Trading Update

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To: Market Information Services Section
NZX Limited
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Auckland, 9 July 2020

Trading update
On 8 June 2020, The Warehouse Group (“the Group”) provided a trading update that commented on
the strength of trading that was occurring across its brands since moving to Level 2. This level of
trading was believed to be a consequence of pent up demand. While trading from this point has
progressively weakened from the levels initially observed, it remains significantly elevated relative to
last year.
Sales performance by brand compared to the same period last year is presented below for quarter to
date (“QTD”) and year to date (“YTD").
Sales growth by brand QTD YTD
The Warehouse 13.8% -2.4%
Warehouse Stationery 0.1% -2.3%
Noel Leeming 32.1% 6.5%
Torpedo7 Group 31.6% 7.3%
Total Sales (excluding TheMarket) 19.3% 0.8%
Online demand increased significantly during COVID alert Levels 4 and 3 and has continued to be
strong since stores reopened. Year to date online sales are up 54.8%, representing 11.8% of all
Group sales versus 7.8% for the full year FY19. There appears to have been a step change in online
sales following the surge during lockdown with online sales as percentage of Group sales being 9.3%
since 18 May
*
, indicating that customers are increasingly moving toward online shopping options.
However, fulfilment costs involved in servicing online sales means that the profitability of this channel
is currently less than that achieved through our in-store transactions. These costs were further
amplified given the rapid escalation to unprecedented levels of online sales through Level 3 and 4.
The Group remains of the view that while post lockdown, a lift in consumer spending has been
observed, the underlying economic impacts of COVID-19 are yet to be fully reflected in consumer
spending. Economic forecasts and the Group’s customer survey results indicate that a slowdown in
consumer spending is highly likely as the conclusion of the wage subsidy scheme further increases
unemployment and discretionary spending is impacted by mortgage deferral schemes rolling off later
this year.
A benefit of the current strength of trading is that the Group has further bolstered its liquidity
position and is prepared for adverse trading conditions. The NZX listed bond of $125m was repaid on
June 15 and the Group retains undrawn bank facilities of $330m. The Group’s banks have granted a
waiver on its interest coverage covenant for Q2, Q3 and Q4 of FY21, if required.
The Group previously withdrew adjusted NPAT guidance for FY20 as a result of the uncertainty
around trading performance. Adjusted NPAT will be subject to year end audit process and there is an
expectation that this could include impairment and provisioning against assets as a consequence of
ongoing economic impacts created by COVID-19. The Board therefore reaffirms its position on
withholding guidance on FY20 adjusted NPAT.
ENDS

*
Group stores reopened on 14 May and week beginning 18 May is the first full trading week post
reopening.

Contact details regarding this announcement:

Investors and Analysts: Jonathan Oram, Chief Financial Officer
+64 21 757 415, jonathan.oram@thewarehouse.co.nz

Media: Nick Grayston, Group Chief Executive Officer
To be contacted via Jordan Schuler
+64 21 143 6930, media.enquiries@thewarehouse.co.nz.