Online Obsessions Drive Warehouse Profits and Accelerate Change

Kiwis bought home gadgets, office furniture and exercise equipment in droves during the shutdown, according to the nation’s largest retailer.

Releasing its final annual results Thursday, The Warehouse Group said it had seen “exponential growth” in online and click-and-collect sales, to the point where online now accounts for 11 percent of all sales.

Much of that was fueled by the seven-week national shutdown from March to May, when The Warehouse was one of the few retailers initially allowed to sell restricted items without contact. As the restrictions eased, their entire range online became available.

The group’s chief executive, Nick Grayston, said demand for home appliances and office furniture had driven sales of its Warehouse Stationery and Noel Leeming brands.

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” Electronics, no doubt, as customers have had to work from home and homeschool … but home products in general have worked as well as people have.

“The other thing that has been done very well is bicycles – a lot of people ride bicycles for exercise and there is a global shortage of bicycles.”

Outdoor clothing and sports equipment related to water also worked very well, he said.

On Thursday, the company confirmed a net profit of $ 44.5 million for the year through Aug. 2, down 32 percent from the prior year. Revenues were $ 3.2 billion, 3.3 percent more than the previous year.

Many commentators have urged companies that accepted the government wage subsidy and later made profits to pay back the subsidies.

But if The Warehouse hadn’t received $ 67.8 million in grants, it would have had a loss of $ 4.3 million and likely different decisions, Grayston said.

” I’d like to be very clear on this … 100 percent went to our people at the time, it wasn’t withheld for profit, and that allowed us to pay our people in full.

“We were only required to pay 80 percent of their salaries and that was a great thing that allowed us to give people security at a time of great uncertainty.”

Sales during the seven-week lockdown fell 67 percent or $ 265 million, and the subsidies had only covered half of his salary expense. “As far as we are concerned, we used it absolutely as expected.”

Covid caught The Warehouse on the cusp of a major restructuring. The company has marked the loss of up to 1080 jobs, a figure that should be firmer after staff consultations conclude this week.

President Joan Withers said the company “was already on the path of change” when the virus hit and that it had only “accelerated the rate at which we travel.”

Grayston confirmed that 115 layoffs had already been made at the head office, with 500 to 750 likely due to roster changes.

There would also be layoffs from various store closings during the year, and seven more Warehouse Stationery branches had folded into the “Red Sheds.”

The changes to come include reduced hours for some workers and different tasks for others, as online ordering and fulfillment became a much more important part of retail life, Grayston said.

” It’s about serving our customers. Many of those lists date back 10 years and people shop a lot more at night and on weekends. And we have a decade of e-commerce growth in just two months. ”

But he was confident the cuts wouldn’t leave the company shy with workers during the holiday rush, as First Union suggested.

“Anyway, we always employ more people at Christmas … it’s about fixing the core and making sure people are there when customers need them.”

“This has been a very considered, planned and consulted decision for a long time.”