The Warehouse Group FY22 First Quarter Sales Update

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To: NZX Limited
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Auckland, 12 November 2021

The Warehouse Group FY22 First Quarter Sales Update


The Warehouse Group sees strong online growth despite ongoing COVID disruption to sales
The Warehouse Group (“the Group”) today reported retail sales for the first quarter ending 31 October
2021 of $630.7 million, a decline of 14.6% on the same quarter in FY21 and a decline of 9.2% on the
same quarter in FY20. Gross profit margin reduced 200 basis points to 32.9% for the first quarter
compared to the same quarter in FY21, largely due to increased clearance sales as we had a build-up of
winter seasonal stock due to the COVID-19 lockdown timing. There has also been a change in product
mix with the limitations of lockdown shopping.

Group CEO Nick Grayston says “The ongoing disruption of COVID-19 and in particular the 10.5-week
lockdown in Auckland during the quarter has impacted our sales but trading is in line with our previous
lockdown experiences.

“During lockdown, we have seen strong online momentum across the Group with our customers moving
swiftly to our digital channels to purchase the items they need to work from home, do remote schooling
and manage from their homes.

Highlights:
• Group sales for 13 weeks to 31 October 2021 were $630.7 million, down 14.6% against the
same quarter in FY21 and down 9.2% against the same quarter in FY20.
• Group sales were impacted due to COVID-19 lockdown levels from 18 August – including
Level 4 for two weeks New Zealand wide and five weeks in Auckland, with Auckland
remaining in Level 3, and Northland and Waikato switching between Level 2 and 3 for the
remainder of the quarter.
• Online sales growth of 118.2%, representing 30.1% of Group sales.
• Group gross profit margin was 32.9% for FY22 Q1, a decline of 200 basis points on FY21 Q1.
• New MarketClub and MarketClub+ loyalty programmes were launched on 20 October.
• From 16 January 2022 only team members who are fully vaccinated will be able to perform
work for The Warehouse Group.
• The FY21 final dividend of 17.5 cents remains in place as declared with a record date of 18
November and will be paid on 3 December 2021.
• The Group have agreed a $70 million Sustainability-Linked Loan with Westpac which further
extends our commitment to the environment.

“With the opening of our retail stores across Auckland as part of the Level 3, Step 2 change from
Wednesday 10 November, we are thrilled to welcome our customers back in store and anticipate
significantly improved sales momentum. We are optimistic that pent up customer demand will see
good uplift in our November and December trading performance and 18 The Warehouse stores in
Auckland will be operating extended trading hours to help us meet this,” said Mr Grayston.

“We have a strong stock position across all brands and are well placed and ready to meet peak period
Christmas and summer demand. We have had some concern about the growing domestic online
delivery challenges and getting customers purchases out to them as we approach Christmas, as a result
of the highly congested postal and courier networks. The opening of Auckland stores will relieve this
pressure and will allow us to improve our online delivery promise to our customers who wish to shop
remotely.”

Total Group online sales were $190.0 million for the quarter – representing growth of 118.2% compared
to the same quarter last year and making up 30.1% of total Group sales (up from 11.8% in the same
quarter last year and 11.5% for FY21). Total click and collect sales increased 117.7% in the quarter,
making up 46.7% of total online sales.

The Warehouse recorded sales of $298.2 million in the quarter, down 21.4% on the same quarter last
year due to store closures during lockdown. While The Warehouse store sales saw a decline across
the country due to various stages of lockdown, online sales increased 164.1% in the quarter. The
Warehouse stores that have moved from Level 4 to Level 2 (i.e. south of Waikato) have performed
well since reopening, with October sales up 4.2% on the same month last year. The standout
categories for the quarter were Sport and Fitness, and Petcare.

Warehouse Stationery recorded sales of $48.2 million in the quarter, a decline of 22.0%. Warehouse
Stationery online sales increased 91.8% compared to the same quarter last year. Warehouse
Stationery performed relatively weaker compared to the extended lockdown of March 2020, with
customers better prepared to work and learn remotely.

Noel Leeming reported sales for the first quarter of $238.7 million, a decline of 4.8% compared to the
same quarter last year, however these sales were up 6.1% compared to the same quarter in FY20.
Noel Leeming online sales saw growth of 148.5%, with strong uptake in 1-hour click and collect
fulfilment and tech solutions services also reporting strong growth in the quarter.

Torpedo7 recorded modest sales growth of 1.2% to $34.2 million compared to the same quarter last
year and 43.7% growth compared to the same quarter in FY20 due to growth in both store and online
channels. Torpedo7 online sales increased 73.0% compared to the same quarter last year.

More recently, as we have moved into Level 3, Step 2, our Group stores in the Waikato have traded
up 30% year on year as customers returned to shopping in store, and our Auckland stores (over the
first two days) have shown trading growth significantly stronger than this.

MarketClub and MarketClub+ loyalty programme
On 20th October, we launched the new MarketClub and MarketClub+ loyalty programmes. This
provides our customers with more convenience, more ways to save money and more ways to give
back. MarketClub is currently available on TheMarket.com and at The Warehouse – instore and online
– and it is our intention is to extend our programme group wide.

The MarketClub membership is free, and customers can unlock exclusive offers and benefits on
TheMarket.com and at The Warehouse, with a charitable donation made by The Warehouse Group
on their behalf with every purchase at The Warehouse. MarketClub+ is a paid membership on
TheMarket.com with free shipping on eligible items when you spend over $45.

Health and Safety in the workplace
Supporting our people has also been a key focus for this quarter, including undertaking a comprehensive
health and safety assessment on how best to make our workplace as safe as possible in a COVID-19
environment. We have now concluded consultation with our 12,000 employees on a proposal for all
team members to be fully vaccinated against Covid-19.

The vast majority of our team supported the proposal and most feedback reflected the fact that the
best way for us to provide a safe workplace and protect each other is to be fully vaccinated.
Accordingly, from 16 January 2022 only team members who are fully vaccinated will be able to perform
work for The Warehouse Group.

Dividend update
At the time of the FY21 Annual Results, the final dividend was declared on the assumption that New
Zealand would predominately be at Level 2 at the end of October. The Group has retained a strong
liquidity position with core bank facilities of $330m undrawn and now with the move to Level 3 Step
2 in Auckland, the Board can confirm the final dividend of 17.5 cents remains as declared.

The record date for the dividend is 18 November and will be paid on 3 December 2021. This brings
the total dividends for the year to 35.5 cents per share declared, and a pay-out ratio of 70.2% of
adjusted net profit. This is in line with our recently amended dividend policy which was approved by
the Board in March 2021 – to distribute at least 70% of the Group’s full year adjusted net profit.

The Warehouse Group agrees Sustainability Linked Loan
We were also pleased to agree a $70 million Sustainability-Linked Loan with Westpac in October that
further extends The Warehouse Group’s commitment to the environment. The targets are ambitious,
innovative and forward-thinking and are focused on the key priorities in our sustainability journey to
receive discounted rates.

The five sustainability targets are as follows:
1. 50% of brands
1
that are directly owned by The Warehouse Group must have sustainable
packaging that is compostable, or recyclable solely at New Zealand kerbside or in store by
FY25.
2. All Tier 2 Sources for at least 50% of Tier 1 Suppliers
1
will comply with The Warehouse Group’s
Labour & Environmental Policy by FY25.
3. Reduce absolute Scope 1 and Scope 2 greenhouse gas emissions by at least 5% for each year
of the loan against an FY20 Baseline. This will help us achieve our science-aligned target to
reduce our Scope 1 and 2 emissions by 42% by 2030.
4. Gender Pay Equity: Achieve 100% pay equity across its overall workforce by FY25.
5. Gender Representation: The board, executive team, or those who directly report to the
executive team, are 50% women by FY25.



1. For The Warehouse and Warehouse Stationery

2021 Annual Shareholder Meeting
The 2021 Annual Shareholder Meeting will take place on Friday 26 November 2021 as 10am.

Due to the ongoing uncertainty arising from the Covid-19 pandemic, the Annual Shareholders’
Meeting will be online only. Shareholders will be able to watch the meeting, vote and ask questions
online through the Computershare Meeting Platform. To join the meeting, please go to
meetnow.global/nz click ‘Go’ on The Warehouse Group Limited meeting tile and then click ‘join
meeting now’.

Further information about how shareholders can join the meeting online, vote and ask questions are
contained in the Notice of Meeting.

ENDS

Contact details regarding this announcement:

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

Media: Jordan Schuler, Corporate Affairs Partner +64 21 143 6930
Media.enquiries@thewarehousegroup.co.nz

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Quarterly Sales
Reporting Period 13 weeks to 31 October 2021
Previous Reporting Period (2021) 13 weeks to 1 November 2020
Previous Reporting Period (2020) 13 weeks to 27 October 2019
Quarterly Retail Sales information:
SalesSalesSales
(2 August 2021 to 31 October 2021)
202220212020
($ Million) ($ Million) ($ Million)
The Warehouse
298.2 379.5 368.9
- 21.4 % - 19.2 %
Warehouse Stationery48.2 61.8 63.0
- 22.0 % - 23.5 %
Noel Leeming238.7 250.8 225.0
- 4.8 % + 6.1 %
Torpedo734.2 33.8 23.8
+ 1.2 % + 43.7 %
Total Group
1
630.7 738.5 694.8
- 14.6 % - 9.2 %
Store Numbers
20222021202220212022202120222021
Start Quarter 1
909271 74 70 71 21 20
End Quarter 1
909071 73 70 70 21 20
20222021202220212022202120222021
Start Quarter 1
487,553 498,955 83,672 77,281 63,684 67,239 27,030 26,489
End Quarter 1
486,051 498,955 85,541 77,281 62,867 67,239 27,030 26,489
- - - 2
- 2 - -
- 1 - -
- - - -
Note:
The Warehouse Group Limited
First quarter sales
Change in
sales
vs 2021
Change in
sales
vs 2020
The WarehouseNoel Leeming
Warehouse StationeryTorpedo7
Store footprint
(Square Metres)
The WarehouseNoel Leeming
Warehouse StationeryTorpedo7
Store changes during the quarter
New
store
Replacement
store
Store
closure
Store
extension/
reduction
The Warehouse
Warehouse Stationery
Noel Leeming
Torpedo7
1) Total Group sales includes TheMarket segment, eliminations and other Group operations in addition to the 4 main retail operations detailed above.