Third Quarter Sales Update

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TO: Market Information Services Section
NZX Limited


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WAREHOUSE GROUP THIRD QUARTER SALES
Positive signs during a period of change
Group Sales for Q3 of $701.2 million, up 2.6% on same quarter last year


Auckland, 11
th
May 2018

The Board of The Warehouse Group (TWG) today reported Group retail sales for the third quarter ending
April 29
th
of $701.2M, up $17.7M or 2.6% compared to the same quarter last year. This is a very
encouraging result compared to the (0.9)% sales decline experienced in the first half year.

In announcing the result, Group CEO Nick Grayston said “the sales growth achieved in our third quarter
shows a positive turnaround from the first half year, which was impacted by major changes to our pricing
strategy and operations. Noel Leeming has once again delivered a strong quarter of sales growth.”.

The third quarter sales results are in-line with expectations and consequently our full year profit guidance
remains unchanged, subject to any material changes in anticipated trading conditions.

The Warehouse
The Warehouse (‘Red Sheds’) reported sales for the third quarter of $388.2M, a decrease of (0.9)% or
($3.5)M compared to the same quarter last year. Same store sales decreased (2.4)% in the quarter. Units
sold increased by 7.5% compared to the same quarter last year. The business continued to see an increase
in transaction volumes.

The Warehouse apparel category has continued to trade well with an increase in gross margins compared to
the same quarter last year. Grocery sales experienced an increase with substantial unit lifts, however this
was offset by sales declines in music/DVD and communications categories.

Mr Grayston commented that overall gross margins saw a reduction compared to the same quarter last
year. “Following the completion of the pricing strategy transition to EDLP, our focus has turned to price
optimisation with a view to improving our margins going forward.”

Warehouse Stationery
Warehouse Stationery (‘Blue Sheds’) reported sales for the third quarter of $71.1M, a decrease of (1.4)% or
$(1.0)M compared to the same quarter last year. Same store sales decreased (2.1)% in the quarter.

The same store sales result for the third quarter showed strong improvement compared to the decline of
(7.9)% in the first half of the financial year. Mr Grayston said the improvement reflected steady Back to
School trading and resolution of several system integration issues arising from the operational merger of the
Blue and Red businesses. Communication category sales remained challenging in the quarter.

Noel Leeming
Noel Leeming reported sales for the third quarter of $212.2M, an increase of 11.2% or $21.3M compared to
the same quarter last year. Same store sales increased 6.8% in the quarter.

On this result Mr Grayston said, “performance remained strong across most categories with key growth
coming from Communications, TV and audio.”

Torpedo7 Group
Torpedo7 Group reported sales for the third quarter of $36.5M an increase of 6.1% or $2.1M compared to
the same quarter last year. Same store sales increased 4.4% in the quarter.

Torpedo7 bricks and mortar stores continue to perform well with same store sales growth of 20.7%. The
cycle category remains a key growth area.

Online
Group online sales (NZ) were $48.6M for the third quarter, up 6.6% or $3.0M compared to the same quarter
last year. During the quarter the Group centralised its marketing functions and consolidated its agency
relationships. We expect these changes to contribute to stronger online growth in the future.

Most Warehouse Group brands continue to see growth in online channels, with Noel Leeming up 15.6% in
online sales for the quarter, but 1-day daily deals business has been flat year on year. Online sales
represent 6.9% of Group sales in the quarter compared to 6.6% in the same quarter last year.


ENDS

Background: The Warehouse Group Limited

The Warehouse Group Limited comprises 93 Warehouse stores, 79 Noel Leeming stores, 69 Warehouse
Stationery stores, 11 Torpedo7 stores in New Zealand and several online businesses. The company had
turnover of $2.9 billion in FY17 and employs over 12,000 people.


Contact details regarding this announcement:

Investors and Analysts: Mark Yeoman, COO/CFO
To be contacted via Kim Russell +64 9 488 3285 or +64 21 452 860

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Reporting Period29 January 2018 to 29 April 2018
Previous Reporting Period30 January 2017 to 30 April 2017
Quarterly Retail Sales information:
SalesSales
(29 January 2018 to 29 April 2018)
20182017
(NZ$ Million) (NZ$ Million)
The Warehouse 388.2 391.7 - 0.9 %
- 2.4 %
Warehouse Stationery71.1 72.1 - 1.4 % - 2.1 %
Noel Leeming (NLG)212.2 190.9 + 11.2 % + 6.8 %
Torpedo736.5 34.4 + 6.1 % + 4.4 %
Year to date sales
SalesSales
(31 July 2017 to 29 April 2018)
20182017
(NZ$ Million) (NZ$ Million)
The Warehouse 1,328.2 1,366.8 - 2.8 % - 3.3 %
Warehouse Stationery200.1 210.9 - 5.1 % - 6.0 %
Noel Leeming (NLG)666.1 613.0 + 8.7 % + 5.6 %
Torpedo7125.1 120.9 + 3.5 % + 1.5 %
Store Numbers
20182017201820172018201720182017
Start Quarter 393 92 79 77 70 67 11 11
End Quarter 393 92 79 77 69 68 11 12
Store footprint (Square Metres)
20182017201820172018201720182017
Start Quarter 3507,476 501,098 76,055 73,591 72,895 71,959 12,652 10,109
End Quarter 3506,106 502,500 76,055 73,591 71,029 72,890 12,652 10,826
- - - 1
- 1 1 -
- - - -
- - - -
Store
Extension/
Reduction
The Warehouse
Warehouse Stationery
Noel Leeming
Noel LeemingWarehouse StationeryTorpedo7
Store changes during the quarterNew Store
Replacement
stores
Store Closure
Noel LeemingWarehouse Stationery
The Warehouse
Torpedo7
Change in
sales
Change in
same store
sales
The Warehouse
Torpedo7
THE WAREHOUSE GROUP LIMITED
Third Quarter Sales
Third quarter sales
Change in
sales
Change in
same store
sales