Warehouse Group warns of possible stock delays

The Warehouse Group has warned it could face some product delays in the months ahead as international supply chain disruption continues.

At the company’s annual general meeting, group chief executive Nick Grayston said The Warehouse and Torpedo7 were facing the prospect of stock shortages within some product categories.

“Covid-19 has required us to take additional measures to ensure that there are sufficient stock levels to meet customer demand during the peak trading period,” Grayston said.

“The Warehouse Group is confident on its product availability, however, there may be some specific categories in the Torpedo7 and The Warehouse brands that are impacted by delays in international shipping and loading once they arrive.”

These categories included some models of Bike, a Warehouse spokeswoman confirmed.

Grayston said the group had engaged with consultants to develop a “winning supply chain strategy” to transform its network to meet evolving customer needs and expectations.

Talking to shareholders, Grayston said FY20 had been a year of “disruption and change” and reflected on the changes to red shed Warehouse staffing rosters and how Covid-19 had impacted the group’s workforce and redundancies.

“Making decisions that impact team members’ roles is the hardest part of my job and I know it was tough on some of the team. However, [changes to staffing rosters] was something that could not be avoided or deferred as it was key to our store operations.”

In the year to August 2, The Warehouse Group posted a $44.5 million net profit after tax – a 32 per cent decrease on its earnings in FY19. It would have made a loss of $4.3m without financial support from the government.

The group posted sales revenue of $3.2 billion in the year, up 1.5 per cent on FY19. Online sales now make up 11.4 per cent of total group sales.

The Warehouse remains the group’s biggest business, making up 53 per cent of total sales. Sales from the red shed in the year we down 1.6 per cent. Warehouse Stationery increased annual sales by 0.1 per cent and Noel Leeming increased sales by 9.2 per cent, surpassing $1b revenue mark.

Torpedo7 increased sales by 0.7 per cent. TheMarket reported an operating loss of $14.7m, in line with the group’s business plan and is not expected to break even for two to four years.

So far, FY21 group first quarter are up 2.9 per cent at The Warehouse, 11.5 per cent at Warehouse Stationery, 41.8 per cent at Torpedo7. Warehouse Stationery sales were down almost 2 per cent.

Group chair Joan Withers said she was extremely proud of how the group had performed in the face of adversity during the FY20 year.

She said the group had finished the year with a strong balance sheet and the result for the year was pleasing despite group stores being closed for seven weeks.

During Alert levels 4 to 2, the group received 1.25 million online orders and turned 105 of its stores into fulfilment centres. In April, all stores recorded a drop in sales greater than 30 per cent, and group sales were down 67 per cent during period of store closures, she said.

“We have been on a transformation journey for three years and in FY20 we started seeing significant evidence that the hard work put in by the business was starting to pay off. Post Christmas 2019 and before the Covid disruption, we had good sales momentum.”

Withers said the group would be revising its dividend policy and hoped to return to paying dividends in the current 2021 financial year.

“The current dividend policy has been in place since September 2015 and our review is to ensure the policy is inline with our strategic and capital management objectives,” she said.

The Warehouse Group opened eight stores and closed 12 stores in FY20.

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