NEW ZEALAND | The Warehouse has simplified its grocery range around pantry staples and everyday essentials as the wider group improved profitability in a subdued retail market. The move improved category performance, with the retailer concentrating on frequently purchased products such as bread, eggs, coffee, and olive oil.
For the 52 weeks ended 2 August 2026, The Warehouse Group reported sales of $3.0 billion, down 1.9 percent against FY25, which included 53 weeks of trading. Sales increased 0.4 percent on a comparative 52-week same-store basis.
Operating profit, measured as EBIT before NZ-IFRS 16, increased to $22.6 million from $1.3 million. Reported net profit after tax reached $11.2 million, compared with a $2.8 million net loss in FY25.
Group Chief Executive Officer Mark Stirton said grocery remained an important reason for customers to shop regularly at The Warehouse. The focus was on strengthening its everyday offer.
“Rather than expanding the range, we’re concentrating on the staples customers buy most often and where we can offer the best value, like bread, eggs, coffee and olive oil. A simpler range allows us to deliver lower prices and a more reliable top-up shop for our customers.”
Margins and Costs Improve
Group gross profit margin increased 40 basis points to 32.6 percent. The cost of doing business fell by $29.8 million to 31.8 percent of sales, also an improvement of 40 basis points.
It was the first year since FY21 that gross margin improved while costs declined as a proportion of sales. Stronger buying and retailing discipline, improved ranges, tighter inventory management, and a higher proportion of full-price sales supported the margin recovery, which accelerated across all three brands in the second half.
Customers remained conscious of value. Average selling prices fell 1.4 percent, while average basket value increased 0.5 percent and units sold rose 1.8 percent.
Consumer confidence improved during the first half as interest rates eased, but international conflict, higher fuel prices, and renewed pressure on household budgets weighed on sentiment later in the year.
Chair John Journee said the recovery reflected actions taken within the business.
“Despite a difficult retail environment, The Warehouse Group made meaningful progress during the year. Sales were steady on a comparable basis, profitability improved, and the business finished the year in a much stronger position.”
Journee said materially improving profitability remained the board’s primary ambition.
The Warehouse Recovers in Second Half
The Warehouse reported sales of $1,774.9 million, down 2.3 percent against the 53-week FY25. Comparative 52-week same-store sales increased 0.6 percent.
After allocating support office costs, the brand recorded an operating loss of $7.5 million, an improvement of $4.7 million on the previous year’s $12.2 million loss. Gross profit margin remained 20 basis points below FY25, although it recovered during the second half and finished the fourth quarter strongly ahead of the prior year.
Homewares and apparel, which represent 50 percent of revenue, contributed to the second-half margin improvement. More apparel sold at full price, while homewares margins also improved.
Beauty sales increased 5.2 percent on a comparable 52-week basis, supported by broader ranges and improved presentation. The Warehouse recorded its highest toy sales and remained New Zealand’s preferred toy retailer for a second consecutive year.
Online sales represented 4.4 percent of sales, compared with 4.6 percent in FY25. Actions to improve online profitability delivered stronger operating margins than the previous year.
Following an extensive review of customer segments, The Warehouse introduced its new brand platform, This Is Warehouse Country. Stirton said the business was improving its ranges, pricing, inventory management, and customer experience as it worked to regain its place as New Zealanders’ first-choice retailer.
Other Brands Lift Earnings
Warehouse Stationery returned to sales growth and nearly doubled operating profit. Sales increased 0.7 percent to $227.6 million against the 53-week FY25, while comparative 52-week same-store sales increased 2.0 percent.
Operating profit rose to $15.9 million from $8.2 million. Online sales represented 7.1 percent of sales, broadly in line with the previous year.
Pricing and stock management supported gross profit growth across every category. On a comparable 52-week basis, Print & Create sales increased 13.8 percent, Art & Craft rose 6.7 percent, and Office Furniture grew 5.5 percent.
Noel Leeming made the largest contribution to the group’s earnings recovery, increasing operating profit to $21.8 million from $11.7 million.
Reported sales of $1,017.4 million were down 2.0 percent against the 53-week FY25. Comparable 52-week same-store sales declined 0.5 percent, while total sales, including online, fell 0.2 percent. Online sales increased to 13.1 percent of sales from 11.3 percent.
Appliance sales grew 11.2 percent on a 52-week basis, led by whiteware and small appliances. Cellular sales increased 4.7 percent, while Computers & Storage grew 10.6 percent, supported by new brands and demand linked to the Windows 10 and 3G transitions.
Services, including delivery, installation, and Tech Solutions, increased 10.1 percent. Pricing discipline supported margin growth in both halves of the year.
Cash Flow Supports Store Investment
Operating cash flow improved by $121.2 million to $193.5 million. Inventory fell to $438.8 million from $476.7 million, aged inventory declined to 21.8 percent from 23.1 percent, and stock turn increased to 4.7 times from 4.6 times.
Free cash flow reached $79.4 million, compared with a $45.2 million outflow in FY25. Net debt fell by $79.1 million to $17.0 million.
Capital expenditure increased to $21.1 million from $12.4 million, primarily directed towards stores. The Warehouse upgrades include lighting, flooring, racking, displays, and visual merchandising in homewares, apparel, and beauty.
During FY26, Warehouse Stationery opened in Wellington Central, and Noel Leeming relocated its Palmerston North store. Since August 2026, Warehouse Stationery has opened in Whitianga, and Noel Leeming has opened its Auckland Central flagship.
The group plans to open The Warehouse and Noel Leeming stores in Mangawhai in late 2027. No final dividend was declared for FY26, with the board prioritising sustainable earnings and financial flexibility.
Sales in the first eight weeks of FY27 were broadly in line with the prior year, while margins were ahead of the comparable period. Stirton said retail conditions were expected to remain challenging, with improving The Warehouse’s performance the group’s biggest priority.
“Improving performance at The Warehouse remains the Group’s biggest priority. We will achieve that by delivering better value and a better customer experience through more relevant ranges, better pricing, better stock management and lower costs,” said Stirton.
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