Warehouse Group chief executive Mark Stirton.
The Warehouse Group’s chief executive has flagged concerns about ships with its imported products potentially skipping New Zealand as the conflict in Iran exerts pressure on the domestic retailer.
The Warehouse Group reported its 2026 half-year result on Friday, with total group sales up 0.3% to $1.612 billion.
The group’s earnings before interest and tax (ebit) rose strongly, up 37.7% to $26.9 million, while overall reporting a net profit after tax of $15.7m, up 33.6%.
The result led to the company’s share price lifting 6.9% on Friday to 69.5c, but chief executive Mark Stirton said he felt the result was more mixed.
“I think we left some potential on the table, but I’m always an ambitious guy so I’m always going to feel like we underperformed,” Stirton said.
Jarden analysts Guy Hooper and Nick Yeo said in a research note they were encouraged by early improvements by the business.
“A reasonable result with operating earnings consistent with expectations.
“Early signs of the shift in strategy are evident, with improving trends within Red Sheds, cost-out activity, and improved capital discipline,” Hooper and Yeo said.
However the conflict in Iran and rising fuel prices has added extra pressure on the second half of the group’s financial year.
The first six weeks of the second half resulted in sales down 0.2% on the same period last year, although chief financial officer Stefan Knight confirmed there hasn’t been a substantial difference since the conflict began.
Stirton said scenario planning for the group is already underway, sharing his intention to not “sit on his hands” as he outlined three areas of concern.
“There are things we’ve got to be very cautious of. One is our shipping lines because we obviously import a huge amount into New Zealand. Albeit most of it’s from China, so it’s not the [Middle] East area, but it’s really the contention of ships.
“When you’ve got limited shipping space, that’s when you can get affected, so we’re really worried about what they call blank sailings where the ship might not arrive. We’ve scheduled stuff and that’s really worried us.”
Another concern is surcharges on containers which elevates the cost, as well as the knock-on effect of fuel both on shipping and domestic transport.
Stirton’s other concern is on the consumer, noting that it is hard to predict how the customer is going to respond.
Consumer confidence research released by ANZ on Friday showed confidence fell to a 17-month low in March.
Stirton’s hope is that The Warehouse and the wider group can be a source of value for Kiwis in this uncertain period.
“Every bump in the road is [slightly annoying], but that’s what good retailers do is we have to come up with ways to deal with different elements that are changing, so it depends on where it gets to. We’ll have to respond differently if it escalates any further.
“Whilst demand might be volatile, we hope people will choose us.”
Work continues for The Warehouse Group on its previously announced restructure.
It is proposing to cut 270 roles from its head office in Auckland, with several workstreams outsourced to Tata Consultancy Service.
The group’s cost reset programme has already delivered a 1.7% drop in the cost of doing business, decreasing 70 basis points as a percentage of sales.
At 30.6%, the group has met its long-term target of getting its cost of doing business under 31% as a percentage of sales, but Stirton was keen to point out to analysts that its costs are often lower in the first half of the year.
As for the impact on the team itself, Stirton said he expected any changes to bed in over the next quarter.
“Our people have been amazing through it and very professional. We try to look after them as best we can through the process, but it’s really tough in these moments. I don’t get up every day wanting to lose key jobs, in fact I wanted to create jobs.
“That’s very much the ambition, but we had to do what was economically responsible at that time, and that was one of our options that we had to select and that was the one we went with.”
One place Stirton will be able to create jobs is in Mangawhai, where the group plans to launch two new locations by mid-2027.
The first will be a roughly 4000sq m Warehouse store, the group’s first new store since 2023, along with a 750sq m Noel Leeming.
The new stores will be adjacent to one another and located at the retail park on Molesworth Drive, roughly equal distance between Mangawhai and Mangawhai Heads.
Stirton said while the focus is on fixing the core business, the group needed to have a growth strategy.
“The market doesn’t stop just because you’re in a turnaround. Mangawhai as a location is booming up there, I think it’s the fastest growing catchment in the country.
“We’ve got an incredible opportunity with a piece of land up there that we can be very central and highly prominent, and we just had to take the opportunity.
“Our numbers stack up, and we’re very happy that Red, Noel and potentially Blue could go there.”
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.