
sales and almost 80% of operating profit
•The counter factual analysis suggested the
declining profitability trend would continue
•Under this scenario, and allowing for a level of
sales growth offset, future earnings would be flat
and at a level below FY17
•New competitive threats, and an inflexible and
complex operating model dominated by large
fixed asset base and heavy capital consumption
increased risk
Note reported operating profit for continuing retail operations
Counter factual: Doing nothing is
not an option

—
•Power shifted to consumers and retailers need to engage in ‘new rules’ of retail
•Our retail business model must evolve to utilise new technologies and platforms which connect
consumers across global marketplaces to create an experience that differentiates us from our
competition
•Acceleration of our transformation plan is now an imperative to respond to emerging trends
Customer Expectations
Global SourcingTechnologyConnectivity
Global Competition
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External forces of change

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Strategy review and development
of retail transformation project
•In FY16 Management and the Board considered a number of strategic options to extract value
for shareholders
•FY17 Christmas performance led to the acceleration of planned simplification and cost take-
out with a reorganisation of our head office operating structure
•Professional advisors assisted to develop the case for change and transformation framework
following an extensive review of our business
•Robust internal strategy development process followed including testing scenarios and
examining risk
•Early and repeated engagement with the Board to understand issues facing the business and
review strategic options in response,resulting in strong alignment

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Technology Enablement
Invest for the FutureFix the Retail Fundamentals
EDLP
Operating
Model
Reducing
complexity
21
st
Century Retailer
Reducing the
range of SKUs
and changing
mix from HiLo to
EDLP to drive
gross margin
and lower
marketing and
operational
costs
Leverage
operational
synergies,
remove
duplication in
product range
and optimise
store footprint
and costs
Driving efficiency
and reduced
CODB through
technology driven
automation and
productivity
gains, direct
sourcing and
increased speed
to market, and
streamlined
fulfilment
Create a mobile first platform to build
digital capabilities and ecosystems to
respond to customer needs
Effortless, personalised and seamless
customer experience and interaction
across multiple brands and omnichannel
Innovative ways to engage and reward
customer loyalty and create value added
service offerings
Moving to execution: Retail
transformation

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What does a 21
st
Century Retailer
look like?
•Pivoting from a supplydriven to a demanddriven model to meet customers’
needs in different ways
•Leveraging our existing Brand channels but also partnering with others and
redefining how we do business closer to the point of need to create a truly
customer centric ecosystem
•Developing a culture of innovation to look at opportunities beyond our current
retail footprint
•Agile methodology
•Speed to market
•Test and learn

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What does this look like for our
Retail Brands?
•Leveraged store footprint incorporated with e-commerce
•Easy to shop: consistent & competitive (dynamic) pricing, clear ranging, good stock availability,
automated checkout, range of payment options & methods
•Customer centric fulfilment
•‘Last mile’ delivery options (2-hour, same day, next day or standard delivery)
•Extensive click & collect offering
•Personalised customer experience
•Relevant product offerings, pricing & marketing
•Lower costs: right-sized head office cost structure
•Global brands complemented with high-quality and affordable private label products

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We have made significant headway
against our strategic pillars
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12
PRODUCT
DIGITAL
PROCESS
•Transitioned to EDLP
(~100% of
categories)
•Reduction of 15k
active Store Keeping
Units (SKU)s in FY17
•Increased direct
sourcing and
extended capability
with opening of Indian
Office
•Benefits of improved
design and curation
seen in apparel,
accessories and
footwear category
with growth of 2.0m
units sold (sales
revenue of $22.3m)
•Implement systems to
improve sourcing
efficiency
•Online Group sales
year-on-year growth of
18.4%
•Expanded South Island
distribution centre
•Innovations in online
fulfilment to build same
day/next day capability
including testing 2 hour
delivery using electric
vehicles
•Adopt agile and design
thinking
•Experimenting with AI
with test cases such as
our HR intranet
•Started retail cloud
discovery
•Built ability to test self-
checkout
•Raised $5.6m in FY17
•Launched Red Shirts
in Community
programme, a
partnership with the
Ministry for Social
Development
•Rolled out customer
soft plastics recycling
to a further 11 stores,
now 47 in total
•Commitment to
transition 30% of our
fleet to EVs by the end
of 2019
•Significant public
recognition and
awards following our
“Family violence-it’s
not ok” and gender
transition policies
•Made key international
hires to build up the
right team
•New operating
structure to drive
sustainable
profitability and reduce
complexity
•Sale of Financial
Services Business
•Sale of Newmarket
property
•First trial of store
within a store to
explore options for
redeploying space
•Extensive strategy
review with the Board
including independent
advice to define retail
transformation project
CSR

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13
PRODUCT
DIGITAL
PROCESS
•Build services capability
across Group
•Build marketplace of
extended goods and
services
•Move to direct sourcing,
eliminating most agents
•Further build in-house
design capability and
move to curated
assortment
•Reduce handling
touches
•Restart virtuous circle
•Ethical Sourcing Policy
•Extend reach through
online and drop-ship
•Move to Retail Cloud
•Scope and build value
exchange based loyalty
and payments
platform/mechanism
•Move to personalized
pricing based around
lifetime value
•Test and build click and
collect capability
•Equip store staff with
capability to assist
customers via AI / AR /
tools
•Test Marketplace Store
concept
•Integrate into all
corporate
and customer
communications
•Explore sales give-
back options
•Build and implement
Carbon Neutrality
strategy
•Build a full suite of
green products
•Identify and support
policies
to Help Aotearoa
Flourish
•Move to EV’s –
minimum
30% by 2019
•Reduce complexity
and costs
•Build performance
culture, mechanism,
data-driven scorecards
•Move to continuous
assessment
•Plan and test store of
the future
•Test beacons / NFC as
information delivery
•Build and use data / AI
to revolutionize
approach to H&S
CSR
With further work to be done

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•Successful integration of operating structures and leadership of retail brands, and centralised support
functions. Work to streamline processes and remove duplication underway
•Centralised support functions to become centres of excellence, encouraging operational best practice,
process improvement, and cost reduction
•Changes have clarified roles and decision-making rights, enabling a focus on execution
•Embarked on a culture transformation project to re-engage our team and shift to a customer-centric
mindset
Centres of Excellence to support all retail Brands
Retail Brands
Operating model changes
Group CEO

Group CEO

Red/Blue

Red/Blue

Red/Blue
Operations

Red/Blue
Operations

Red/Blue
Merchandise

Red/Blue
Merchandise

NLG/T7 Group

NLG/T7 Group

NLG/T7 Marketing

NLG/T7 Marketing

NLG/T7
Merchandise

NLG/T7
Merchandise

Red/Blue
Marketing

Red/Blue
Marketing

NLG/T7
Operations

NLG/T7
Operations

Customer
Experience & CSR

Customer
Experience & CSR

Fulfilment &
Logistics

Fulfilment &
Logistics

People Support

People Support

Finance (inc legal/
property)

Finance (inc legal/
property)

IS/Digital

IS/Digital

Customer Insights
& Data Analytics

Customer Insights
& Data Analytics

Group Sourcing

Group Sourcing

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Building a world class team
Nick Grayston
Group CEO
Anna Campbell
Chief People Officer
Tim Edwards
CEO, NLG & T7
Timothy Kasbe
Chief Information &
Digital Officer
Pejman Okhovat
CEO TWL & WSL
Tania Benyon
CEO Group Sourcing
Support & TWL/WSL
Merchandise
David Benattar
Chief Experience
Officer
Mark Yeoman
Group Chief Financial
Officer
Jonathan Waecker
Chief Marketing Officer
Michelle Anderson
EGM Data & TWL/WSL
Marketing

Pejman Okhovat,
Chief Executive Officer,
The Warehouse and
Warehouse Stationery
Tania Benyon,
Chief Executive Officer,
Group Sourcing Support
FY18INVESTOR DAY

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The Warehouse core purpose

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million+ transactions every week
•Shop with hearts and heads
•See value in everyday low price
•Spending under increased pressure
•Affordable style and design
•Clear expectations of service, range and availability
•Like our team
•Like innovation to assist in their experience
million individuals shop at The
Warehouse, every 12 months
every New Zealander is within 30
minutes of a store
Source: TWL customer research and financial data
3.5
1.0
30
Customer consideration

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The Warehouse, an iconic
Kiwi brand, loved and trusted
by families and communities,
helping them grow and
flourish, by making the
desirable affordable and the
affordable desirable.
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Where everyone gets a bargain, EVERY DAY
Price
Everyday low price message
Reinvention of the bargain
Transitioning our customer
mindset
Community &
Environment
Celebrate all we do within our
communities and for our
environment
Innovation
Demonstrate
innovation to
customers
Trend
Design, quality,
value for money
The Warehouse brand

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FY18 Strategic Focus Areas
Brand Position
Iconic Kiwi brand that isloved and trusted byfamilies and
communities
Product & Price
Curated range at best prices every day
eCommerce
Drive sales by focusing on core fundamentals of experience,
range and fulfilment
Customer Experience
Improve omnichannel experience across all channels
Integration and Operating Model
Integrated team running Red and Blue business, driving value
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•Customers told us they want a bargain every day
•Establish a reliable “best value” price for customers-“Where everyone gets a bargain
every day”
•Simplification in product ranges to drive efficiencies and deliver a clear offer.
•EDLP a proven model in US, Europe, and Australasia whilst Hi/Lo failing globally
EDLP delivering simplicity for
customers

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•EDLP ~ 100% of categories by end of Q1 FY18
•Curating a more focused range
•Rationalisation of our private label brands
•Improvement in advertising promotional programme, via reduced investment in traditional
channels and increases in digital optimisation
EDLP delivering cost savings

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Kidswear was the first category to fully transition to EDLP in H2 FY2017.
Customers have responded positively to EDLP prices, enjoying the freedom to choose
when they shop
•Units +18%
•Sales +14%
•GM$ +13%
•Sell through +14%
•Inflow Margin –6%
•Margin Burn –12%
•Avg Sell Price -3%
•Inventory Value -1%
Kidswear
H2 FY17
Kidswear case study

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We have built an integrated team that is lowering our ‘cost of goods sold’ and
improving our speed to market, with on trend, quality product
Buying
Curate the Range
Planning
Deliver the Plan
Design
Make the
Affordable
Desirable
Sourcing &
Product
Development
Better Products
at Better Prices
Quality & Ethical
Fit for Purpose
and Worth What I
Paid
Our
Customer
Dynamic buying and sourcing

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Our in-house design studio team interpret the latest trends in apparel and
homewares, delivering speed to market and making ‘the desirable affordable’
Homewares
Menswear
Dynamic buying and sourcing

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Our private label programme includes ensuring quality and ethical status of goods we source
CHINA
66%
NZ
10%
AUSTRALIA
7%
USA
4%
SE ASIA
5%
OTHER
8%
Direct Sourcing Country of Origin
Group sourcing support

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Following operating model changes and our transition to EDLP we will continue to identify and
deliver more reasons for customers to shop withus. We will create the following points of
difference:
•Differentiated and non-replicable product and servicesoffering through private label growth
•Increased choice through exploring space productivity and re-purposingwhere appropriate
•WSL store within a store
•Other TWG opportunities
•Future relevant tenancies
•Introduction of new categories
•Omni-channel experience that is market leading in user experience (UX), seamless in application
and fully utilises all channels to provide choice and convenience
•Our people and services
•Leveraging Group synergies to enhance our offer and create an ecosystem that adds value
FY18 takes us in a bold direction to re-establishsustainableprofits and
future growth
Growing our business beyond FY18

FY18 INVESTOR DAY
Pejman Okhovat,
Chief Executive Officer,
The Warehouse and
Warehouse Stationery

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•People who lead full lives and want their days to be
productive
•They want to be inspired
•Great value is important
•They want to feel engaged at a personal level
•They appreciate everything in one convenient, inspiring,
and welcoming place
000 businesses served through
WSL
for Back to School
60
100
#1
000 transactions every week
Customer consideration
Source: WSLcustomer research and financial data

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Build on our purpose to
inspire and enable a more
productive New Zealand by
providing everything our
customers need to WORK,
STUDY, CREATE and
CONNECT.
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60
Products and
Services
•Curated range of
products
•Services and solutions
Partnership
•Partnering with
businesses and the
education sector
•Delivering whole offer
with added value
Innovation
•Demonstrate
innovation to
customers
Inspiration and
Value
•Inspire people to do
more
•Delivering great value
Warehouse Stationery brand

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Brand Strategy
Using data and insights to become more relevant and personalised
Product & Service
Curated offer by customer channel
eCommerce
Drive eCommerce sales
B2B& Education
Grow market share in both channels
Integration and Operating Model
Integrated team running Red and Blue businessesto drive value
Customer Experience
Improve omnichannel experience across all channels
FY18 Strategic Focus Areas

Rationale
•Blue into Red is a series of tests to assess the impact of combining twobrands under
one roof, with a curated product range, given:
•Online shopping channel growth
•Globally space is being reconfigured in different ways
•Impact of digitalisation on the stationery market
•Occupancy costs
Our Aim
•Further validation to continue. Plan to pilot 4-6 examples before we set rollout targets
•We will be testingimpact on the following to inform targets:
•Business customers
•Conversion for both Red and Blue
•Total basket size
•Build greater flexibility into our ability to repurpose space according to customer need
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Blue stores into Red

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First trial store opened
in June
Early signs encouraging:
•Red store performing
better than control set
•Transactions in Blue up
•Property costs saving
•Better overall profitability
Customer Feedback
•Love that they can shop two stores
•It’s easy; they shop across both brands and pay once
•Improved range and choice in technology and stationery
•Business customers feel some categories have less range
compared to the past
Blue stores into Red: Airport

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WSL store
within a
store
Rolleston store opens Nov 2017
We have implemented key learnings from Airport store:
•Better adjacencies of categories across the whole store
•Better office furniture ranges to demonstrate credibility
•More appropriate staffing levels
Blue stores into Red: Rolleston

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WSL will grow profitability by remaining relevant to customers,
differentiating and growing market share and improving its
operating model
WSL is focused on differentiated strategic growth opportunities alongside realising
synergies/efficiencies from business integration and operating model changes.
The areas of focus:
-Use of data and insights to become more relevant and personalised
-Omnichannel customer experience to provide convenience and choice
-Products and service strategy with emphasis on service and experience
-Driving sales growth through eCommerce strategy
-Growing marketshare through B2B and education
-Integration and operating model changes enabling our team to run two businesses,
unlocking more value
-Realising further efficiencies through TWG synergies in areas ofsourcing, digital, supply
chain, property
Growing our business beyond FY18

Tim Edwards,
Chief Executive Officer,
Noel Leeming and Torpedo7
Group
FY18INVESTOR DAY

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Passionate Experts
Passionate Enthusiasts
Noel Leeming has come a long way since
our first store opened in 1973. We have
stores from Kaitaia to Invercargill and
have become one of New Zealand’s most
well-known brands and #1 consumer
electronics retailer.
Torpedo7 Group includes Torpedo7 plus
Shotgun Supplements and No.1
Fitness, and 1day.co.nz. Torpedo7 is
committed to providing adventure
enthusiasts with an extensive range of
quality goods at competitive prices.
Both brands at a glance

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Who we are: Noel Leeming

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Personalise our customer experience
Utilise myNoelLeeming, embed customer journey and maximise
customerlifetime value
Build onpassionate experts
Embed recruitment tools,learning programmes in specialist areas,
diversity initiatives, increase engagement by >2%
Services evolution
Extend Tech Solutions to all stores in FY18. New warranties
product developed in FY18
Improve gross profitahead of sales
Better manage discounting. Focus on exclusives, maximise scale
with suppliers
Maximise profitability through process efficiency
Inventory planning and online fulfilment focus. Improvement in
GMROx inFY18
FY18 Strategic Focus Areas

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Providing news,
trends, ideas and
examples to add
value
Ensure customers
get set up with
new technology,
know how to get
the best out of it,
and always have
help on hand
Provide choice,
information and advice
to make it easy to find
the right products and
services
Right product at the
right price, flexible
payment options,
rewards, and
services
More than just selling product

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0
0.5
1
1.5
2
2.5
3
Noel LeemingMyNLFlybuysFlybuys &
MyNL
Tech SolutionsFinanceCommercial
Channels for our customers
Visitiation p.a.
We see greater visitation when customers subscribe to MyNoelLeeming (currently over
500,000 active members)
Customer visitation and value is driven by:
•Loyalty, supported by digital/data
•Value-add services, and financing options
Multiple customer channels
Source: Datamine–sales data between July 2015 and June 2016

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In store,
from
Kaitaia to
Invercargill
In Home
or at work
~1000 per
week
Customer
Care &
Tech
Support
A perfect combination of Passionate Experts and End-to-End service
End-to-end service proposition

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Q. Now thinking about all these things together, image and reputation, product offering, in store experience, staff experience, services, price and
promotions, and advertisinghow would you rate these retailers overall on a 10 point scale where 1 means “poor” and 10 means “excellent”?
Our focus on right product, right price, passionate experts, and leading services
has helped us stand out from our competitors
Leading in all brand measures
Source: NLG brand tracker

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Torpedo7 is an outdoor activity/adventure retailer,
offering home and international brand outdoor
equipment, apparel and footwear. T7 trades in NZ
through 10 stores, 2 outlet stores and online in NZ and
Australia.
No.1 Fitness and Shotgun represent fitness and nutrition
within T7 Group.
No.1 Fitness specialises in fitness equipment, apparel,
accessories & nutrition, trading online and through the T7
network as well as 1 speciality store in Christchurch.
Shotgun.co.nz is primarily a online retailer of sports nutrition
products and accessories.
1-day is an online daily deal business. It is a market leader
accounting for around 50% of the product daily deal market
in NZ. It is an online pure play, mainly focused on the NZ
market but does participate in the Australian market.
T7 Group at a glance

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Brand Clarity
Relaunch T7 as the authority for outdoor adventure
Refine and Curate Product Offering
Define range proposition with external partnerships and house brand.
Drive increased margin
Customer Experience
Drive engagementthrough store and online experience
Deliver Albany as hub for innovation
Maximise Customer Data & Loyalty
Review and redefine our loyalty programme
Streamline Systems and Processes
Evaluatebusiness processes and drive continuous improvement
Build our Services Business
Developadd-on services to increase the lifetime value of customers
and increase our value proposition
FY18 Strategic Focus Areas

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ORPEDO
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Our Albany store is our “test and learn” environment to maximise the customer journey
Store of the future -Albany

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Bike Workshop Bike
Hire
Ski & Snowboard
Workshop
Ski & Snowboard
Hire
•25+ service specialists
delivering mechanical
and technical service
across 9 stores
nationwide
•Our services crew live
and breathe the
outdoors, enabling
them to deliver value
solutions with practical
technical knowledge
and expert advice
Services proposition

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TheWarehouseGroup

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World-class fulfilment for online
and offline business growth
Help New Zealanders manage their
lives from anywhere, anytime, and
from any device to engage with The
Warehouse Group

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FY18 Logistics & Fulfilment FocusAreas
Strategy
•Own the “last mile”; 2 hour, same day, next day, standard
•Frictionless commerce
Merchandising
•SKU rationalisation
•Optimise buy plan
International logistics
•Supplier rationalisation
•Improve container utilisation
•Stock flow planning
DC operations
•Optimise process towards variable costs
•Introduce Machine Learning and AI based automation
•Deploy digital everywhere
Domestic freight
•Continuous cost improvements
•Real-time supply demand driven variable costs
5 Areas of Improvement Towards World Class Supply Chain

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What is Digital?
•Extract value from new ideas while strengthening the core business
•Anticipate customer needs by using data and algorithms (contextual, real-
time and journey-focused)
•Changing mindset (agile, faster, better decisions via test & learn, iterative)
•Systems, integration, architecture and data
Digital commerce

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•Everything customer first, predictive and personalised
•Move towards information driven enterprise by enabling digital and data for all
employees
•Automate everything after patching every process gap
•Power of now, fail faster, 307 experiments underway
•Technology is the “new retail”

Data driven culture
powered by AI

Deliver faster

Deploy world-class talent



Efficient processes to
enable future outcomes
Solid infrastructure
Platform for culture of
innovation
Driving business transformation
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MARKET CONTEXTPROGRESS
CHALLENGES
•NZ ecommerce market
growing at 14% YoY
•Local competition
increasing with Kmart
ecommerce launch
•Global competition
heating up
•Cheap Flash/disk Storage
•Affordable computers
•Open Source
•Wide availability of
broadband and 3
rd
highest
penetration of
smartphones in the world
at 87%
•Group online sales +18.4%
YoY in FY17, ahead of
market
•The Warehouse &
Warehouse Stationery
websites re-platformed in
FY17 with customer
experience and conversion
benefits
•Innovations in fulfilment to
build same day/next day
capability including testing
2 hour delivery
•Creation and testing of
“Leon”, a bot on the Noel
Leeming website
•Voice infrastructure
deployed
•Part-Pay options available
•War for talent
•Speed of execution
•Self Checkout
•Bots
•TMS
•New Management
Paradigm
•Global focus
•Stanford University
•Andreessen Horowitz
•WayIn
•TAMR
•Instart Logic
•ScrumStart (85%
Development Savings)
Where are we today?
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Own the “last mile”
Digital platform experience
transformed & personalised
Advanced analytics & big
data for competitive
advantage
—
Leading NZ
fulfilment &
collection
Step change in
customer
experience
Analytics driven
action & culture
Extended online
assortment
Dramatic shift in
marketing mix
Omnichannel
experience &
services
Leveraging the group ecosystem
Driven by deep
understanding of behaviour
across channels
Serving customers anytime,
anywhere through any
device
Leveraging group range, services, data & experience to enhance the offer
across all digital platforms.
Where we need to be
Increased choice through online
vs. in-store ranges with dynamic
personalised pricing
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•AI powered voice search & support integrated into mobile app
•Experimenting with different AI packages for strongest customer experience
Voice AI integrated into mobile app
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Express Delivery TrialShipmate Subscription Trial
•2 hour delivery slots same day
•Launched as initial trial for WSL
BizReward customers in Auckland
•Free delivery subscription service
•Launched with NZPost
Delivery innovations
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Noel Leeming bot ‘Leon’

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Real-time performance

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Customer A
Customer BCustomer C
BIG DATA
Artificial
Intelligence
Module
Delivery
Engines
Personalization
Module “Library”
Products from Most
Viewed Categories
Recently Viewed
Email Sign Up
Recommended Most-
Wished-For Products
Red Alert Products
Most Pinned Products
Price Drop Module
Wish List Items
Pool and Pet Modules
Upsell Module
Products from Most
Viewed Categories
Upsell Module
Red Alert Products
Pool and Pet
Modules
Most Pinned
Products
Email Sign UpUpsell Module
Price Drop Module
Recently Viewed
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Big data and personalisation journey

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TheWarehouseGroup

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We believe that we can help
New Zealand flourish by combining
commerceand community.
Starting with education,
we will create new experiences
that address customer pain points
and benefit society.
Helping New Zealand flourish is in
our DNA

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Implication: Parents and teachers find it difficult to achieve their goal
of providing the best for their children. Fragmentation and affordability are
the huge barriers
Economically, times
are tough
The costs for a year 1 student
starting school in 2015 $1,976
and expected to grow to $3,781
by 2027*.
Everyday life is dominated
by technology
Devices in class are the new
norm and a necessity.
Technology is continuously
evolving, which poses challenges
for schools, parents and children.
Time pressures
are mounting
This is intensified for parents
with both school and after
school activities balanced
against employment.
The NZ population
will grow by 14% 2020
NZ’s
Ethnic
makeup is
changing
rapidly
Migration expected to contribute to
1/3 of population growth in the next
20 years
Source: Education Research for The Warehouse Group, TRA, Oct 2016
*”Cost of “free” education in New Zealand: $35,000 or more a child”, The New Zealand Herald, Jan 23 2015
There are a number of challenges in the lives of parents and schools
Insights: New Zealand is in a rapid
period of change

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Purple School -
Bringing parents, schools
and communities closer
together
•Giving families back what they have the least, but want the most; quality time
•Initial proof of concept tested with 6 schools and 3,000 kids
•Measuring increase in average bundled basket combining tech, uniforms,
stationery and essentials
•Engaging schools via consolidated group offering and give back around tech,
science and outdoor

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——
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Our current CSR activities

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•Launched Red Shirts in
Community programme
17 July 2017 with
Ministry for Social
Development
•3m cumulative audience
(opportunities to view)
•Represents 18.6% of the
total audience value of
all Warehouse mentions
(in July)
The Warehouse Red Shirts in
Community

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TheWarehouseGroup

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To become a data driven organisation using
analytics and insights to power business decisions
and drive sustainable profit and customer
relevance.
We will transform our relationship with our
customers by understanding more about them
through the deep analysis of data to personalised
customer experiences across channels to deliver
improved business outcomes.
Our data vision

—
Source: (1) IBM
•Rapidly changing consumer and
media landscape
•Increasingly connected
customers, in an increasingly
connected world
•Data initiatives have moved from
theoretical possibilities to focusing
on solving real and pressing
business problems
•Data will fundamentally change
the way businesses compete and
operate
The growthof data
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•We have a strong customer data asset across the Group
•We have started the delivery of the building block foundations of our
data strategy within the Brands
•A greater opportunity to drive business outcomes exists if we take a
Group single view of customers
•More advanced analytical techniques / tools will provide significant
value
•We are making significant cultural, process, and platform changes
across the business to drive the strategy
The opportunity
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3.7m Individuals
$2.98b Spend
80% Population
TWGcustomer landscape

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FY18 Strategic Focus Areas
Data Maturity Management
Governance, data quality, data management and data operations
DataPlatform
Platform, integrated analytics, integration and event management
Personalisation
Personalised customer experience across all touch points with
our brands
Advanced Analytics
Advance capability in mathematical models, algorithms, AI and
machine learning
Customer Understanding
Enhanced customer experience through research

—
Progress to Date
Media ROI
Single Customer View

—
We have made good progress in the delivery of our Data
Analytics and Customer Insights strategy.
•Weneed to continue to invest in our data and insights capability
•We need to make significant cultural, process, and platform changes across
the business to support the delivery
•We need to invest in talent and partner to augment capability when needed.
•We need to move faster
Summary
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TheWarehouseGroup

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“Culture eats strategy for breakfast.” Peter Drucker
We are building a culture of agility, innovation, connectedness and
customer centricity that strongly supports our purpose of helping NZ
flourish.
Our journey will deploy technology to support increased productivity
and articulate ‘our story’ and develop shared TWG values as the basis
for our culture change journey.
Transforming our culture

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Transformation of TWG and its culture
Bench strength, succession and workforce planning
Performance and productivity
Transformation of People Support service provision
Data driven insights to support our leaders and our decision
making
A five point people plan underpins our transformation journey.
FY18 Strategic Focus Areas

The WarehouseGroup

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Q1 sales update
TWG sales Q1 FY18 vs Q1 FY17
•The Warehouse $358m down 5.2%
•Warehouse Stationery$59m down 7.2%
•Noel Leeming$195m up 6.3%
•Torpedo7 Group $39m up 3.7%
•Group total
(1)
$645m down 1.7%
Key comments:
•The Warehouse sales mix reflects the reduced product range and effects of EDLP with almost all categories using the
EDLP model by the end of the quarter. The reduction in sales was an anticipated effect from the transition to EDLP
and lower prices. In addition, sales of seasonalcategories were impacted by the wet weather in the early Spring.
Gross margins were similar to last year reflecting a mix of higher margins from EDLP ranges and clearance activity
from exiting discontinued ranges.
•Systems issues connected with the merging of operations for TheWarehouse and Warehouse Stationerydisrupted
inventory replenishment for a few weeks in the quarter. That, together with softness in the computing and
communications category were the main factors behind the decline in sales at Warehouse Stationery.
•Noel Leeming and Torpedo7 continued their strong growth trend fromlast year.
(1) Group consolidated total after intra-group eliminations

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81%
19%
PropertyOther
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-
20
40
60
80
100
120
140
160
Store
fittings and
equipment
LandBuildingSoftwareComputer
hardware
Work in
progress
other
Work in
progress
buildings
Vehicles
$ Millions
Fixed Assets including software
0
50
100
150
200
250
300
350
Working
Capital
Fixed AssetsIntangible
Assets
$ Millions
Capital Employed $673m
•Inventories and Property the significant components of capital employed
•ROCE (continuing operations) currently at 10.5%
•Strategic program will drive improvements in inventory levels, greater efficiency in working capital.
•Capital investment aiming more towards software and systems to support customer experience rather
than property
•We do not expect to grow our footprint in the future. Optimisation, relocation, repurposing rather than
expansion.
•TWL = 503,970m2 WSL = 73,216m2 NLG = 74,591m2 T7G = 12,652m2
Asset base

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•Capex envelope starting point set to
depreciation levels, with some flex over if the
business case justifies the return.
Our bias is towards projects that:
•have deliverable benefits in the near term
•are staged and risk-managed
investments rather than large scale
•While we have over $100m of possible
projects, in FY18 we are planning between
$60m and $72m of capital investment
compared to total depreciation of ~$61m.
This reflects a tightening of capital allocation
and investment disciplines.
•Transformation investments, which are largely software and capability related, represent 48%
of FY18 planned capex.
•Future capex is dependent on the progress and success of transformation initiatives. For
example the store within a store rollout is dependent on the outcome of the trial.
•R&D and investment in digital future initiatives are modest in FY18, as our focus is on the
execution of the “fix the retail fundamentals” aspect of the strategy, and laying some important
groundwork for the “digital future”.
Capital investment

—
Debt position adjusted for the sale of Financial Services shows an improving gearing ratio.
$M
Senior Debt (Jun 20), 5.3%125.0
Term Bank Facilities, 2.48%35.0
Term Debt160.0
Current net liquidity (asset)18.3
Net Debt141.7
Gearing22.6%
Implied debt levels using the capitalisation of leases (PV
method) shows higher gearing levels
Present Value of Future lease commitments 563.0
Adjusted Implied Net Debt704.7
Adjusted Gearing59.2%*
*The equity base has not been adjusted in the gearing calculation
for the associated “Right to Use” asset on the other side of the
capitalised lease calculation
•Focused on managing and reducing gearing levels despite interest rates remaining at cyclical
lows.We expect some inflationary pressures to emerge, and with the uncertainty around the
transformation program our position is to build balance sheet resilience whilst maintaining a
strong dividend yield for shareholders.
•Sufficientforecast operating cash flow and balance sheet capacity to fund the expected
transformation program investments.
Debt
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Other Factors
•Group sales trend to continue with opportunity
•T7 expanded scale
•Continued growth in NLG
One-off
—
Sales outlook

—
•A wide range of initiatives are designed to drive improvement in Gross Margin. Our baseline
expectation is to see around 1.5% margin improvement in FY18, however there are many offsetting
forces to consider, some of which are highlighted in the chart below.
•In the medium term (FY19 onward) we expect margin improvement to offset any potential decline in
top line sales to preserve Gross Profit dollars once the clearance effects of the transition to EDLP
are complete (Q3 FY18)
•There are other factors at work in addition to those highlighted, for example scale growth in
Torpedo7, and the emphasis on private label will also drive margin improvement.
Positives
Headwinds
One-off
Margin outlook
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Our target for margin improvement of 200-300bps (measured against 32%) over 3 years is still in place.

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•Historical track has been CODB increases year-on-year. We are targeting material reductions in
CODB through the transformation program
•Significant opportunities for cost reductions as the Group consolidates its operations and changes
the task requirements to support an EDLP model.
•Where required we will engage with partners to help drive execution and delivery of expected
benefits from our transformation program.
PositivesHeadwinds
One-off
CODB outlook
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Our target for margin improvement of 200-300bps (measured against ~29%) over 3 years is still in place.

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—
•We continue to maintain a strong
dividend yield for our shareholders.
•We are confident in our strategy and
the indications that we are seeing from
its execution to date are encouraging.
•We are reiterating that we will issue
guidance only after the key Q2 trading
period.
Outlook

The WarehouseGroup

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G20/OECD Definition:
“Corporate governance involves a set of relationships
between a company’s management, its board, its
shareholders and other stakeholders. Corporate
governance also provides the structure through which the
objectives of the company are set, and the means of
attaining those objectives and monitoring performance are
determined.”
FOUR PILLARS OF GOVERNANCE:
•Determining purpose
•Effective governance culture
•Holding to account
•Effective compliance
Corporate governance at The
Warehouse Group

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Sharp focus on moving towards best practice:
•Board performance review
•Identification of skills gap
•Review of committees
•Review of charters and policies
•Independentreview of investor relations (IR) and
development of IR strategy
Robust interrogation of strategy development:
•Divestment of Financial Services
•Confidence in CEO, CFO, and Executive Team driven out of
deep understanding of issues facing the company, lessons
learnt from the past, stress testing and independent analysis
Corporate governance at The
Warehouse Group

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•JamesOgden and Vanessa Stoddart not seeking re-election at next ASM
•Sir Stephen Tindall taking one year’s leave of absence with Robbie Tindall
standing in as alternate
•Searchunderway to find skills and experience required to supplement existing
capabilities to ensure the board is adding value in the ongoing development of
strategic and operational initiatives and is able to competently and constructively
challenge the CEO and the world class Executive Team he is assembling around
him
Board composition

TheWarehouseGroup

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This all comes together with avision
of a customer centric ecosystem

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Our vision of a customer centric
ecosystem
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Conclusion
•The ‘new rules of retail’ mean retailers must evolve to utilise new technologies
and platforms in order to remain relevant
•This fundamental transformation will ensure a sustainable business in this new
globally competitive retail environment
•We have established a world class leadership team which includes global
expertise and local knowledge
•The Board and ExecutiveTeamare focused on successful execution and risk
management