The Warehouse Group – 2019 Annual Results Announcement

Results for announcement to the market
Name of issuer The Warehouse Group Limited
Reporting Period 30 July 2018 to 28 July 2019
Previous Reporting Period 31 July 2017 to 29 July 2018
Currency NZD
Interim Dividend
Record Date 22 November 2019
Dividend Payment Date 05 December 2019
Contact phone number
Contact email address
Date of release through MAP
Audited financial statements accompany this announcement.
Current periodPrior comparable period
up 2.4 % $ 3,072,619
Amount per Quoted Equity
Security
8.00 cents
Imputed amount per
Quoted Equity Security
3.1111 cents
Profit/(loss) from
continuing operations
$ 67,310 up 146.9 %
Net profit (loss) attributable
to shareholders
$ 65,382 up 185.8 %
09 217 7651
Jonathan.Oram@thewarehouse.co.nz
25 September 2019
105.8 cents (29 July 2018)
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Refer to media release
Authority for this announcement
Name of person authorised to
make this announcement
Joan Withers (Chair)
Net tangible assets per
Quoted Equity Security
103.3 cents (28 July 2019)
Jonathan Oram (Group Chief Financial Officer)
Contact person for this
announcement
Revenue from continuing
operations
$ 3,071,357 up 2.6 %
Total Revenue
The Warehouse Group Limited
Results for announcement (for Equity and Debt Security issuer)
Amount (000s)Percentage change

---

FY19 Annual Results
September 2019

This presentation may contain forward looking statements and projections. There can be no certainty of the outcome and projections involve known and unknown risks, uncertainties, assumptions and
other important factors that could cause the actual outcomes to be materially different from the events or results expressed or implied by such statements and projections.
While all reasonable care has been taken in the preparation of this presentation, The Warehouse Group Limited does not make any representation, assurance or guarantees as to the accuracy or
completeness of any information in this presentation. The forward-looking statements and projections in this report reflect views held at the date of this presentation.
Except as required by applicable law or any applicable Listing Rules, the Relevant Persons disclaim any obligation or undertaking to update any information in this presentation.
A number of non-GAAP financial measures are used in this presentation. You should not consider any of these in isolation from, or as a substitute for, the information provided in the audited
consolidated financial statements, which are available at www.thewarehousegroup.co.nz.
This presentation does not constitute investment advice, or an inducement, recommendation or offer to buy or sell any securitiesin The Warehouse Group Limited.
Disclaimer
2

FY19 at a Glance
1
Adjusted NPAT is a non-GAAP measure. A reconciliation to NPAT is located on slide 18.
2
Based on normalisedonline sales adjusted for the closure of online platforms during FY19.
3
The Warehouse Group Ethical Sourcing Policy 2019.
3
$3.1b
in Group Sales
26%
increase in
Adjusted NPAT
1
83%
increase in
Operating
Cash Flow
2.25m
average customer visits
per week
175
transformation initiatives
completed
35,000
homes visited by
Noel Leeming Tech Experts
53%
reduction in Net Debt
18%
growth in online sales
2
(now 7.8% of Group Sales)
19%
Mobile Web App Sales %
of The Warehouse Online Sales
57%
increase in
Click & Collect use
Development
and launch of
TheMarket
1
st
NZ carbon neutral retailer
(3
rd
globally)
30%
of our fleet to be electric vehicles
by end of 2019
$67m
raised in donations for New
Zealand since 1982
100%
of private label manufacturing sites
are required to meet our ethical
sourcing standards
3

Chair’s Update

Performance
•We are pleased with this year’s result which is one of our strongest from a profitability perspective for a number of years
•Evidence of our transformation process is starting to show through –from our relationships with customers and suppliers,
our impact on the environment and our financial results
•Sales for the Group were up 2.6% on last year, with retail sales up across all brands
•Adjusted NPAT was up 25.6% to $74.1m, reflecting top line growth and benefits from our transformation programme
•Adjusted NPAT includes $6.0m of costs associated with the development of TheMarket, our new e-commerce platform.
We are excited by its potential as we seek to provide New Zealanders with access to local and international labels as well
as alternative ways to shop
•Backing that investment out from the result would show a 31.1% improvement in Adjusted NPAT
•The Board has confirmed a final dividend of 8.0 cents per share, bringing total pay-out for the period to 17.0 cents per
share. This represents a pay-out of 80%, within the Group’s stated policy of 75% to 85% of Adjusted NPAT, and a one
cent improvement on last year
Chair’s Update
5

Transformation Update
•Our transformation programme continues to add rigour and discipline to how we work and to enable us to explore greater
efficiencies
•We have implemented 175 initiatives across merchandise, store performance, logistics, non-trade spend and other
workstreams and I am impressed that we have been able to sustain the level of intensity in terms of the execution of the
programme over this period
•While this is a result to be proud of, our commitment to this transformation programme remains and there is still work to
be done. This is necessary given the nature of a retail environment that is in a constant state of change. We are
committed to our plan for improving the long term profitability of The Warehouse Group and we are confident that there is
now both the trading momentum and execution capability for the gains within the business to continue
Chair’s Update
6

Board Update
•Will Easton was appointed to the Board in October 2018
•Sir Stephen Tindall has decided to take a further year’s leave of absence due to his work commitments and Robbie
Tindall will continue as his alternate
•We are pleased to announce that Renee Mateparae, who is currently the lead of the Future Connectivity team at Spark,
has just commenced her time with The Warehouse Group Board as part of the Future Directors Programme
Integrated Reporting
•Last year we introduced what integrated reporting would look like for the Group. This is our first year of integrated
reporting which reflects our commitment to improving transparency and providing shareholders and analysts with the
widest possible view of our activities as part of good corporate governance
Chair’s Update
7

Group Update

•FY19 demonstrated that our transformation and strategy are delivering
•Our transformation programme on fixing the retail fundamentals has helped us change the way we work and has
enabled us to lift our ability to execute, which is now reaping financial benefits
•The Warehouse, Warehouse Stationery, and Noel Leeming all reported operating profit growth
•We successfully launched our digital platform –TheMarket –part of our wider strategy to construct an enhanced
ecosystem for our customers around our business
•Importance of investment in the transformation program cannot be understated given current and future competition from
international retailers and the changing ways our customers want to shop. Our focus is on making the most of our
advantages as a New Zealand based retailer with a significant omni-channel footprint, engaged customers, and deep
community relationships
•As an organisation we recognise the need to continually change in order to meet the evolving needs of New Zealanders.
This means changing the way we work as a business –both internally and with our partners. This has been a significant
focus for the year and in planning for our future
Group Performance Review
9

Key Metrics by Brand
1
Apple iOS App Store and Google Play Store.
10
+1.8%
Retail Sales
+11%
Online Sales Growth
#1
In “BackToSchool”
+75%
Mobile Web-based Sales
Most 5-star reviews of any NZ
shopping app
1
6.2%
Retail Operating Profit Margin
(220 basis point improvement)
+0.6%
Retail Sales
+23%
Online Sales Growth
5.0%
Retail Operating Profit Margin
(80 basis point improvement)
+39%
Click & Collect Fulfilment
19%
Mobile Web App Sales %
of The Warehouse Online Sales
+29%
Click & Collect Fulfilment

Key Metrics by Brand
11
-4.1%
Retail Operating Profit Margin
(320 basis point decline)
+5.0%
Retail Sales
+45%
Online Sales Growth
+10%
Tech Solutions Sales
+60%
Mobile Web-based Sales
+5.6%
Retail Sales
+33%
Online Sales Growth*
+4
New stores opened
+64%
Mobile Web-based Sales*
4.1%
Retail Operating Profit Margin
(60 basis point improvement)
+68%
Click & Collect Fulfilment
+128%
Click & Collect Fulfilment*
* Excludes 1-day

Phase 1
Phase 2
Phase 3
Phase 4
Phase 5
Progressing Our Transformation
12
RISE –way of working
Systems and processes
Digital future / Customer experience
EDLP
Creation of COEs

Towards a 21
st
Century Customer-lead,
Technology-driven Ecosystem
13

Through Building a Change Able Performance Culture
14
We provide exceptional
experiences by putting our
customers first
We are change able and
have a winning culture
We are productiveand
make speed a habit

Group Financials

FY19 Annual Results
16
•Retail Sales up 2.6% on last year with sales growth across all
our brands and improving momentum into year end
•Retail Gross Profit up 3.8% and Gross Margin improvement
of 40 basis points, reflecting benefits of our transformation
programme
•Cost of Doing Business up 1.8% but down as percentage of
Sales reflecting investment in transformation, Torpedo7 store
network growth and TheMarket
•Overall, it was a strong year for the Group with Operating
Profit up 22.9% and Adjusted NPAT from Continuing
Operations up 25.6%
•Operating Cash Flow up 83.5%, benefitting from overall
performance and working capital initiatives
•The Board have announced a Final Dividend of 8.0 cps
bringing the total pay-out for FY19 to 17.0 cps (up from 16.0
cps in FY18)
$ million20192018Variance
Retail Sales
3,071.4 2,994.6
2.6%
Retail Gross Profit
1,028.6 991.2
3.8%
Gross Margin %33.5%
33.1%
40 bps
Retail CODB
916.2 899.8
1.8%
CODB %29.8%
30.0%
(20) bps
Retail Operating Profit
112.4 91.4
22.9%
Operating Margin %3.7%
3.1%
60 bps
Continuing NPAT (Reported)
67.3 27.3
146.9%
Continuing NPAT (Adjusted)
74.1 59.0
25.6%
NPAT (Reported)
65.4 22.9
185.8%
Operating Cash Flow
198.0 107.9
83.5%
Ordinary Dividend
17.0 16.0
1.0 cps
For the period ended 28 July 2019

Group H1 and H2 Performance
17
For the Year ended 28 July 2019
$ millionH2H1
20192018Variance20192018Variance
Retail Sales
1,430.8 1,396.5
2.5%
1,640.5 1,598.1
2.7%
Retail Gross Profit
495.4 468.7
5.7%
533.2 522.5
2.1%
Gross Margin %34.6%33.6%100 bps
32.5%32.7%
(20) bps
Retail CODB
443.5 435.7
1.8%
472.7 464.1
1.9%
CODB %31.0%31.2%(20) bps
28.8%29.0%
(20) bps
Retail Operating Profit
51.9 33.0
57.2%
60.5 58.4
3.5%
Operating Margin %3.6%2.4%120 bps
3.7%3.7%
-
Continuing NPAT (Adjusted)
34.5 21.3
61.5%
39.6 37.7
5.2%
•We are pleased with the H2 result for the Group, particularly with the warmer weather impacting seasonal sales
•Second half began to show benefits of initiatives focused on gross margin improvement
•Significant improvement in H2 profitability due to trading, improvement in the quality of the balance sheet, and relatively lower incentives

Adjusted vs Reported NPAT
18
•Restructuring costs relating to the group transformation were
$15.7m, in-line with guidance provided in the FY19 Interim
Results
•Realised a property profit of approximately $11.8m from the
sale of land adjacent to the Auckland Support Office
•Fully impaired the brand assets associated with the 1-day
business of $5.5m
•Discontinued Operations relates to the winding up of the
Diners Club (NZ) business
•We expect to realise further benefits in relation to our
transformation programme over FY20 and further restructuring
cost of $18m –$20m in H1
For the period ended 28 July 2019
$ millionNPAT
FY19FY18Variance %
Adjusted Earnings
74.1 59.0 25.6%
Adjusted for:
Restructuring costs
(15.7)(8.7)
80.0%
Gain on property disposals
11.8 0.2
nm
Brand and Goodwill impairment
(5.5)(25.6)
(78.6)%
Income tax
2.6 2.4
10.8%
Reported Earnings
67.3 27.3
146.9%
Discontinued Operations
(1.9)(4.4)
(56.0)%
NPAT Attributable to
Shareholders
65.4 22.9
185.8%
To improve the understanding of underlying business performance, the Group adjusts profit for unusual and non-operating items. Unusual items include profits
from the sale of assets and losses associated with adjustments in carrying value of assets, M&A activity and restructuring costs.

Balance Sheet
19
•Significant improvement in operating cash flow due to
trading, working capital initiatives and lower capital
expenditure relative to last year
•Net debt reduced by $86.1m to $76.2m, this is a
reduction of 53.1% compared to last year and the third
consecutive year of debt reduction
•The current level of gearing of 13.6% is helping to build
capacity in advance of expected future investment in
planned transformation and growth initiatives
•The Group is targeting gearing below 30% over the next
three financial years
As at 28 July 2019
$ million20192018Variance
Inventory
517.8 523.8
(6.0)
Trade and Other Receivables
90.779.8
10.9
Trade and Other Payables
(352.7)(279.0)
(73.7)
Provisions
(82.0)(88.0)
6.0
Working Capital
173.8 236.6
(62.8)
Fixed Assets
271.2 272.9
(1.7)
Held for Sale
-3.7
(3.7)
Funds Employed
445.0 513.2
(68.2)
Tax Assets
37.8 32.0
5.8
Derivatives
(0.1)16.4
(16.5)
Goodwill and Brands
75.5 81.0
(5.5)
Capital Employed
558.2 642.6
(84.4)
Shareholders Equity
481.3 479.4
1.9
Minority Interests
0.7 0.9
(0.2)
Net Debt
76.2 162.3
(86.1)
Sources of Funds
558.2 642.6
(84.4)
Gearing13.6%25.3%

Cash Flow
20
•Operating cash flow has improved 83.5% on LY to
$198.0m
•Further reduction in Working Capital from the impact of
inventory and trade creditor initiatives
•Capex of $61.3m (excluding $777k of payables at year
end) was below guidance given at the FY19 Interim
Result as a number of transformation initiatives planned
to land in FY19 have been pushed into the early part of
Q1 FY20
•Divestments last year included Lunn Ave and the sale of
the Financial Services business
•Consequently, Net Cash Flow is up $30.2m on LY
•Cash Flow shows a $3.5m reduction in dividends paid
due to a lower interim dividend in FY19 of 9 cps versus
10 cps in FY18
For the period ended 28 July 2019
$million20192018Variance
Trading EBITDA
173.0 151.1
21.9
Working Capital
77.2 (5.9)
83.1
Taxes Paid
(26.5)(14.1)
(12.4)
Interest Paid
(8.7)(9.3)
0.6
Discontinued EBITDA
(3.1)(3.5)
0.4
Other Items
(13.9)(10.4)
(3.5)
Operating Cash Flow
198.0 107.9
90.1
Capital Expenditure
(61.3)(70.2)
8.9
Divestments
1.9 12.2
(10.3)
Divestments -Discontinued
1.9 62.5
(60.6)
Dividends Received
0.2 0.3
(0.1)
Dividends Paid
(52.3)(55.8)
3.5
Other
(2.2)(0.9)
(1.3)
Net Cash Flow
86.2 56.0
30.2
Opening Net Debt
(162.3)(218.3)
56.0
Closing Net Debt
(76.2)(162.3)
86.1

FY19 Capex Spend
21
•Increased discipline around the allocation of capital has
resulted in capital spend this year below guidance
•Additionally there were transformation initiatives that
were originally planned to land in FY19 that are now
expected to occur in the first half of FY20
•Investment in stores included the execution of six Blue
Sheds being integrated into Red Sheds (store-within-a-
store) and an additional four T7 stores
•Investment in a Warehouse Management System drove
the proportion of capital spent on logistics higher than
guidance, the first phase of which has delivered
improvement in eCommerce fulfilment metrics
•Over the FY20 –FY22 periods we are expecting an
average capital expenditure of $100m –$120m
39%
Stores &
Distribution Centres
40%
Information
Systems and Digital
Initiatives
21%
Logistics
Total FY19 capex
$62.1m

Divisional Performance Review

Divisional Summary
23
$1,705.7m
55.5%
The
Warehouse
$924.6m
30.1%
Noel
Leeming
$268.6m
8.7%
Warehouse
Stationery
$172.5m
5.6%
Torpedo7
Group
$85.1m
The
Warehouse
$38.1m
Noel
Leeming
$16.7m
Warehouse
Stationery
-$7.0m
Torpedo7
Group
-$20.4m
Other*
$112.4m
Total Group
Retail Sales FY19Retail Operating Profit FY19
*Includes Digital Retail costs (TheMarket) of $6.0m and $14.4m of Other Group costs.
$3,071.4m

$million20192018Variance
Retail Sales
1,705.7 1,695.8 0.6%
Same Store Sales Growth1.5%
(3.0)%450 bps
Retail Gross Profit
658.4 642.4 2.5%
Gross Margin %38.6%
37.9%70 bps
Retail CODB
573.3 571.0 0.4%
CODB %33.6%
33.7%(10) bps
Retail Operating Profit
85.1 71.4 19.1%
Operating Margin %5.0%
4.2%80 bps
Stores
9393
-
For the period ended 28 July 2019
•FY19 was a year of development and transformation for the brand.
Good progress was made following the move to Every Day Low
Pricing and we saw clear benefits from the transformation initiatives,
especially around merchandising, cost of goods sold and gross margin
•Overall, Retail Sales were up 0.6% on LY with a strong H2
performance. Despite a warmer than normal winter period, H2 Same
Store Sales (SSS) growth was 2.2%, driving SSS growth to 1.5% for
the year
•Challenges due to the weather notably impacted the Head-to-Toe
category with General Merchandise and Home delivering strong sales
and margin
•Gross profit improved 2.5% to $658.4m and GM% also grew 70 bps,
benefiting from the transformation initiatives focussed on COGS and
pricing in an EDLP environment
•Operating profit increased 19.1% to $85m, benefiting from careful
management of CODB -particularly of store labour
24

For the period ended 28 July 2019
•Warehouse Stationery performed well in FY19, recording a record
profit despite industry headwinds in its core stationery categories
•FY19 has been a year focused on delivering valuable solutions for
our customers and getting back to historical performance
•Retail Sales are up 1.8% on LY and we are most encouraged by
improvements in margin percentage and very careful management
of CODB that have delivered an excellent Retail Operating Profit
result
•Retail Operating Profit increased 57.4% to $16.7m, with margin also
improving to 6.2%. This result is the best ever for the brand
(previously $15.7m in FY17)
•All key categories have grown in sales and margin with outstanding
performance from Print & Copy and Furniture
•6 store-within-a-store integrations were implemented in FY19
bringing the total to 10, and initial observations are positive. We
continue to proactively assess opportunities to undertake this
integration across our portfolio of Red and Blue sheds
$million20192018Variance
Retail Sales
268.6 263.8
1.8%
Same Store Sales Growth1.4%(6.0)%740 bps
Retail Gross Profit
112.8 104.7
7.8%
Gross Margin %42.0%39.7%230 bps
Retail CODB
96.1 94.1
2.2%
CODB %35.8%35.7%10 bps
Retail Operating Profit
16.7 10.6
57.4%
Operating Margin %6.2%4.0%220 bps
Stores
70*70*
-
25
* Includes 10 store-within-a-store integrations. Four integrations implemented in FY18.

For the period ended 28 July 2019
•The focus in FY19 was to deliver exceptional technology solutions to
our customers through the knowledge of our Passionate Experts
•Noel Leeming built on its excellent H1 result and delivered FY19 Retail
Sales growth of 5.0% with 22.3% growth in Retail Operating Profit to
38.1m, a record result for the brand
•Significant growth opportunities exist through service offerings of Tech
Solutions and Consumer Protections. In FY19, Sales from Services
were up 11.4%, which includes increases in Tech Solutions and
Protections of 10.0% and 12.1%, respectively
•Strong category performances in Home Appliances, Cellular/Wearables
and Audio Visual. Home Appliances was a standout performer this year
with Small Appliances performing particularly well
•In FY19, three new clearance centres were opened in Glenfield,
Henderson and St Lukes
$million20192018Variance
Retail Sales
924.6 880.5
5.0%
Same Store Sales Growth2.8%5.7%(290) bps
Retail Gross Profit
210.3 198.9
5.7%
Gross Margin %22.7%22.6%10 bps
Retail CODB
172.2 167.7
2.7%
CODB %18.6%19.1%(50) bps
Retail Operating Profit
38.1 31.2
22.3%
Operating Margin %4.1%3.5%60 bps
Stores
77 74
3
26

For the period ended 28 July 2019
•Torpedo7 Group is made up of Torpedo7 and 1-day. Torpedo7 Group has
undergone a tremendous amount of change in FY19 as we have
continued to execute on our strategy of brand clarity, a refined product
offering and store expansion
•Sales increased 5.6% and Gross Profit increased 1.2% on LY in
Torpedo7 Group
•Total Retail Sales were $172.5m for Torpedo7 Group, of which $107.6m
of sales were attributed to Torpedo7 and $64.9m to 1-day
•Torpedo7 experienced strong sales growth in Bike and Water categories
and from additional stores
•CODB increased 14.9% and Retail Operating Profit was a loss of $7.0m.
Higher operating costs were driven from our store expansion programme
•We opened 4 new stores in FY19 in New Plymouth, Palmerston North,
Te Rapa and Manukau
•Overall good progress has been made on brand positioning and store
network expansion, but gross margin is below expectations. A dedicated
leadership team under Simon West has been formed
•1-day’s profitability was consistent with last year, however its current and
future outlook doesn’t support the brand’s carrying value which we have
written-off
$million20192018Variance
Retail Sales
172.5 163.4
5.6%
Same Store Sales Growth4.4%1.3%310 bps
Retail Gross Profit
39.8 39.3
1.2%
Gross Margin %23.1%24.0%(90) bps
Retail CODB
46.8 40.7
14.9%
CODB %27.2%24.9%230 bps
Retail Operating Profit
(7.0)(1.4)
(385.6)%
Operating Margin %-4.1%-0.9%(320) bps
Stores
18 14
4
27

FY20 Outlook and Dividend

We expect FY20 to be a year where we will continue to see the benefits of our transformation programme as well as
investment in new transformation and growth initiatives.
•In FY19 we achieved some solid sales growth within the brands.We expect this overall trend to continue but with an
increasing focus on gross margin and CODB improvement
•TheMarket is expected to generate an operating loss in the range of $14m –$17m as we continue develop the platform’s
functionality and offer and build scale
•In H1 we expect to realise further restructuring costs of $18m –$20m as we complete the current transformation
programme
•We are expecting to have several years of capital expenditure in the range of $100m –$120m, but with gearing remaining
below 30%
•We expect continued headwinds from labour cost inflation, fuel and currency, and some increased volatility around the
latter two
•The earnings outlook for FY20 will be dependent on the critical Q2 trading period and earnings guidance for the year will
be considered at the end of this quarter
FY20 Outlook
29

•Dividend policy remains unchanged with a dividend pay-out ratio of 75% –85% of Adjusted Net Profit After Tax
•The Directors are pleased to confirm the final dividend for FY19 of 8.0 cent per share. This brings the total dividend for
FY19 to 17.0 cents per share fully imputed and a one cent per share improvement on FY18
•Total Dividend pay-out represents 80% of Group Adjusted Net Profit After Tax
•Dividend Record Date: 22 November 2019
•Payment Date: 5 December 2019
Dividend
30
94%
80%
81%
94%
80%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
10
11
12
13
14
15
16
17
18
19
20
FY15FY16FY17FY18FY19
Dividend (cps) and Pay-out Ratio FY15 -FY19
Dividends cents/sharePayout ratio

Thank you
& Questions

---

______________________________________________________________


To: Market Information Services Section
NZX Limited
_________________________________________________________________________________

Wednesday 25 September 2019

The Warehouse Group lifts adjusted full-year profit by 25.6 per cent

Highlights

• Adjusted Net Profit After Tax of $74.1m, up 25.6 per cent on last year
• Reported Net Profit After Tax attributable to shareholders up 185.8 per cent to $65.4m
• Group sales were $3,071.4m, up 2.6 per cent compared to FY18
• Warehouse Stationery achieved a record operating profit of $16.7m
• Noel Leeming sales up 5.0 per cent, achieving record retail operating profit of $38.1m
• Group online sales (online, mobile and mobile app) up 18% to $239.2m
• Final dividend of eight cents per share, total dividend for FY19 17 cents per share


The Warehouse Group has announced an Adjusted Net Profit After Tax (NPAT) of $74.1m for the 2019
financial year, up 25.6 per cent on last year. Group retail sales were up 2.6 per cent with sales growth
across all four major trading brands. Reported NPAT attributable to shareholders is $65.4m for the
year, up 185.8 per cent on last year.

Gross margin improved by 40 basis points and Group operating profit was up 22.9 per cent. The
Warehouse Group Chair Joan Withers said the Board was pleased with this year’s result, which was
one of the strongest profitability-wise for a number of years. “Evidence of the changes we are making
to the business and the rigour and discipline provided by the transformation programme are starting
to show through.

“While we are proud of what we have achieved this year, there is still more work to be done and we
are conscious of the ever-changing retail landscape. We are committed to our long-term plan of
improving the profitability of The Warehouse Group and we are confident that we are on the right
track.”

Group Chief Executive Nick Grayston said discipline, tenacity and hard work had paid off. “Thank you
to all the team members at The Warehouse Group for their contribution to this result.

“The considerable work done over recent years is now evident on the bottom line which is gratifying,
and we are looking forward to delivering on the next steps of our strategy.”

Shareholders of The Warehouse Group will receive a final dividend of eight cents per share, taking the
overall dividend payment for the year to 17 cents per share fully imputed. This is a one cent increase
on last year, and the highest dividend in five years.


The Warehouse is making good progress following the decision to move to everyday low pricing, said
Nick Grayston. The brand recorded sales of $1,705.7m, up 0.6 per cent on last year, with a strong

second-half performance. Despite warmer than usual weather during winter, the second half of the
year saw same store sales growth of 2.2 per cent, driving same store sales growth to 1.5 per cent for
the year. Gross profit improved by 2.5 per cent to $658.4m and gross margin also grew 70 basis
points. Operating profit increased 19.1 per cent to $85.1m.

Nick Grayston said FY19 was a year of development and transformation for The Warehouse.
“Transformation-related initiatives played a large part in the result including improved inventory
management and supplier terms along with careful management of costs.”

Warehouse Stationery has recovered from its systems integration and stock availability issues and
returned to historical levels of performance to deliver a record retail gross profit of $112.8m. Retail
sales were up 1.8 per cent to $268.6m and gross operating profit improved 57.4 per cent to $16.7m.

“The focus on delivering valuable solutions for customers and careful management of costs has paid
off despite industry headwinds in core stationery categories.” Print and Copy and Furniture
categories performed particularly well.

Noel Leeming continued its upwards momentum with a record retail operating profit of $38.1m in
FY19, with sales up 5.0 per cent. “The technology expertise offered to customers has made the brand
experience more valuable, as people look to incorporate more and more technology into their lives,”
said Nick Grayston.

“Noel Leeming commercial sales continue to improve and the services part of the business, including
My Tech Solution in-home and store-based technology assistance, grew by 11.4 per cent.

“We see significant continued growth opportunities within the Noel Leeming and commercial
businesses.”

Sales in Torpedo7 Group increased 5.6 per cent year on year and gross profit increased 1.2 per cent,
however due to costs associated with the Torpedo7 store expansion programme, the business made
an operating loss of $7.0m. “We see this business as having a lot of potential, but continued focus is
important. To that end we recently appointed Simon West as CEO for Torpedo7 who will ensure a
dedicated focus to this business.”

Group online sales were up 18 per cent, now 7.8 per cent of total Group sales. “While online sales
currently make up a small percentage of total retail sales, they are a critical part of our growth
strategy,” said Nick Grayston.

“After balance date, we launched our new digital platform TheMarket, part of the execution of our
wider strategy to construct an enhanced service-based ecosystem around our business.”

The Warehouse Group strategy and outlook
“Our strategy of fixing the retail fundamentals and investing in the digital future is showing promising
signs of delivering results in terms of profit, revenue growth and customer behaviour, and remains
unchanged.

“An important part of this is developing a customer ecosystem that will provide solutions for our
customers’ changing expectations and savvier shopping habits.”

As in previous years, the earnings outlook for FY20 will be dependent on the critical second quarter
trading period. Earnings guidance for FY20 will be considered at the end of the second quarter.

More information about The Warehouse Group’s result, strategy, transformation programme and
operations can be found in the Annual Report for 2019, available at www.twg.co.nz.

Group Governance
Sir Stephen Tindall will take a further 12 months leave of absence from his directorship of The
Warehouse Group. Robbie Tindall will continue to act as his alternate on the Board.

Will Easton was appointed to the Board in October 2018. Mr Easton is Managing Director of
Facebook Australia and New Zealand.

Renee Mateparae, who is currently an Agile team leader at Spark, has just commenced her time with
The Warehouse Group Board as part of The Future Directors programme.

ENDS

Contact details regarding this announcement:
Investors and Analysts: Jonathan Oram, Chief Financial Officer
To be contacted via Sam Kater, +6421953701
Sam.kater@thewarehouse.co.nz
Media: Nick Grayston, Group Chief Executive Officer
To be contacted via Jessamy Malcolm Cowper, +64272 752 834,
media.enquiries@thewarehouse.co.nz

---

THE WAREHOUSE GROUP
INTEGRATED ANNUAL REPORT 2019
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THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
REPORT
CONTENTS
FRONT COVER
Purpose, Vision and Values 4-5
Group Highlights 6-7
Chair’s Report 8-11
CEO’s Report 12-17
Our CEO and Board 18-19
Our Board 20-21
Board Skills Matrix 22-23
Integrated Reporting 24-25
Risk & Materiality 26-27
Our Networks 28-29
Our People 30-31
Our Expertise 32-33
Our Relationships 34-35
Our Environment 36-37
Financial Capital 38-39
Financial Statements 41-45
Notes to Financial 46-64
Statements
Independent Auditor’s Report 65-67
Annual 5 Year Summary 68-69
Governance Report 70-75
Statutory Disclosures 76-84

THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
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OUR COMPANY
3. ADDITIONAL INFORMATION
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REPORT CONTENTS
We continue to change and
adapt to the rapidly evolving
retail environment. This year,
we got to a good place in
terms of progress and results.
PURPOSE, VISION, VALUES

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REPORT CONTENTS
Helping Kiwis live better every day
Over two million New Zealanders shop with us every week, enjoying the convenience, quality
range, and competitive prices we are famous for. Together they spent more than $3 billion with us
last year across our networks, which is unparalleled in the New Zealand market.
Every day, we’re living our purpose by transforming our business to exceed our customers’
expectations and beat our competitors in a way that has a positive impact on our communities.
Being New Zealand’s most sustainable business means that we will not only be profitable but we’ll
also take responsibility for our environmental impact and the impact we have on people’s lives. We
know that sustainable business is good for our company and the wider economic climate in which
we operate. We want to be New Zealanders’ first choice for convenience by providing products
and services when and where they are needed, with as easy access as possible and a variety of
payment and collection options.

We want to be synonymous with ‘customer-first’ in New Zealand and help customers
understand that quality and great prices don’t need to be at a high cost, and we can
save them time as well as money.
OUR PURPOSE
TAKE THE LEAD

We use our smarts
and make things
happen
BE THE
EXPERIENCE

We make every
connection count
CREATE THE WAY

We make today great
and tomorrow even
better
HERE FOR GOOD

We always do the
right thing
OUR VALUES
To build New Zealand’s most sustainable,
convenient and customer-first company
OUR VISION
PURPOSE, VISION AND VALUES
4

THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
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PURPOSE, VISION AND VALUES
GROUP HIGHLIGHTS
Leveraging: Our reach, our customer insights, our ability to serve
Enabled by: World-class team, partners and technology
For: Our communities, our investors, our planet
OUR ECOSYSTEM
Our strategy is showing promising signs of
delivering results in terms of profit, revenue growth
and satisfied customers. We are not changing the
strategy at this stage. There is still more to do
around fixing our fundamentals through a range
of transformative initiatives. We also have the
opportunity to continue to invest in our digital
capability to meet customer needs and build
our future.

Given the fast-moving, changing face of retail,
we are working at pace to build an ecosystem
around our core business that will provide solutions
for our customers’ changing expectations and
savvier shopping habits. The launch of our digital
shopping platform TheMarket is one example of our
ecosystem in action. Further initiatives are
in progress.
Our strategy is based on customer insights. We will
continue to listen to what our customers have to
say, before testing and learning to problem-solve
in a way that drives a positive quality and value
perception for today’s customer.

With changing customer expectations comes a
need for us to continue to refine our business
processes and implementation methods. We are
upskilling our team by building a performance
culture with new leadership behaviours that are
linked to our values. We are also giving thought to
the future of work and how we can best equip and
support our team for ongoing changing skills needs.

Our transformation programme has enabled
greater discipline and ways of working, promoting
increased nimbleness and agility, which we will
continue to adopt throughout our business.

THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
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GROUP HIGHLIGHTS
THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
PURPOSE, VISION, VALUES

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GROUP HIGHLIGHTS
CHAIR’S REPORT
average weekly customer visitsGroup sales (up 2.6% on last year)
25.6%
18%
$3.1b
Development
and launch

of TheMarket
reduction in net debt
online sales growth
(online sales account for
7.8% of total sales*)
transformation initiatives
delivered
53%
2.25m
175
increase in adjusted NPAT
of private label manufacturing
sites are required to meet our
ethical sourcing standards
100%$67m
We are the first retailer
in New Zealand

(the third in the world)
to go carbon neutral.
Noel Leeming is New Zealand’s
largest TV installer, and
Noel Leeming Tech Experts
visited over 35,000 homes.
raised in donations for
New Zealand since 1982
* Based on normalised online sales
adjusted for the closure of online
platforms during FY19.

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CHAIR’S
REPORT
8
GROUP HIGHLIGHTS
Where we said we would be
Two and a half years ago, we set out a plan to
improve the long-term profitability of
The Warehouse Group by fixing our retail
fundamentals and investing in the Group’s digital
future. Over that time, we have been focused on
delivering results rather than promises, and being
transparent about the progress we are making and
the challenges we face.
I am pleased to report that the evidence of our
transformation is starting to become apparent
throughout the business. We are seeing progress in
our relationships with customers, our impact on the
environment, and now in our financial results with
one of our strongest profit results for some years.
Our adjusted Net Profit After Tax (NPAT) result of
$74.1m for this financial year provides comfort that
we are on the right track.
Given the overall performance in the retail market
over the last 12 months, the Board is heartened
by our progress. We see trading momentum and
incremental improvements which augur well for that
progress to continue.
Net profit attributable to shareholders for the year
was $65.4m, a significant improvement on last year.
In line with previous reports, this bottom line result
includes a number of one-off items, which is why we
use adjusted NPAT for guidance; this metric shows
the underlying performance of the business.
FY19’s adjusted NPAT is also well up on last year’s
result, and exceeds the guidance given at the half-
year which indicated we expected to finish the year
with an increase of 7% to 12% on FY18 adjusted
NPAT. In fact, the adjusted NPAT represents a
25.6% improvement. Included in that result is a
$6.0m investment in developing our new venture,
“TheMarket”. Backing that investment out from the
result would show that the underlying performance
improvement in the retail group on a like for like
basis is a 31.1% improvement year on year.
The Board has confirmed a final dividend of 8.0
cents per share. Added to the interim dividend of
9.0 cents per share, fully imputed, that was paid
in April, this brings the total dividend pay-out for
the year to 17.0 cents per share. This equates to a
pay-out ratio of 80.5% on adjusted NPAT for the
second half, and 79.6% for the full year. Combining
dividends paid with the change in share price, the
total shareholder return for FY19 is 20.2%.

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“ FY19’s adjusted NPAT is also
well up on last year’s result,
and exceeds the guidance
given at the half-year which
indicated we expected
to finish the year with an
increase of 7% to 12% on
FY18 adjusted NPAT. In fact,
the adjusted NPAT represents
a 25.6% improvement.
Included in that result is
a $6.0m investment in
developing our new venture,
‘TheMarket’.”
CHAIR’S
REPORT
9
Joan Withers
Chair
The Warehouse Group
CHAIR’S REPORT
THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019

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CHAIR’S
REPORT
We have been able to implement change,
improvements and efficiencies right across the
business. This year’s performance shows that we have
the ability to execute an ambitious and multi-faceted
programme while still meeting the needs of the
millions of customers who shop with us through our
stores and online.
The Group has also transformed our internal way of
working, becoming more collaborative and utilising
our expertise across all brands. A good example of
this is the enhanced use of customer data to provide
insights which inform retail decisions such as product
design, price and experiences.
Our integrated report shows that using our resources
wisely and managing our networks, expertise, people,
relationships, responsibilities to the environment and
financial capital to best effect is not just about driving
financial benefits; it is also about creating benefits
across all aspects of the business and our broader
stakeholder groups.
Strong capital management
The Board recognises the need to invest in areas
where there has been an investment deficit in
recent years. Systems is one such area, and we have
allocated around $100m over several years to re-
platform the business with modern, efficient retail and
back-office technologies. This will allow us to innovate
our offerings to customers, and provide them with the
experiences and services that they deserve.
We are conscious that historically the returns from
investments have not always been as strong as
anticipated. Considerable work has been done
to improve our investment processes and capital
allocation to ensure that we drive returns from these
investments. Noel Leeming is an example of an
investment that has worked very well for the Group.
Having acquired the business in December 2012 for
$65m, Noel Leeming is now performing at an EBIT
margin of 4%, delivering annual EBITDA of $48m.
Customer behaviours changing quickly
It is difficult to overstate the extent and speed of
change in the retail market. As I pointed out at the
half year, customer shopping behaviour has changed
and will continue to do so at a rapid pace. At the
same time, the arrival of global retailers is altering
the options for shoppers, bringing new ways of
retailing to our already competitive market and
pushing us to examine our range and offering as
never before.
We have a leadership team with tremendous
knowledge and understanding of the global context
of retailing, and the Board is confident that we are
in a strong position to understand the implications
and opportunities of the competitive environment
and to respond accordingly. That is starting to come
through in our results. The Warehouse, Warehouse
Stationery, and Noel Leeming have all reported
increases in gross profit, reinforcing our belief that
we know how to compete in an intensifying retail
environment.
Considerable transformation
Twelve months in, our transformation programme
continues to add rigour and discipline to how we
work and to enable us to explore greater efficiencies
through integrating and improving our systems,
streamlining our processes and taking greater
control of our brands. So far, we have delivered 175
initiatives across merchandise, store performance,
logistics, non-trade spend and other workstreams.
I am impressed that we have been able to sustain
the level of intensity in terms of the execution of our
transformation over this period. Such programmes
depend on strong people engagement. Our
people have stepped up and faced tremendous
shifts in their day to day working with courage and
determination. Not only are we already seeing
tangible financial benefits but the transformation has
also provided tools and resources that have become
embedded as our way of delivering.
CHAIR’S REPORT

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CEO’S REPORT
“ Our integrated report shows that using our resources wisely
and managing our networks, expertise, people, relationships,
responsibilities to the environment and financial capital to
best effect is not just about driving financial benefits, it is also
about creating benefits across all aspects of the business and
our broader stakeholder groups.”
CHAIR’S REPORT
Doing right by our shareholders
We complete the year in an upbeat frame of mind.
Of course there is still much work to be done – there
always will be, given the changing nature of retail –
but progress has been at least as good as we hoped
for and probably better than we anticipated given
how the wider market environment continues to
evolve.
I referred, at the beginning of this report, to our
commitment two and a half years ago to focus on
doing what we said we would do. It would have
been possible at that point to simply have taken cost
out of the business in a non-strategic way in order
to improve short term results. Instead, the Group
has focused on effecting sustainable improvement
and doing the right thing for the longevity of the
business, for our stakeholders and our shareholders
in the long term. The balance sheet is now in
excellent shape and the business has some exciting
growth opportunities ahead.
Our decision to move to a fully integrated report
reflects our commitment to improving transparency
and providing shareholders and analysts with the
widest possible view of our activities as part of good
corporate governance.
On behalf of the Board, we thank Nick Grayston and
his executive leadership and all the hard working
teams across the Group. We thank our customers
for their business, and our business partners for
their support. This is a result we can all be proud
of. My thanks, too, to my fellow Directors for their
commitment and energy and for the support they
continue to give me. Finally, thank you to all our
shareholders for continuing to invest in our quest to
help Kiwis live better every day.
Joan Withers
Chair
Board activity
The Warehouse Group’s Board continues to actively
support the strategy of the business and as Chair I
have been delighted with the commitment of the
Directors individually and collectively. We focus on
continuing to improve the quality of governance
in the Group and look forward to ongoing
improvement in the years ahead. Like any evolving
organisation though, we remain aware of the need
to keep pace with the skills needed for the business
in the future. At both board and executive level we
are focused on succession planning.
We see the Future Director programme as an
important way of staying in touch with both the
capabilities available and the next generation of
directors. A future director also brings their own
perspectives and experiences to the Board, which
can be tremendously valuable. We are pleased to
announce that Renee Mateparae, who is currently an
Agile team leader at Spark, has just been appointed
to our Board as a future director. We look forward to
working with her over the next 18 months.
Sir Stephen Tindall has decided to take a
further year’s leave of absence due to his work
commitments with the America’s Cup and also his
private involvements. Robbie Tindall will continue as
his alternate, a role that he continues to impress in.
We continued to focus on our Health, Safety and
Wellbeing with our board committee chaired by
Julia Raue. Julia has done an exemplary job in
working with the executive and assisting the whole
Board to gain a better understanding of our critical
risks and the moves we should be taking to
mitigate them.
We recently launched TheMarket, our exciting new
foray into the digital retail environment. TheMarket
operates as a separate company with its own board.
Our interests are represented by Robbie Tindall and
John Journee, who are the parent Board’s nominees
on that subsidiary board.

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THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
CEO’S
REPORT
CHAIR’S REPORT
12
Proud to serve New Zealanders
Discipline, patience and hard work over a sustained
period paid off this year as The Warehouse Group
recorded an impressive result. Tangible signs of
progress show that the hard yards have been worth
it and that the company’s focus over recent years can
now start to be seen on the bottom line.
Accelerating our strategy through an ambitious
transformation programme, relentlessly improving
our business processes, focusing on what we offer,
our Every Day Low Pricing pricing model, lifting
brand performance across the board, and the
ongoing development and roll-out of our digital
future – these and other strategic initiatives have all
improved our position significantly. The range and
breadth of these measures speak to the complexity
of the retail sector today: the rapidly evolving
competitive environment, and the changing
shopping behaviours of our customers.
No single answer is ever going to be enough given
the dynamics of the retail sector, and so we have a
broad portfolio of improvement initiatives running
across our business. This has required our people
to undertake significant change and I want to thank
everyone for their hard work in getting us to this
point. I’ve been impressed with the work and focus
of the leadership team, and by the support from the
Board.

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Nick Grayston
Chief Executive Officer
The Warehouse Group
CEO’S REPORT
13
CEO’S REPORT
“ Our drive to reduce
inventory and improve
working capital efficiency
saw progress this year,
translating through to a
reduced net debt position
following the renegotiation
of offshore supplier trading
terms and the reduction in
aged inventory.”
Good progress across our brands
It is particularly satisfying this year to see improvements
across almost all of our brands.
The Warehouse is making good progress following the
decision to move to Every Day Low Pricing and
we saw clear benefits from the transformation initiatives,
especially around merchandising and improvements in
the cost of goods sold (COGS). This translated into a
19% increase in operating profit year on year for the Red
Sheds. As well as improved profitability, we have also
seen a six point increase in terms of perceived quality.
Our drive to reduce inventory and improve working
capital efficiency saw progress this year, translating
through to a reduced net debt position following the
renegotiation of offshore supplier trading terms and the
reduction in aged inventory.
Unit volume in the Red Sheds has remained flat this
year as we continue to simplify our brand portfolio and
further reduce our overall number of full stock keeping
units (SKUs) by 17%. Continued focus on the optimisation
of our product offering has delivered an enhanced
shopping experience for Kiwis.
We are now starting to find the right balance between
our ongoing commitment to Every Day Low Pricing and
introducing some limited seasonal promotions to give us
flexibility around driving foot traffic.

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CEO’S REPORT
CEO’S REPORT
Revenue for The Warehouse increased by 0.6%
to $1.7b, with gross margin up 70 basis points.
Our best performing categories were General
Merchandise and Home. Good progress was
made following the move to Every Day Low
Pricing and we saw clear benefits from the
transformation initiatives.
Noel Leeming continues to impress, with another
record result. The technology expertise offered to
customers has made the brand experience more
valuable to customers looking to incorporate more
and more technology into their lives. Noel Leeming
revenue grew by 5.0% to $924.6m this year, with
operating profit up by 22.3% to $38.1m and gains
in operating margins from 3.5% in FY18 to 4.1% in
FY19.
Two important factors in the nature of the Noel
Leeming offering point to a healthy future. The
first is the continued rise of B2B on top of retail
activity. Commercial sales continue to improve and
we see this as a significant growth opportunity. The
second is the ongoing growth of services, which
increased 11.4% on last year. Growth in these areas
demonstrate an increasing demand for more
end-to-end life-cycle technology services from
customers.
Warehouse Stationery made a welcome recovery
this year after a poor FY18 as a result of internal
systems integration and stock availability issues.
Those issues are now behind us and Warehouse
Stationery has performed well in FY19, reporting a
record profit despite industry headwinds in its core
stationery categories.
Revenue for Warehouse Stationery was up by 1.8%
on the previous year to $268.6m in FY19. Operating
profit also increased from $10.6m in FY18 to $16.7m
this year. Operating margins kept pace with this,
increasing from 4.0% last year to 6.2% this year.
We have continued to roll out the integration of
The Warehouse and Warehouse Stationery. There
are now 10 of these stores-within-a-store across the
country, and both brands are benefiting from the
strengths that the other can bring: foot traffic
from Red, and high quality products and services
from Blue.
Torpedo7 has continued to roll out more stores
this year as we build scale and target new markets.
Our overall view of the business is that it has
considerable potential but that more focus is
needed to turn good fundamentals into a profitable
trading entity. To that end we recently announced
the appointment of Simon West as CEO for
Torpedo7, a move designed to focus on brand-
specific issues.
Revenue for Torpedo7 increased again this year to
$172.5m, up 5.6% on last year’s result of $163.4m;
however, the company made an operating loss of
$7.0m as we invested in greater market presence
through 18 stores. As I have said for some time,
expansion alone will not be enough because all
stores have proven to be relatively profit-neutral in
their first year of operation. This year we continued
to build greater brand clarity and to refine our
inventory.
Group online sales continued to grow this year,
up 18% on last year to $239m. Currently, online
sales represent 7.8% of our total sales, and are a
critical part of our growth strategy. Digital initiatives
enable us to create vehicles that reach beyond the
specific constraints of the businesses that we own
and operate. New Zealanders currently spend $4.2b
online and that figure is only going to get bigger.
We launch a new digital era
After balance date, we launched our new digital
platform TheMarket – part of the execution of a
wider strategy to construct an enhanced ecosystem
around our business. We’re very proud of the work
that the team has done in a short period of time to
release such an elegant platform to market.
Proof that we can do this and that there is capacity
in the market for such initiatives can be seen in
the fact that, at launch, we had welcomed 150
merchants onto the platform – offering more than
a million products, including local brands Karen
Walker, WORLD, Father Rabbit, Citta and Barkers,
and Australian and international brands PE Nation,
Cue, Billabong, Cotton On and The Nile. Key
categories include fashion, footwear, kids and baby,
toys, health and beauty, home, garden, electronics,
sports and outdoor. TheMarket is independently
operated but backed by The Warehouse Group.

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CEO’S REPORT
CEO’S REPORT
Senior Executive Team
from left to right:
Scott Newton, Chief Transformation Officer; Tim Edwards,
CEO Noel Leeming Group & Torpedo7 Group; Simon West,
CEO Torpedo7 (commenced 2 August 2019); Justus Wilde,
CEO The Warehouse Group Investments; Evelyn Ross, Chief
People Officer; Jonathan Oram, Group CFO; Nick Grayston,
Group CEO; Mark Yeoman, Chief Operating Officer; Tania
Benyon, CEO Group Sourcing Support & The Warehouse
Limited / Warehouse Stationery Merchandise; Jonathan
Waecker, Chief Marketing Officer; Pejman Okhovat, CEO
The Warehouse Limited / Warehouse Stationery.
15
TheMarket is a key investment for us in the digital
future, one in which we see a much broader role for
the Group in supporting a range of services to help
New Zealanders live their lives better.
The next step will be the launch of a Group loyalty
programme, and we have a number of services at
various stages of consideration and development
to expand the offering in order to become a
true ecosystem.
Holding our own in an intense trading environment
These developments come not a moment too soon.
We are more convinced than ever that without
these changes we could not thrive in tomorrow’s
retail environment. Our predictions of increased
competition are being realised, with a number
of fashion and lifestyle retailers having arrived
or committed to come here. The presence of
competitors such as Zara, H&M and the upcoming
arrival of Costco, along with Amazon’s growing
maturity in Australia which we think will start to
affect us too, point to our need as a Group to make
the most of our advantages as a New Zealand-based
retailer with a significant footprint, loyal customers
and deep relationships within communities.
As I said last year, scale and brand affinity are two
of our greatest strengths, and we will continue to
leverage them by recognising and rewarding the
people who shop with us and offering them access
to new and exciting digital initiatives, guided by
sophisticated data, insights and capabilities. Looking
at our performance against our current competitor
set, we are satisfied that our strategy is headed in
the right direction and our market data is showing
significant progress against our close competitors.
Moving with speed
Speed, or rather the inability to respond to changing
market dynamics at speed, has always been our
greatest challenge. We are determined to move
faster – and our Executive Team is focused on how
we drive the business forward at an increased pace
at the same time as we take care of our people. In
light of what is happening around us, it is all the
more important that we continue to put our house
in order. Right now, we are moving towards peak
investment mode in terms of systems and processes,
and we’ll be looking for better ways to organise and
drive customer-centricity, productivity and cultural
change.
We’ve already lifted productivity in our stores by
being more efficient and only focusing on those
things that make a difference for customers.
Boosting our wider productivity starts with
addressing a significant under-investment in core
systems and supply chain logistics capabilities. We
need to make sure our systems of record are no
longer a competitive disadvantage. The first step
in getting that right is improving our fulfilment
capability. Our new Warehouse Management
System is the first expression of that. At this stage,
it is greatly assisting us to serve our customers
digitally.
In terms of our wider back office, we are also
continuing to identify how we can use modern
integrated systems to support our people,
merchandising and finance systems and to
reorganise our processes as part of that.

THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
16
CEO’S REPORT
CEO’S
REPORT
Transformation on a range of fronts
New systems and processes by themselves won’t be
sufficient. Our RISE transformation programme has
helped us change the way we work and has enabled
us to lift our ability to execute, which is now reaping
financial benefits. However, it’s also clear that we still
need to make the full pivot from being a rigid, 20
th

century command and control organisation focused
on supply to become a nimble, digital company
focused on solving customer problems. With that
goal in mind, we are assessing different operational
models, adjusting our culture and looking to adopt
lean principles such as speed-as-a-habit, agility,
flexibility, minimum viable product and fail-fast as
part of how we operate.
All of that requires further deep cultural change.
We made the first steps towards that this year
by redefining our values and examining the
behaviours required to bring those values to life.
While changing how we work is important, unlike
some companies that have been through significant
change, we don’t believe that is the extent of the
transformation required. For us, it’s one part. We
want to get the best value we can from it, of course,
but we also need to use it as a lever to move the
whole company forward.
Our transformation programme has been
effective because it has been cross-functional and
collaborative. We’ve recognised that we need to get
better right across our Group, not just in some parts
of the business, and the key to success is continuing
to embed integrated solutions that lead to a far
more collaborative style of working.
On top of that, the muscle that we’ve built in data
science has enabled us to start building strength in
areas such as price optimisation by category which
will grow margins. We will continue to refine our
understanding of our customers and their needs and
to use that to inform our brand performance and our
future investments.
Meeting our other responsibilities
Our core purpose to help Kiwis live better every day
gives us both a responsibility and a remit to look
beyond just making profits. Of course we must be
as efficient and make the best returns as we can
but we also serve the communities that we are part
of, and there are other elements of value that are
important to us and to other stakeholders. That’s
why we have adopted Here for Good as a core
value. It has prompted us to make stands on issues
such as mental health and carbon neutrality this year.
We believe this is fundamental to our values, to our
operating principles, and supports our commitments
to the community and the interests and priorities of
New Zealanders.
This year we became a carboNZero
™
company, and
committed to 25 initiatives focused on reducing our
carbon footprint. Our environment capital section
in this report spells out what we are doing and the
progress we are making in this space. We have three
key focus areas: reducing our carbon emissions and
waste; offsetting our carbon emissions through the
regeneration of land and renewing native forests
(this will become clearer as carbon trading legislation
is finalised); and buying international Gold Standard
carbon credits. We are reassessing our raw materials
and enhancing our environmental performance
by reducing packaging materials and purchasing
responsibly produced products.
An integrated approach
Our commitment to a fully integrated report
this year recognises that not everything we do
is about financial value and we want to keep our
stakeholders informed about the many non-financial
initiatives we are undertaking and the progress we
are making. It is also a reflection of the integrated
way we are addressing our strategic priorities:
integrating our capitals to give us a holistic view of
our vulnerabilities and opportunities; building clear
understandings of our progress on multiple fronts;
and recognising, as I said earlier, that there
is not a singular answer. We believe that’s also
good business.

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17
OUR CEO AND BOARD
Good progress
This year we had defined the key performance
indicators (KPIs) that mattered to us as a leadership
team: earnings for the year, product and retail
experience, systems and processes, performance
culture, mid-term strategy and eCommerce.
We have made good progress in each of these
areas, but the work is far from done. And we know
that major system and process change in the next
year of our transformation, coupled with product
changes and refinement of our ecosystem, is all part
of refining our retail experience and testing new
formats as we feel our way into a rapidly evolving
competitive environment.
The investments we make going forward will be on
that basis: looking for ways to bolster each brand
so that it achieves its full potential and, at the same
time, getting best leverage from what we do as a
Group. With earnings rising and our balance sheet
in good health, we are well placed to make some of
the big investments in front of us. Having reduced
our debt gearing, we now have the capacity to
balance the demands on our capital and deliver a
strong and sustainable future for our organisation
across all our channels, current and emerging.
My thanks to everyone in the Group for your hard
work this year.
Nick Grayston
Chief Executive Officer
The Warehouse Group
“ This year we became a carboNZero
™
company, and
committed to 25 initiatives focused on reducing our carbon
footprint. Our environment capital section in this report spells
out what we are doing and the progress we are making in this
space. We have three key focus areas: reducing our carbon
emissions and waste; offsetting our carbon emissions through
the regeneration of land and renewing native forests (this
will become clearer as carbon trading legislation is finalised);
and buying international Gold Standard carbon credits.
We are reassessing our raw materials and enhancing our
environmental performance by reducing packaging materials
and purchasing responsibly produced products.”
CEO’S REPORT

THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
18
OUR CEO
AND BOARD
CEO’S REPORT
THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019

THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
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OUR COMPANY
3. ADDITIONAL INFORMATION
19
1. TO OUR SHAREHOLDERS2. GROUP MANAGEMENT REPORT
OUR COMPANY
3. ADDITIONAL INFORMATION
OUR CEO AND BOARD
OUR BOARD
Our CEO and Board
from left to right:
Nick Grayston (CEO), Tony Balfour, Joan Withers (Chair),
Keith Smith, John Journee, Will Easton, Robbie Tindall,
Julia Raue.

THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
20
Board bios available at: www.thewarehousegroup.co.nz/about-us/board-directors
OUR CEO AND BOARD
OUR BOARD
Joan Withers
MBA, CFinstD
Chair & Independent
Non-Executive Director
Keith has been involved
with The Warehouse since
Sir Stephen opened his
first store in 1982, initially
providing accounting, tax
and corporate advice,
and was Chair from 1995
to May 2011. He has a
long-standing record of
leadership as a director and
advisor to companies in a
diverse range of industries,
including the energy sector,
rural services, printing,
media and exporting. Keith
is Chair of listed company
Goodman (NZ) Limited and
is a director of Mercury
NZ Limited, Healthcare
Holdings Limited and
several other private
companies.
Keith is a past President of
the Chartered Accountants
Australia and New Zealand.
INTERNAL
• Audit & Risk Committee
(Chair)
• Disclosure Committee (Chair)
• Corporate Governance and
Nomination Committee
• People and Remuneration
Committee
• Health, Safety and Wellbeing
Committee
OTHER DIRECTORSHIPS
• Goodman (NZ) Limited (Chair)
• Mercury NZ Limited
• Healthcare Holdings Limited
Keith Smith
BCom, FCA
Deputy Chair & Independent
Non-Executive Director
Julia is an Independent
Director for Z Energy,
Television New Zealand
Limited, Southern Cross
Health Society and Jade
Software Corporation
Limited.
Julia has extensive
experience in digital and
information technology,
business transformation and
strategic planning across the
airline, telecommunications
and local government
sectors, as well as not-
for-profit in New Zealand.
Previously, Julia was the
Chief Information Officer of
Air New Zealand (2007–
2015) and she was awarded
the New Zealand CIO of the
Year award in 2009.
INTERNAL
• Health, Safety and Wellbeing
Committee (Chair)
• Audit & Risk Committee
OTHER DIRECTORSHIPS
• Z Energy Limited
• Television New Zealand
Limited
• Southern Cross Health Society
• Jade Software Corporation
Limited
Julia Raue
CMinstD, GAICD
Independent
Non-Executive Director
In October 2017 Sir Stephen
Tindall decided to take a
leave of absence from the
business. Robbie represents
him during this time.
Robbie has been attending
Board meetings since his
appointment in 2011.
Robbie studied Arts and
Science at the University
of Auckland before
spending eight years at
The Warehouse in various
merchandise and buying
roles. Today he works for
K One W One Limited, a
family investment company,
working alongside – and
investing in – some of New
Zealand’s most exciting
technology and innovation
companies as they grow
and seek to go global.
INTERNAL
• Disclosure Committee
• Corporate Governance and
Nomination Committee
• People and Remuneration
Committee
• Health, Safety and Wellbeing
Committee
OTHER DIRECTORSHIPS
• K One W One Limited
• The Tindall Foundation
• Franklin Smith Limited
• Foundation Services Limited
Robbie Tindall
BA, BSc
Non-Executive Director
(Alternate to Sir Stephen Tindall)
Joan has been a professional
director for more than
20 years and spent over
25 years working in the
media industry, previously
holding CEO positions at
The Radio Network and
Fairfax Media. Her current
governance roles are Chair
of Mercury NZ Limited and
The Warehouse Group
Limited, and director of
ANZ Bank NZ Limited. Joan
has previously held Chair
positions at Television
New Zealand Limited and
Auckland International
Airport.
Joan is a Trustee of the
Sweet Louise Foundation
and is Chair of a steering
committee working to
increase the percentage of
South Auckland Maori and
Pacific Island students taking
up roles in the health sector.
INTERNAL
• Corporate Governance and
Nomination Committee (Chair)
• Audit & Risk Committee
• Disclosure Committee
• People and Remuneration
Committee
• Health, Safety and Wellbeing
Committee
OTHER DIRECTORSHIPS
• Mercury NZ Limited (Chair)
• ANZ Bank NZ Limited
• Sweet Louise Foundation

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21
OUR BOARD
BOARD SKILLS MATRIX
John has had an extensive
retail career, which includes
executive experience
across sectors that span
general merchandise,
fashion apparel, FMCG,
consumer electronics,
telecommunications,
hospitality and electricity
retailing. Over his 30-year
career he has spent 15
years with The Warehouse
Group, starting as a joint-
venture partner in 1990
and progressing through
senior roles in operations,
marketing, merchandise,
international sourcing and
business development.
John has also had CEO
roles with Noel Leeming
and Australasian foodservice
distributor Southern
Hospitality.
INTERNAL
• Audit & Risk Committee
• Health, Safety and Wellbeing
Committee
OTHER DIRECTORSHIPS
• Vanishing Point Limited
• Farmlands Society
• Colonial Motor Company
• Quantiful Limited
(Member, Advisory Board)
John Journee
BCom, CMinstD, MAICD
Independent
Non-Executive Director
Tony has extensive global
retail and eCommerce
experience with a strong
track record in a diverse
range of industries. Most
recently, he was General
Manager (Markets) for
Icebreaker Clothing with
responsibility for the
company’s global business
units in New Zealand,
Australia, USA, Canada,
Europe and Asia as well
as the development of the
company’s rapidly growing
eCommerce and retail
business units.
His prior experience
includes senior roles in
Monster.com
and Seek.com, both
successful online
recruitment sites.
INTERNAL
• People and Remuneration
Committee (Chair)
• Corporate Governance and
Nomination Committee
• Health, Safety and Wellbeing
Committee
OTHER DIRECTORSHIPS
• Les Mills International Limited
• Wayfare Limited (formerly Real
Journeys Limited)
Antony Balfour
BCom
Independent
Non-Executive Director
Will is a seasoned business
leader and has an extensive
track record of driving
growth across emerging
markets and technologies.
He is currently Managing
Director of Facebook for
Australia and New Zealand
and was previously Vice
President at Facebook
for Asia Pacific Emerging
Markets.
Other roles in his portfolio
include Regional Director
at Google for Mobile and
Social in the Asia Pacific
region and Director of
Sales at Microsoft in
the Consumer Products
Division. Will has a passion
for the retail industry and
has worked closely with
retailers throughout his
career. He started his career
with Coca-Cola as a Retail
Sales Manager and believes
that “there are more
opportunities than risks in
retail, provided retailers
focus on improving
organisational designs”.

INTERNAL
• Health, Safety and Wellbeing
Committee
OTHER DIRECTORSHIPS
• Facebook Pty Limited
Will Easton

Independent
Non-Executive Director
Renee Mateparae
BEng

Future Director
Renee is currently the Tribe
Lead for Future Connectivity
at Spark New Zealand,
taking a lead role in looking
for future connectivity
including mobile, Internet
of Things, marketplaces,
5G and the technology
and ’productisation’ of
these. At Spark, Renee has
played a key leadership
role in the organisation’s
transition to Agile. Prior
to this role, Renee worked
for major organisations
such as Air New Zealand
and Macquarie Group.
Her earlier career
years included roles in
strategy transformations,
customer experience,
product strategy, product
development, engineering
and business optimisation.
She also has previous
governance experience,
including as a director
with AUT Ventures Limited
and as Board Observer at
PropertyNZ.
Renee holds a Postgraduate
Diploma in Business
Administration and a
Bachelor of Engineering
(Automation and Control)
(Hons) from Massey
University.

THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
22
Governance plays a critical role in business. All
business stakeholders deserve the highest standards
of corporate governance from their boards.
Our Board skills and diversity self-assessment
completed in FY19 found the following: the Board
holds many strong attributes, including highly
relevant capability and governance processes with
a diverse mix of skills among the Directors. There is
a high concentration of skills in areas that will drive
the Group to achieve our strategy, through great
execution, brand marketing and customer experience
and by building a high-performance culture through
this time of transformation and business disruption.
There are some areas where we don’t have the depth
of skills so are reliant on those of only one or two
Directors in these areas. We are mindful of these
and will take them into account in future director
appointments.
The assessment consisted of a list of skills and
attributes identified and agreed by the Chair and
key members of the management team that are
relevant to drive the Group’s three-to-five year
strategy. The list of skills was grouped into three
categories: retail industry skills, skills related to the
delivery of Group strategy and general subject matter
expertise. Directors then completed a self-assessment
of whether or not various skills were ‘primary’ or
‘secondary’ skills in their suite of experience and
expertise.
BOARD
SKILLS
MATRIX
OUR BOARD

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23
BOARD SKILLS MATRIX
INTEGRATED REPORTING
Primary skillsSecondary skills
The results of the assessment are reflected in the table below:
Operation experience in the retail industry
Industry specific
Relevant Board Skills to execute Group Strategy
Brand, marketing and customer experience
Omni-channel retail experience
Digital and technology experience
Direct sourcing experience
Logistics experience
Development of a high performance culture
Specific to Group strategy
Senior leadership of change management at scale
Transformation and business disruption experience
Innovation and entrepreneurism
Government relations
Union relations
Environment and Corporate Social Responsibility
experience
Development and execution of business strategy
Subject matter expertise
Governance experience
Large company leadership experience
Finance / accounting expertise
Audit committee / risk management experience
Regulatory knowledge and experience
John
Journee
Health and safety experience
HR / learning and development experience
Julia
Raue
Tony
Balfour
Financial markets experience
Iwi relationships and connectivity
Shareholder and investor relations experience
Primary skillsSecondary skills
Female 2
Board Gender
Male 5
0 – 2 years 3
Tenure
3 – 6 years 2
7+ years 2
European 6
Ethnicity
NZ Euro with
some Tongan
ancestry 2
Robbie
Tindall
Keith
Smith
Joan
Withers
Will
Easton
1. TO OUR SHAREHOLDERS3. ADDITIONAL INFORMATION2. GROUP MANAGEMENT REPORT
OUR COMPANY

THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
24
BOARD SKILLS MATRIX
INTEGRATED REPORTING
HOW WE CREATE VALUE THROUGH OUR BUSINESS MODEL
OUR BUSINESS MODEL
Our core business is retailing of products and services principally aimed at consumers, however we do
have a strong presence in the small-to-medium-sized business segment and a sizeable commercial business.
RETAIL VALUE CREATION PROCESS
International supply offices to ensure local
focus and reach into manufacturers and
upstream supply chain.
Providing career pathways across the retail
value chain, valuing language and cultural
differences, giving end-to-end insight
and experience across retail activities into
sourcing and wholesale.
Contract negotiation, quality
management and long-term relationship
development. Ethical sourcing practices.
Developing mutually beneficial
partnerships to represent product
and provide access to market for
manufacturers.
Minimising wastage and enhancing
product quality through sustainable
material and manufacturing processes.
Trade terms with suppliers that manage
product risk and maximise financial
capacity. Efficient use of working capital
to maximise leverage. Management
of FX risk that maintains attractive
pricing for our customers.
Demand forecasting analytics and tools to
better understand demand and volume.
Providing opportunities for team members
across the Group to provide customer
centric feedback, feeding into design
and product choices.
Understanding customers, through
insights and analytics. Fitting product to
market at the right price/value/quality
intersection. Demand planning and
forecasting.
Developing long-term relationships with
suppliers and manufacturers with a focus
on ethical work practices and sustainably
sourced raw materials.
Taking a lead on sustainable product
quality and materials, packaging and
consumption.
Maintaining our financial resilience and
access to capital as a key enabler to retail
value creation. Developing and providing
innovative payment solutions
for customers.
OUR NETWORKS
OUR PEOPLE
OUR EXPERTISE
OUR RELATIONSHIPS
OUR ENVIRONMENT
FINANCIAL CAPITAL

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25
INTEGRATED REPORTING
RISK & MATERIALITY
Under Integrated Reporting our concept of creating value is broader than ‘how our business process consumes these inputs
to create financial value’. It recognises that our business model adds value to each capital at every step in the process, and
that value is determined in the context of each capital. As can be seen by the diagram below, value is driven in different
ways across each capital at each stage in the process of managing our retail business. The six capitals are not commodity
inputs or outputs, rather, they are an intrinsic part of the process of managing a retail business and are impacted in many
different ways. External forces, which are covered in our approach to risk management, also influence the six capitals.
Almost universal coverage across NZ,
with key local retail points of presence
across the country as well as leading omni-
channel experiences. Seamless experience
for customers across physical and digital
channels.
Specialist sales and customer engagement
training. Treating customers as you
would expect to be treated yourself.
Flexible working arrangements and
equal opportunity advancement.
Career opportunities with cutting edge
technologies in online retail and the
opportunity to contribute to leading
retail change in NZ.

Value is created through sales expertise,
product knowledge and customer service.
Product availability and ability to fulfil on
time and to meet or exceed customer
expectations.


A life-cycle perspective of customer
interactions. Each transaction is important
to build the relationship, however it is the
lifetime customer experience that creates
loyalty and discretionary participation.
Driving loyalty to improve the return on
investment on promotional activity and
feed up into the product decision making
process.
Reinforcing good environmental practices
at the customer edge, reducing plastics in
packaging and providing customers with
choice and sustainable options without
premium pricing those choices. Role
modelling environmental stewardship.
Effective sell-through and margin
management of products in the right
channels. Price optimisation and on-target
seasonal events all drive financial value
through improving inventory turn rates
and minimising clearance. Creating
adjacent value streams through value-
add services. Diversifying channel risk.
Minimise cost to serve through efficient,
managed distribution, warehousing and
delivery on time to store. Efficient process
management and inventory costing and
access to branded products.
Providing jobs throughout the network
that recruit unskilled and skilled labour
into retail and business career pathways.
A safe working environment that values
an individual’s right to return home
safely at the end of the day. Recognition
of experience and fair and equitable
remuneration. Supportive wellness
programmes. Opportunities
for progression and learning.
Continuous improvement and drive for
efficiency. Use of best practice at scale in
NZ provides the opportunity to influence
change for the better. Modernisation
of core systems to disrupt our business
model from within.
Key partnerships with third parties are
an intrinsic part of bringing product to
market, and enable us to focus on the
risks we manage best, and avoid being
a jack-of-all-trades. Mutually beneficial
relationships give us access to investment
in automation and technology that may be
unavailable to stand-alone operators.
Minimise our impact on the environment
through smart use of technologies,
packaging, labour management,
minimising rework and harmful materials.
Maintaining compliance with all materials
handling regulations.
Optimising the economically efficient
use of network assets, minimising our
cost to serve and inventory touchpoints.
Reducing wastage and breakage.
Exploring ways to utilise and express
existing assets in ways that create value.
Universal reach means no part of NZ is
outside of our influence. Our capabilities
can be leveraged to deliver what is
needed. Extended operating hours
provides choice and access.
Enabling our people to be a part of
their community while being part of the
Group. Caring and committed teams drive
superior customer experiences, increased
engagement and performance. Doing the
right thing is part of who we are and what
we stand for.
Effective community engagement
programmes deliver real results, not
intentions. Practised processes to
support and empower the people in
our communities enables us to deliver
on promises that are meaningful to our
communities and stakeholders.
Giving back in support of the communities
our customers and team members are
part of. Saying thank you and recognising
that it is a privilege to be part of a
local community, not a right. Creating
employment and giving customers what
they need.
Combining the Group’s objectives with
those of community groups to maximise
impact on environmental matters. Taking
a leading role in modelling, educating
and facilitating in NZ business. Creating
incentives and new opportunities for
communities to make a difference.
Partnering to share risk. Leading
transparency and accountable reporting
to increase trust and confidence among
investors and financial partners.

THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
26
INTEGRATED REPORTING
RISK & MATERIALITY
26
THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
The Group faces a broad range of risks as a retailer
within New Zealand. These risks include macro-
economic, competitive and industry sector risks,
including those relating to international trade and
our trading partners from an importer’s perspective.
Business specific risks include those resulting from
our responsibilities in the areas of strategic planning,
forecasting, day to day operations, investment and
programme or project management.
Strategic Risk Management within the Group is
conducted using a structured framework, and deals
with two primary concerns:
1. Understanding what the Group’s risk appetite is,
or our willingness to take and manage risks in the
pursuit of value and competitive advantage.
2. Making active decisions around risks and whether
to accept, transfer, share or mitigate risks that, in
the absence of mitigation strategies, fall outside
the target risk settings or acceptable risk
appetite.
The Group’s risk management framework seeks to
ensure that there is an effective process in place to
manage risk across all the brands within the Group.

The Group acknowledges that risk management is
important to all aspects of our activities and is the
responsibility of every team member. Managers
have a particular responsibility to appraise their risk
environment, to put in place appropriate controls
and to monitor the effectiveness of those controls.
Our risk management culture encourages analysis
and management of risk in all business processes.
These risks are identified, assessed and managed
at both an enterprise level (top-down) and business
level (bottom-up).
An Enterprise Risk Management Committee will be
responsible for this framework and meet monthly to
discuss its application, monitoring and management
of material risks. The committee will provide a report
on its activities to both the Senior Executive Team
and the Board.

Strategic Risk plans are developed for each primary
brand and the Group overall. Operational Risk plans
are developed within brand and Group functions to
deal with specific operational risks.

Specific Risk areas are then managed depending
on the nature of the domain and our risk appetite
settings. For example, in the Health and Safety
domain, we have identified certain critical risks
which are actively managed as focus areas (Traffic
Management, Hazardous Substances, Storage of
Product, Violent and Aggressive Behaviour, Working
at Height).

Risks arising from the Group’s responsibilities can
be significant and these risks are managed through
detailed processes that emphasise the importance
of integrity, maintaining high quality team members
and stakeholder accountability.

The diagram opposite outlines the risk appetite
for the Group taking into account the various
brands. This reflects a balanced perspective on the
management of risk which considers our ability to:
• Grow the business and improve the return on
equity. To achieve this, the Group needs to
continue to innovate and accept some
uncertainty
• Achieve growth and return. The Group needs
to execute our strategies and maintain control
over operational costs, quality and delivery of
performance
• Ensure we maintain financial rigour while investing
capital into our digital transformation.

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Very High
Risk Appetite
High
Moderate
Low
Very Low
Uncertainty, pursue innovation,
more delegation, invest speculatively
fewer controls
Certainty, conservative,
less delegation, reduce exposure
more controls
STRATEGIC
RISK
FINANCIAL
RISK
RETAIL
RISK
OPERATIONAL
RISK
people
legalIT coregovernance
compliancebusiness continuity
security
project execution
health & safetyinternal fraud & corruption
data
governance
IT-peripheral
processes
eCommercetransformationcompetition
insightsconsumer trends/
preferences
consumer
spending
supply
chain
customer
fraud &
theft
pricinginventory
new formats
brand
positioning
reputation
strategic change
sustainability
market
tax
liquiditycredit
capital
earnings volatility
RISK & MATERIALITY
OUR NETWORKS
Each risk domain in this framework has subsequent
detailed breakdown, identification of causal factors
and risk management plans. We continue to work to
improve, refine and formalise our risk management
approach.
Materiality
Materiality in the six capitals is different from
financial materiality in the Financial Statements. It is
driven by the risk appetite settings, and the specific
outcomes and strategies in each capital. A material
improvement in our environmental reduction
outcomes, for example, may be different this year
compared to other years depending on the starting
position and default trajectory of performance.
Building on an improvement may mean we have
The progress diagrams that are reported in the six capitals
section of the integrated report follow the following key:
a higher materiality for change than if we were
attempting to arrest a declining performance.
Materiality is therefore relative to each strategy and
metric in each capital and is used to filter what is
reported and what is not. The Integrated Report is
not the definitive or last word that the organisation
has to say on a given topic, it is the material
performance report against those elements in the
capitals that we are trying to influence or improve.
Intrinsic in the Integrated Reporting Framework is
a degree of inter-connection between the capitals.
Risk and materiality is considered within the domain
of a capital, risk within the domain of strategies that
may operate across capitals.

THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
28
RISK & MATERIALITY
OUR NETWORKS
Key initiatives
We have made some significant changes within our property
portfolio this year, rolling out six SWAS stores (store within a
store: Warehouse Stationery and The Warehouse stores
co-located), three new Noel Leeming clearance stores (following
the acquisition of Appliance Shed) and four new Torpedo7 stores.
We analyse store catchment, identifying four critical areas to
resolve to achieve best future use of our properties: small (urban)
formats; future (flexible) formats; our physical presence across
New Zealand; and tenancy/third party services.
We added new interactive capabilities to enhance customer
support via chat bots and live chats. Our other eCommerce
venture, TheMarket, successfully launched shortly after
balance date.
We developed a Group integrated sourcing model by
consolidating our wholesale and Torpedo7 sourcing functions
into our sourcing and merchandise structure. We completed our
cross-functional, product critical path for every category, to help
give us greater alignment and visibility of tasks for sourcing and
merchandise.
We enhanced our fulfilment and delivery capabilities, centralising
our online fulfilment for The Warehouse and Warehouse
Stationery, introducing Click&Collect lockers into some stores,
trialling an automated distribution tower at Sylvia Park and
commenced implementing our new warehouse management
system. Our Information Systems strategy has been refreshed
and we are planning a major ($100m) systems modernisation
programme across the Group’s core systems of record.
Materiality
Online commerce has changed consumer expectations in regard to their shopping experiences. While physical store shopping is still a
significant consumer activity, online shopping continues to grow. That means we face greater competition from a broader range of general
and specialist retailers both here and overseas. This represents a considerable and ongoing material risk to our business and one we intend
to combat by investing actively in our supply chain co-ordination, data optimisation around each customer, improved digital capabilities
and attractive stores that our customers enjoy shopping in. In acknowledgement of the future need to re-purpose or reformat our physical
store network, the Group has prioritised flexibility in our store lease profile over tenure. Transport is outsourced to partners except for
in-home delivery and installation teams.
1
Apple iOS App Store and Google Play Store
2
Customer voice
FY18
(last year)
FOCUS
AREA
PRIORITIES
ACTUAL PROGRESS
OUR GOAL:
Create a world-class omni-channel retail network that leverages physical, digital and infrastructure
assets to deliver customer needs and wants in an efficient and innovative way
Customer
facing
channel
optimisation
Improve our store experience
and productivity
FY19
(this year)
FY19 ProgressFY20
(next year)
FY21FY22+
ROADMAP TO OUR GOALKEY RISKSMITIGATIONS
• Lack of well-positioned affordable retail space
• Some landlords not responding to seismic
upgrades proactively
• Re-purpose and re-utilise excess space within
our large format stores.
• As more The Warehouse and Warehouse
Stationery stores are co-located, re-purpose
vacated Warehouse Stationery stores with
other Group brands.
• Work with our landlords to ensure stores
meet seismic risk requirements.
Increase our digital footprint
and productivity
• Increasing customer demands driven by
continued growth in online shopping
• Local and international online retailers
taking market share across digital channels.
Improve the omni-channel experience by:
• Linking physical and digital and scaling
personalisation across channels.
• Reinventing our Click&Collect experiences
and launching TheMarket.
Year on year incremental growth
• Co-located 6 Warehouse Stationery and The Warehouse
stores, continuing to test the ranging, customer experience
and profitability changes
• 24% of capital expenditure allocated to asset maintenance
• Online traffic for the Group increased 5.5% year on year
while store foot traffic reduced 1.1%, however overall gross
profit increased 3.8%
• Click&Collect sales grew 57% across our omni-channel
brands to now represent an average of 36% of online sales
• Online conversion reduced by 3 basis points driven by a
reduction of 30 basis points in Torpedo7, partially offset by
The Warehouse app, which increased by 64 basis points
• The Warehouse app, which has the most 5-Star reviews
of any NZ shopping app
1
, grew sales by 244% and now
represents 19% of total online sales for The Warehouse.
• Collaborate across the supply chain to
collectively reduce costs, improve forecast
accuracy, and reduce inventories.
• Develop robust contingency, preparation and
continuity plans for peak trading volumes and
issue/incident management.
• Unify commerce strategies to tailor shopping
experiences around individual preferences.
• Develop a structured programme to improve data
quality and practices utilising external advisors.
• Continue to strengthen data protection and
minimise the amount of third-party information
we hold
.
• Significant increase in retail spend, including
online shopping growth, will challenge costs,
resources and distribution capabilities
• Peak period stress on underlying systems
and processes causes unscheduled outages.
• Data quality issues slow down the speed
of effective change and decision making
• Data security and privacy is becoming an
increasingly important issue.
• Consolidate our investment into Asia by
creating a direct entity in Bangladesh,
supporting the existing team with senior
leadership at source and regularly rotating
team members through different merchandise
categories.
• Challenge of investing in new, stronger
suppliers inside and outside of existing
sourcing markets
• We are aware of the risks of corruption,
particularly in the quality and merchandise
teams.
Optimise
supply chain
network
• Moved a further $62m (FY18: $119m) of product
purchases to our direct sourcing offices
in China, India and Bangladesh.
Increase our level of direct
sourcing
Reduce our cost to serve
and enhance store
deliveries
• Achieved a Perfect Order of 88% vs our target of 95%
for online customers.
Increase our pool
of quality data
• Net Promoter Score across all brands either improved or
remained consistent
2
• Our Master Data Management practices will be the
subject of a major overhaul in FY20.
Data
optimisation
Development and implementation
of a quality data programme
Grow our fulfilment
capability to support
customer choice
Ongoing improvement
• Achieved a store DIFOT (Delivered In Full On Time)
of 97% vs our target of 98%
• Cost to serve increased by 11%
• Centralised online fulfilment into our North Island
Fulfilment Centre for The Warehouse (and Warehouse
Stationery post balance date)
• Deployed a new warehouse management system to
improve online fulfilment performance.

THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
1. TO OUR SHAREHOLDERS2. GROUP MANAGEMENT REPORT
OUR COMPANY
3. ADDITIONAL INFORMATION
29
OUR NETWORKS
1. TO OUR SHAREHOLDERS3. ADDITIONAL INFORMATION
OUR PEOPLE
Significance
Retail is an unforgiving sector. If customers cannot buy what they are looking for, they have a number of other places they can turn to. Our
network is the critical link between what we offer and what our customers choose to spend their money on. If we fail to understand what
our customers want and how they most want to buy and receive it, we are compromising their willingness to come back to us. Our network
enables us to bring the right product to the right place at the right time, at a cost that makes economic sense, and in a way that serves our
customers’ needs best.
Better experiences across channels
Physical property and online environments are core elements in
customers’ experiences. Our understanding of what constitutes
a ‘store’ has broadened as a result. Our focus now is to increase
our foot traffic and per-visit purchase by introducing smaller
formats and new concepts that put our customers’ needs first.
At the same time, we will continue to build our eCommerce
capabilities, improving our omni-channel experiences to enable
them to shop however, whenever and wherever they want.
Better integration from source to sale
An integrated view of inventory and order management is key to
unlocking efficiencies and delivering improved quality, on trend
products and product information from the best suppliers. Those
products will need to arrive on time through complete alignment
between our sourcing teams, merchandise teams, shipping teams
and overseas factories.
Network optimisation is a key focus for us, as we drive efficiency
and look to utilise our core assets and capabilities in new ways to
drive value.
Future focus areas
These are the areas where we know we can make important gains:
• Improving property footprint productivity – working with insights and data to complete a robust catchment analysis for all our brands,
supporting the SWAS programme and objectively evaluating new format initiatives
• Improving our omni-channel experiences to better link physical and digital
• Achieving an integrated view of our inventory and order management to unlock efficiencies and improve our customer service.
2. GROUP MANAGEMENT REPORT
OUR COMPANY
FY18
(last year)
FOCUS
AREA
PRIORITIES
ACTUAL PROGRESS
OUR GOAL:
Create a world-class omni-channel retail network that leverages physical, digital and infrastructure
assets to deliver customer needs and wants in an efficient and innovative way
Customer
facing
channel
optimisation
Improve our store experience
and productivity
FY19
(this year)
FY19 ProgressFY20
(next year)
FY21FY22+
ROADMAP TO OUR GOALKEY RISKSMITIGATIONS
• Lack of well-positioned affordable retail space
• Some landlords not responding to seismic
upgrades proactively
• Re-purpose and re-utilise excess space within
our large format stores.
• As more The Warehouse and Warehouse
Stationery stores are co-located, re-purpose
vacated Warehouse Stationery stores with
other Group brands.
• Work with our landlords to ensure stores
meet seismic risk requirements.
Increase our digital footprint
and productivity
• Increasing customer demands driven by
continued growth in online shopping
• Local and international online retailers
taking market share across digital channels.
Improve the omni-channel experience by:
• Linking physical and digital and scaling
personalisation across channels.
• Reinventing our Click&Collect experiences
and launching TheMarket.
Year on year incremental growth
• Co-located 6 Warehouse Stationery and The Warehouse
stores, continuing to test the ranging, customer experience
and profitability changes
• 24% of capital expenditure allocated to asset maintenance
• Online traffic for the Group increased 5.5% year on year
while store foot traffic reduced 1.1%, however overall gross
profit increased 3.8%
• Click&Collect sales grew 57% across our omni-channel
brands to now represent an average of 36% of online sales
• Online conversion reduced by 3 basis points driven by a
reduction of 30 basis points in Torpedo7, partially offset by
The Warehouse app, which increased by 64 basis points
• The Warehouse app, which has the most 5-Star reviews
of any NZ shopping app
1
, grew sales by 244% and now
represents 19% of total online sales for The Warehouse.
• Collaborate across the supply chain to
collectively reduce costs, improve forecast
accuracy, and reduce inventories.
• Develop robust contingency, preparation and
continuity plans for peak trading volumes and
issue/incident management.
• Unify commerce strategies to tailor shopping
experiences around individual preferences.
• Develop a structured programme to improve data
quality and practices utilising external advisors.
• Continue to strengthen data protection and
minimise the amount of third-party information
we hold
.
• Significant increase in retail spend, including
online shopping growth, will challenge costs,
resources and distribution capabilities
• Peak period stress on underlying systems
and processes causes unscheduled outages.
• Data quality issues slow down the speed
of effective change and decision making
• Data security and privacy is becoming an
increasingly important issue.
• Consolidate our investment into Asia by
creating a direct entity in Bangladesh,
supporting the existing team with senior
leadership at source and regularly rotating
team members through different merchandise
categories.
• Challenge of investing in new, stronger
suppliers inside and outside of existing
sourcing markets
• We are aware of the risks of corruption,
particularly in the quality and merchandise
teams.
Optimise
supply chain
network
• Moved a further $62m (FY18: $119m) of product
purchases to our direct sourcing offices
in China, India and Bangladesh.
Increase our level of direct
sourcing
Reduce our cost to serve
and enhance store
deliveries
• Achieved a Perfect Order of 88% vs our target of 95%
for online customers.
Increase our pool
of quality data
• Net Promoter Score across all brands either improved or
remained consistent
2
• Our Master Data Management practices will be the
subject of a major overhaul in FY20.
Data
optimisation
Development and implementation
of a quality data programme
Grow our fulfilment
capability to support
customer choice
Ongoing improvement
• Achieved a store DIFOT (Delivered In Full On Time)
of 97% vs our target of 98%
• Cost to serve increased by 11%
• Centralised online fulfilment into our North Island
Fulfilment Centre for The Warehouse (and Warehouse
Stationery post balance date)
• Deployed a new warehouse management system to
improve online fulfilment performance.

THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
30
FY18 (last year)
FOCUS
AREA
PRIORITIES
ACTUAL PROGRESS
OUR GOAL:
Build a dynamic organisation that has the highest performing retail talent in New Zealand
FY19 (this year)FY19 Progress
Increase the number of our
team members who go home
safely at the end of their work
day
Total Recordable Injury Frequency Rate (TRIFR)
1

increased from 21.5 (per million hours worked)
in FY18 to 25.9 in FY19 against a target of 18.3
• The majority of TRIs are strains and sprains of
a minor nature
• High level of reporting in place, with high levels
of near miss reporting
Our Severity One Incidents Frequency Rate (SV1FR)
2
was 22.4 per million hours worked (not measured in
FY18).
Health,
Safety and
Wellbeing
TRIFR <20
million hours
worked
SV1FR >10%
year on year
decrease
FY22+FY20 (next year)
TRIFR <15
million hours
worked
SV1FR >10%
year on year
decrease
FY21
ROADMAP TO OUR GOALKEY RISKSMITIGATIONS
• Handling of bulky, heavy or awkward
goods by team members
• Slips and trips due to poor
housekeeping or excessive stock
• Stockroom racking failure causing
product fall
• Team member interaction with moving
equipment
• Falls from height from ladders
• Exposure to violent and aggressive
behaviour in our stores
• Storage of hazardous substances.
TRIFR <10
million hours
worked
SV1FR >10%
year on year
decrease
• Introduced a single source of recruitment
across the Group
• Commenced leadership behavioural
model
• Took an average of 43 days to fill roles
vs our target of 60 days.
Build our skills pipeline and
workforce planning
Future-ready
talent
High
performance
workplace
Increase our organisational
health and engagement
• Achieved Rainbow Tick accreditation in
September 2019
• Achieved 100% gender pay equity in
our store network.
Lift our diversity and inclusion
OHI in top
quartile
• Team member and/or union
dissatisfaction with change and
bargaining outcomes.
• Challenge in building and/or buying
required talent capability.
Ongoing
improvement
Maintain
Rainbow Tick
accreditation
• Develop a clear employee relations strategy
• Build and nurture relationships with
government and external stakeholders.
• Gap in change management
experience and demonstrated
resilience as we prepare our culture
and organisation for Future of Work
environments.
• Invest in technology to reinvent productivity
• Define clear direction around expected
leadership behaviours and seek support
from external experts
• Align communication clearly and consistently
with vision and strategy.
• Proactively develop talent pipeline
• Assign appropriate budget and technology
to lift capability
• Activate a single-entity approach to talent
development and mobility.
• Achieved an Organisational Health Index (OHI) of
68 (FY18: 71 ) maintaining our position in the
second quartile
• Launched Group Performance and
Development Framework.
Retain Rainbow Tick accreditation.
Gender diversity is at best practice
in our store network.
• Launched ‘Ability2Execute’ facilitated
and digital training programmes
• Commenced work to build a
‘learning, fail fast and iterate’ culture.
Introduce continuous learning
and future-ready learning
experiences
• Resistance to change
• Training does not meet organisational
requirements and impedes speed of
change.
• Support change readiness through leadership
guidance and by shifting mindsets
• Streamline engaging communication.
• Early intervention programme for pain and
discomfort and review of team member tasks
in stores
• Manual handling improvement programme
involving AUT Occupational Health Unit
• Equipment solutions for goods handling
• Invest in traffic control processes across
distribution centres to separate people
from mechanical handling equipment (MHE)
• Consideration of height access equipment
to replace ladder use where practical
• Introduce enhanced security for high
risk stores
• Ongoing compliance with regulatory standards.
OUR NETWORKS
OUR PEOPLE
Key initiatives
As part of a shift to a Group focus on performance, we aligned
a set of Group values on which to orient our culture. We also
introduced a performance focus and discipline to all of our
activities and actions, with a new performance and development
model aligning goals and measures for all positions.
With a distributed employee model, communicating effectively
is critical, especially through times of change. We deployed
Workplace by Facebook as our unified platform of communication
and engagement, to share vision, best practices and dialogue
across all our team members.
In stores we have implemented tools to improve productivity
and deliver real-time analytics on store performance. These tools
also support coaching and timely feedback for managers and
team members.
To help us continue to secure the best people available, we
established a connected talent relationship and recruitment digital
solution powered by SmartRecruiters and Phenom People.
Key Health, Safety and Wellbeing changes: we introduced a new
anti-bullying and harassment policy, launched new Health, Safety
and Wellbeing Standards and completed Bow-Tie analysis for
three priority critical risks. In our distribution centres, we focused
on traffic management and mechanical handling equipment
and in FY20 we will be allocating capital for further safety
improvements. Directors of the Board attended a number of
Health and Safety observations, engaging directly with our
people at sites across the country.
From a team development perspective, the transformation
programme has delegated the responsibility for driving change
across over 150 initiative owners in the business. As we look to
move the business towards a more collaborative, less structurally
rigid way of working, empowering more team members to own
and drive change will be a key success measure.
During FY19 we focused on five priority practices for improving
our organisational culture: Challenging Leadership, Performance
Framework, Talent Development, Performance Review and
Rewards & Recognition. In our team member engagement survey
at the end of the financial year, we improved on four out of five
of those practices, with Rewards & Recognition going backwards.
In FY20 we will adopt a revised set of priority practices based on
survey feedback.
1
TRIFR is measured as a 12-month rolling and 1 million hours is used
2
Severity One Incidents are those with a high potential for serious injury, long-term health effect or death.
SV1FR is measured as a 12-month rolling and 1 million hours is used

THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
1. TO OUR SHAREHOLDERS2. GROUP MANAGEMENT REPORT
OUR COMPANY
3. ADDITIONAL INFORMATION
31
FY18 (last year)
FOCUS
AREA
PRIORITIES
ACTUAL PROGRESS
OUR GOAL:
Build a dynamic organisation that has the highest performing retail talent in New Zealand
FY19 (this year)FY19 Progress
Increase the number of our
team members who go home
safely at the end of their work
day
Total Recordable Injury Frequency Rate (TRIFR)
1

increased from 21.5 (per million hours worked)
in FY18 to 25.9 in FY19 against a target of 18.3
• The majority of TRIs are strains and sprains of
a minor nature
• High level of reporting in place, with high levels
of near miss reporting
Our Severity One Incidents Frequency Rate (SV1FR)
2
was 22.4 per million hours worked (not measured in
FY18).
Health,
Safety and
Wellbeing
TRIFR <20
million hours
worked
SV1FR >10%
year on year
decrease
FY22+FY20 (next year)
TRIFR <15
million hours
worked
SV1FR >10%
year on year
decrease
FY21
ROADMAP TO OUR GOALKEY RISKSMITIGATIONS
• Handling of bulky, heavy or awkward
goods by team members
• Slips and trips due to poor
housekeeping or excessive stock
• Stockroom racking failure causing
product fall
• Team member interaction with moving
equipment
• Falls from height from ladders
• Exposure to violent and aggressive
behaviour in our stores
• Storage of hazardous substances.
TRIFR <10
million hours
worked
SV1FR >10%
year on year
decrease
• Introduced a single source of recruitment
across the Group
• Commenced leadership behavioural
model
• Took an average of 43 days to fill roles
vs our target of 60 days.
Build our skills pipeline and
workforce planning
Future-ready
talent
High
performance
workplace
Increase our organisational
health and engagement
• Achieved Rainbow Tick accreditation in
September 2019
• Achieved 100% gender pay equity in
our store network.
Lift our diversity and inclusion
OHI in top
quartile
• Team member and/or union
dissatisfaction with change and
bargaining outcomes.
• Challenge in building and/or buying
required talent capability.
Ongoing
improvement
Maintain
Rainbow Tick
accreditation
• Develop a clear employee relations strategy
• Build and nurture relationships with
government and external stakeholders.
• Gap in change management
experience and demonstrated
resilience as we prepare our culture
and organisation for Future of Work
environments.
• Invest in technology to reinvent productivity
• Define clear direction around expected
leadership behaviours and seek support
from external experts
• Align communication clearly and consistently
with vision and strategy.
• Proactively develop talent pipeline
• Assign appropriate budget and technology
to lift capability
• Activate a single-entity approach to talent
development and mobility.
• Achieved an Organisational Health Index (OHI) of
68 (FY18: 71 ) maintaining our position in the
second quartile
• Launched Group Performance and
Development Framework.
Retain Rainbow Tick accreditation.
Gender diversity is at best practice
in our store network.
• Launched ‘Ability2Execute’ facilitated
and digital training programmes
• Commenced work to build a
‘learning, fail fast and iterate’ culture.
Introduce continuous learning
and future-ready learning
experiences
• Resistance to change
• Training does not meet organisational
requirements and impedes speed of
change.
• Support change readiness through leadership
guidance and by shifting mindsets
• Streamline engaging communication.
• Early intervention programme for pain and
discomfort and review of team member tasks
in stores
• Manual handling improvement programme
involving AUT Occupational Health Unit
• Equipment solutions for goods handling
• Invest in traffic control processes across
distribution centres to separate people
from mechanical handling equipment (MHE)
• Consideration of height access equipment
to replace ladder use where practical
• Introduce enhanced security for high
risk stores
• Ongoing compliance with regulatory standards.
OUR PEOPLE
OUR EXPERTISE
Significance
Our team members are at the heart of
our organisation and we believe that by
focusing on their performance, keeping
them safe and preparing them for the
future workplace we will lift engagement
and achieve long-term business
sustainability.

To do this, it is critical we invest in digital
solutions to leverage people data and
insights to drive performance. Alongside
this, we focus on our people’s wellbeing
and everyday experience at work. We
are also focused on attracting top talent,
building the skills of the future and defining
and embedding leadership behaviours.
We continually develop and strengthen
our relationships with industry bodies and
government to ensure we remain part of
the conversations, helping to shape the
future of work in New Zealand.
Materiality
True transformation requires culture change and a meaningful shift to a new way of working.
Naturally, change can take time and is sometimes met with resistance. This has meant in
some cases we have not met the milestones we have set in some initiatives. We also made
the conscious decision to exit the implementation of a digital solution option which in turn
impacted our potential to scale performance.
Despite this, rapidly changing technology is shaping the future of work and as customer
expectations continue to evolve, we need to make significant process, productivity
and technology improvements to unlock performance and enable improved ways of
working. The next several years will see deliberate change as we prepare our culture and
organisation to move into the future of work environments. Moving our culture to be more
adaptive will take time. Financial investment into technology, talent development and
health, safety and well-being will be critical to reinvent productivity across the Group.
Future focus areas
Our focus in FY20 and beyond will be to accelerate initiatives that deliver:
• Simplified practices and processes that will allow us to track and measure performance
and productivity
• Consequence management and remuneration to reward output
• Connected digital solutions that function at scale, enabling productivity and actionable
insights
• An evolving organisational structure, team design and capability to support future ways
of working.
1. TO OUR SHAREHOLDERS3. ADDITIONAL INFORMATION2. GROUP MANAGEMENT REPORT
OUR COMPANY

THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
32
FY18
(last year)
FOCUS
AREA
PRIORITIES
ACTUAL PROGRESS
OUR GOAL:
Build ways of working that foster repeatable and competitive excellence
Use data analytics and insights
to achieve better demand
planning, product/market fit
and more accurate forecasting
Understanding
our customers
Enterprise
systems and
processes
Integrate and simplify business
processes across the Group
Innovate at the customer
edge using customer-based
thinking
FY19
(this year)
FY19 ProgressFY20
(next year)
FY21FY22+
ROADMAP TO OUR GOALKEY RISKSMITIGATIONS
This year we have focused on:
• increasing the ratio of effort on systems and processes that add
value for our customers. We have achieved a ratio of 34%,
which is below our target of over 50%. The investment into a
replacement back-office integrated system will, by the end of FY21,
enable more focus on value-adding processes;
• increasing the number of standardised systems and processes
across our brands. We have made a small amount of progress,
reducing the number of bespoke systems by 2%.
• Innovation in Click&Collect with an automated distribution tower
being trialled at Sylvia Park, continued rollout of self-service
checkouts and ongoing innovation with the launch of TheMarket
and mobile app features.
• Industry recognition for innovation in technology solutions (Elastic).
• Much of the workload is still waterfall in nature, with agile teams
operating
in the eCommerce domains. In FY20 we will focus on
developing plans
to move towards a more customer-centric way
of working.
Create leading customer
experiences that drive
demand
Move towards a more
collaborative operating
model
Innovation
• Complexity of moving from build to buy/
configure with some build at customer edge.
• Concerns over data privacy. • Adopt a conservative posture and ensure an
approach that is consistent and compliant with
privacy legislation and best practice
• Run customer loyalty programmes across the
Group.
• Organisational resistance to change, moving to
a Group standardised, consistent, highly visible
and transparent approach.
• New customer experience technologies do
not meet customer demands.
• Develop pathways, retention and support
for end of life systems decommissioning
• Manage end-of-life workloads
• Build capability to support chosen platforms.
• Waiting for core systems to be upgraded before
implementing change.
• Support change readiness through leadership
guidance and by shifting mindsets
• Standardise processes in line with best practice
and new integrated solution.
• Establish collaborative and customer-centric
design innovation capability and investment.
• Reduced our aged inventory by 3.3%
• Maintained a stock turn of 4.3
• Invested in capability and methodologies in our Data Sciences
and Design teams to help drive insights to inform decision making
• Further developed a unified view of the customer.
Investment in and
implementation of
enterprise systems
Establish seasonal
sell-through metrics
• Drive customer-centric ways of working in
systems of engagement first (eCommerce).
OUR PEOPLE
OUR EXPERTISE
Key initiatives
Product is at the heart of every successful retailer. Customer
is at the centre of every successful business. Our expertise
combines our skills across product and customer to drive value.
We continue to use data driven insights to improve customer
experience. Our merchandise teams align these with our design
cues and market trends for product range and assortment
planning. While we have invested in improving processes
around range management, contracting, specification, quality
and pricing, many of our retail processes, particularly those
around data interpretation and editing product assortment,
remain undocumented. This presents a risk and makes induction
and consistency of operations a challenge. As processes are
redesigned and improved, documentation and operational
support materials will be developed and deployed.
Our strong store layout methodology is documented and is
applied to all store types depending on store size, shape and
product range. The format of our stores is a key part of the
customer experience and we have a number of challenges ahead
to manage relevant and modern experiences consistently across
our store network.
Every Day Low Prices (EDLP) has made demand planning and
price setting more important as there is not the same discounting
mechanism to readily address slow moving stock. We are focusing
on improving our forecast accuracy and achieving better
continuity of product to meet customer demand. Mastering the
sell-through curve is about finding the right balance of ongoing
and seasonal stock and lowering our weighted average cost of
aged inventory. Critical to getting this right is smart demand
management. Right now, this is a relatively manual process.
We have recognised the need to standardise, automate and
document our processes, and while good progress has been
made on assortment and range planning, most of the work
on demand management is still ahead of us. We are currently
focusing on building our expertise in price optimisation and
assortment management.
As a group, we operate a number of businesses that use
different systems and processes. Our strategy is to provide a
more stable core platform of systems and common processes
upon which the brands can accelerate their points of competitive
differentiation. Across the Group, we currently spend 66% of
our Information Systems development and support effort on our
core systems of record, and 34% on systems of engagement. We
are about to start a major systems and process modernisation
investment to drive efficiency and common processes across the
Group, supported by a modern technology stack that will enable
future innovation.
Materiality
As a customer-focused business, we depend on the expertise of our people in so many ways. We are heavily reliant on the expertise
of our team members and on old core systems that require complementary manual resources.

Automation will give us greater resilience because it will mean we are not so dependent on individuals’ knowledge. We still need critical
human judgements around negotiation, relationship building and so much more. We recognise that leading the customer experience
through innovation, for example, will be important in terms of creating and measuring demand.
Materiality can be thought of in the context of reducing key person risk in areas where we create value for customers, and areas that
are sources of competitive advantage and scale. Also relevant is the time it takes for team members to be fully productive as well as the
reduction of unplanned variability in our processes and outcomes.

THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
1. TO OUR SHAREHOLDERS2. GROUP MANAGEMENT REPORT
OUR COMPANY
3. ADDITIONAL INFORMATION
33
FY18
(last year)
FOCUS
AREA
PRIORITIES
ACTUAL PROGRESS
OUR GOAL:
Build ways of working that foster repeatable and competitive excellence
Use data analytics and insights
to achieve better demand
planning, product/market fit
and more accurate forecasting
Understanding
our customers
Enterprise
systems and
processes
Integrate and simplify business
processes across the Group
Innovate at the customer
edge using customer-based
thinking
FY19
(this year)
FY19 ProgressFY20
(next year)
FY21FY22+
ROADMAP TO OUR GOALKEY RISKSMITIGATIONS
This year we have focused on:
• increasing the ratio of effort on systems and processes that add
value for our customers. We have achieved a ratio of 34%,
which is below our target of over 50%. The investment into a
replacement back-office integrated system will, by the end of FY21,
enable more focus on value-adding processes;
• increasing the number of standardised systems and processes
across our brands. We have made a small amount of progress,
reducing the number of bespoke systems by 2%.
• Innovation in Click&Collect with an automated distribution tower
being trialled at Sylvia Park, continued rollout of self-service
checkouts and ongoing innovation with the launch of TheMarket
and mobile app features.
• Industry recognition for innovation in technology solutions (Elastic).
• Much of the workload is still waterfall in nature, with agile teams
operating
in the eCommerce domains. In FY20 we will focus on
developing plans
to move towards a more customer-centric way
of working.
Create leading customer
experiences that drive
demand
Move towards a more
collaborative operating
model
Innovation
• Complexity of moving from build to buy/
configure with some build at customer edge.
• Concerns over data privacy. • Adopt a conservative posture and ensure an
approach that is consistent and compliant with
privacy legislation and best practice
• Run customer loyalty programmes across the
Group.
• Organisational resistance to change, moving to
a Group standardised, consistent, highly visible
and transparent approach.
• New customer experience technologies do
not meet customer demands.
• Develop pathways, retention and support
for end of life systems decommissioning
• Manage end-of-life workloads
• Build capability to support chosen platforms.
• Waiting for core systems to be upgraded before
implementing change.
• Support change readiness through leadership
guidance and by shifting mindsets
• Standardise processes in line with best practice
and new integrated solution.
• Establish collaborative and customer-centric
design innovation capability and investment.
• Reduced our aged inventory by 3.3%
• Maintained a stock turn of 4.3
• Invested in capability and methodologies in our Data Sciences
and Design teams to help drive insights to inform decision making
• Further developed a unified view of the customer.
Investment in and
implementation of
enterprise systems
Establish seasonal
sell-through metrics
• Drive customer-centric ways of working in
systems of engagement first (eCommerce).
OUR EXPERTISE
OUR RELATIONSHIPS
Significance
To keep up with changing demands, we need to become better at
executing what’s relevant for the customer. Meeting their demands
means we need to find new ways to deliver value faster.
While we have made some good progress on aged inventory
and full price product sell-through versus our targets, we have
only recently developed interactive reporting on optimum product
inventory ranges. This is enabling data visibility and analysis in
more in-depth detail than has previously been available. We
are continuing to develop this to identify and maintain the right
products at the right quantity levels that align with our customer
demand.
We have a key person risk that we need to resolve. Expertise lies
within our team members and should they leave the business,
the knowledge leaves with them, so we recognise that a focus
on documentation and systemisation is a priority.
Old legacy core systems with lack of integration are not fully
supported and some are not fit for purpose given the business
growth and advances in customer demand for a seamless omni-
channel experience. Having a large number of systems means
integration is difficult and complex, consolidated data is not easily
available. In recognition of this risk, the Board has approved an
integrated solution discovery project, which is well underway. A
decision as to whether or not to move ahead to implementation
with a preferred supplier will be made in FY20.
Future focus areas
Over the next two to three years, we will be focusing on:
• standardising systems and processes by implementing an
‘out of the box’ integrated suite, completing implementation
of our new warehouse management system and implementing
a modern point of sale system across our brands
• systems and processes that add value to our customers,
including upgrading our existing B2C eCommerce platform
for the Group and a new B2B platform
• standardising our retail systems and documenting our processes
across our brands
• monitoring and understanding product demand versus our
forecasts to enable timely corrective action.
1. TO OUR SHAREHOLDERS3. ADDITIONAL INFORMATION2. GROUP MANAGEMENT REPORT
OUR COMPANY

THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
34
FY18
(last year)
FOCUS
AREA
PRIORITIES
ACTUAL PROGRESS
OUR GOAL:
Build strong relationships with strategic stakeholder groups that deliver sustainable value
FY19
(this year)
FY19 Progress
Rewarding and engaging
customer experiences
• Net Promoter Score across all brands either improved or
remained consistent
1

• While customer frequency of purchase has remained stable
year on year

2
, there has been good growth in basket size in
Noel Leeming and Torpedo7
• The Warehouse Group market share grew to 5.8% of the
total market
3
.
Customers
Suppliers
Collaborative and
engaging supplier
relationships
FY22+FY20
(next year)
FY21
ROADMAP TO OUR GOALKEY RISKSMITIGATIONS
• Consolidation in upstream suppliers limits our
choices for changing buyer power dynamics
• International trade barriers or limitations of
access
• Cost of goods sold (COGS) exposure to inflation
drivers in other economies.
• Diversify supply chain geographically
• Continue to apply hedging and appropriate
risk management processes.
• International competition is growing in New
Zealand, as New Zealanders show that they
are more ready to interact with overseas
brands than ever before
• Customer disposable income remains
constrained in the years ahead.
• Deliver add-on/supporting services
surrounding retail
• Focus on delivering value for money
propositions linking sustainability values.
Strong employment
brand
Reputable standing in the
investment community
including in our ability to
deliver results
Strong corporate brand
and reputation
• The Group has 89% employment brand awareness and 37%
attractiveness within the Wholesale and Retail Trade sectors.
5
• Displayed evidence on stated transformation plan, however
we still have a long way to go
• Achievement of forward-looking guidance.
• The Warehouse is ranked 8th in New Zealand for its corporate
reputation with its 108
6
score putting it in the global top 10% of
companies that have resilience and reservoirs of trust

• $67m raised in donations for New Zealand since 1982 including
$0.3m for Victim Support following the Christchurch attacks

• 700 New Zealand youth participated in Red Shirts in Communities
(RSIC), a programme resulting from a partnership between the
Group and the Ministry of Social Development. The RSIC
programme was digitised through the Accelerator platform.
Team
members
Investors
Government
and
community
• Churn, driving increased staffing costs
• Industrial Action risk increases due to climate
of wage ‘catch up’ and base wage inflation.
• Partner with employee groups
• Broader services of participation and values
beyond wages.
• Our capacity to support Government initiatives
is exhausted or spread too thinly to be effective
• The Warehouse Group becomes too politically
identified, leading to reputational risk.
• Continue routine accountability reporting.
• Liquidity of free float stock insufficient to drive
more active investor interest in the stock
• Market prioritisation of short-term profits over
long-term sustainable value creation.
• 90.7% of our overseas suppliers meet our ‘good factory’
standards and measures, up from 90.1% last year. Our
stringent focus with suppliers in this area has resulted in
a significant change from 57.1% in 2015.
4
• Continue to maintain recurring and open
dialogue with the investment community
• Provide timely and transparent disclosure of
company performance, strategy and
investments
• Deliver on stated Group goals and
performance targets.
OUR EXPERTISE
OUR RELATIONSHIPS
Key initiatives
This year we began a two year journey to bring all our marketing
in-house to create a fully-scaled and integrated marketing
function that delivers for our customers and our business.
This has significantly increased our accountability across our
entire marketing supply chain. We further developed customer
journey maps to continue to optimise customer experiences and
saw good growth in The Warehouse app. Understanding our
customers and how they want to interact with us is core to better
meeting their needs.
We continued to consolidate our supply chain, placing more
business with fewer, stronger suppliers and creating deeper
strategic relationships. For example, we consolidated our
fabrics buy by 79% and shifted 29% of our apparel business to
Bangladesh, India and Pakistan. This helps bring suppliers closer
to our business, making it easier for them to help us innovate,
and to drive quality and economy, deliver more effective waste
reduction programmes, and focus our work to support up-stream
suppliers more effectively.
In our relationships with investors, we are driving the adoption
of Integrated Reporting as evidenced by this report. Using the
principles of Integrated Thinking in decision making, helps our
business to recognise the different aspects of value that are
important in a way that is understandable and consistent.
We interacted with appropriate Government Ministries and
related public parties on issues ranging from climate change
to youth employment to technology. We also provided input
into a variety of legislation including De Minimis, Employment
Relations Amendment Bill, Equal Pay Amendment Bill, Plastic
Bags, Waste, Ministry for Primary Industries Cost Recovery
Actions, Food Safety and Foam Filled Furniture.
The Red Shirts in Schools (a high school based retail work
experience programme) now reaches more than 2,000
participants. We piloted P-Tech, a high school IBM partnership
for technology students.
We will be concluding our funding for the establishment of the
Massey University Bachelor of Retail and Business Management
(BRBM) degree, which has now been established and is growing
solidly year on year. We are also driving Retail as a Career
through Industry Training Organisations and membership on the
Boards of Directors at ServiceIQ and Retail NZ.
We invest in long-standing, sustainable relationships to build our networks based on shared understanding and values. We engage
with our many stakeholders in ways that align with their influence and involvement in the life of our business.
Measuring our impact and the strength of relationships is difficult, and something we continue to work on. Some basic measures are
available such as money raised to support charities and local communities, or international suppliers accredited for ethical sourcing,
but we recognise that relationships go deeper than outcomes. Our work in FY20 will involve more focus on measurement in this area.
1
Customer voice
2
Market view token data
3
Marketview (total market includes petrol, supermarkets and non-retail spend)
4
Based on our factory assurance audits
5
Randstad New Zealand
6
Colmar Brunton’s Corporate Reputation Index 2019 in partnership with Wright Communications

THE WAREHOUSE GROUPINTEGRATED ANNUAL REPORT 2019
1. TO OUR SHAREHOLDERS2. GROUP MANAGEMENT REPORT
OUR COMPANY
3. ADDITIONAL INFORMATION
35
FY18
(last year)
FOCUS
AREA
PRIORITIES
ACTUAL PROGRESS
OUR GOAL:
Build strong relationships with strategic stakeholder groups that deliver sustainable value
FY19
(this year)
FY19 Progress
Rewarding and engaging
customer experiences
• Net Promoter Score across all brands either improved or
remained consistent
1

• While customer frequency of purchase has remained stable
year on year

2
, there has been good growth in basket size in
Noel Leeming and Torpedo7
• The Warehouse Group market share grew to 5.8% of the
total market
3
.
Customers
Suppliers
Collaborative and
engaging supplier
relationships
FY22+FY20
(next year)
FY21
ROADMAP TO OUR GOALKEY RISKSMITIGATIONS
• Consolidation in upstream suppliers limits our
choices for changing buyer power dynamics
• International trade barriers or limitations of
access
• Cost of goods sold (COGS) exposure to inflation
drivers in other economies.
• Diversify supply chain geographically
• Continue to apply hedging and appropriate
risk management processes.
• International competition is growing in New
Zealand, as New Zealanders show that they
are more ready to interact with overseas
brands than ever before
• Customer disposable income remains
constrained in the years ahead.
• Deliver add-on/supporting services
surrounding retail
• Focus on delivering value for money
propositions linking sustainability values.
Strong employment
brand
Reputable standing in the
investment community
including in our ability to
deliver results
Strong corporate brand
and reputation
• The Group has 89% employment brand awareness and 37%
attractiveness within the Wholesale and Retail Trade sectors.
5
• Displayed evidence on stated transformation plan, however
we still have a long way to go
• Achievement of forward-looking guidance.
• The Warehouse is ranked 8th in New Zealand for its corporate
reputation with its 108
6
score putting it in the global top 10% of
companies that have resilience and reservoirs of trust

• $67m raised in donations for New Zealand since 1982 including
$0.3m for Victim Support following the Christchurch attacks

• 700 New Zealand youth participated in Red Shirts in Communities
(RSIC), a programme resulting from a partnership between the
Group and the Ministry of Social Development. The RSIC
programme was digitised through the Accelerator platform.
Team
members
Investors
Government
and
community
• Churn, driving increased staffing costs
• Industrial Action risk increases due to climate
of wage ‘catch up’ and base wage inflation.
• Partner with employee groups
• Broader services of participation and values
beyond wages.
• Our capacity to support Government initiatives
is exhausted or spread too thinly to be effective
• The Warehouse Group becomes too politically
identified, leading to reputational risk.
• Continue routine accountability reporting.
• Liquidity of free float stock insufficient to drive
more active investor interest in the stock
• Market prioritisation of short-term profits over
long-term sustainable value creation.
• 90.7% of our overseas suppliers meet our ‘good factory’
standards and measures, up from 90.1% last year. Our
stringent focus with suppliers in this area has resulted in
a significant change from 57.1% in 2015.
4
• Continue to maintain recurring and open
dialogue with the investment community
• Provide timely and transparent disclosure of
company performance, strategy and
investments
• Deliver on stated Group goals and
performance targets.
OUR ENVIRONMENT
Significance
The continuing rise of global online retailing means that our customers have unlimited shopping choices 24/7. We must source
dynamically and deliver the latest trends quickly by partnering and planning with the right suppliers to remain relevant and continue
to grow in our market.
Our customers
As New Zealanders face increasing challenge in balancing their
weekly household budget, we want to help them live better every
day by guaranteeing market leading quality, availability, selection
and convenience at the best possible value.
Investors
A track record of doing what we say we will do, being transparent
and open, as well as showing our values and who we are as a
company will help investors make good decisions about supporting
our business. Our goal is not to pitch our company to investors, but
to expose investors to our thinking and our way of operating so
that they are appropriately informed about us and the risk/reward
proposition that we represent.
Our suppliers
Our relationships with our suppliers focus on meeting our product
sustainability objective to source sustainably, optimise design and
support recycling. By consolidating our suppliers and building more
strategic relationships, we can drive long-term value.
Government and community
Operating in a deregulated industry does not absolve us from
playing a role in the future wellbeing of our country. It is a privilege
to be part of the communities we serve. We work with government
and our communities to leverage our capabilities in ways that
matter to the people who are our customers, suppliers and
partners, not only of today but also tomorrow.
Our purpose is helping Kiwis live better every day. It is a role that
can make a difference in many ways.
OUR RELATIONSHIPS
Future focus areas
Our focus in FY20 and beyond will be to:

• Deliver stronger end-to-end customer experiences that motivate our customers to give us lifetime value
• Drive product development and design through strategic relationships with our suppliers and take the ethical
and sourcing actions that our customers now expect
• Prepare our culture and organisation to move our team members into the future of work environments
• Continue to work within our communities.
1. TO OUR SHAREHOLDERS3. ADDITIONAL INFORMATION2. GROUP MANAGEMENT REPORT
OUR COMPANY