The Warehouse Group (WHS) H1 2025 earnings summary

Executive summary

• The business is undergoing a turnaround with early signs of improvement, focusing on cost control, refreshed categories, and efficiency, despite subdued consumer demand and economic headwinds.

• Sales declined 1.6% year-over-year to NZD 1.6 billion, with improving trends in Q2 and January.

• No interim dividend declared due to current performance and outlook, with a positive net cash position of NZD 19 million.

• Net profit from continuing operations was NZD 11.99 million, down from NZD 32.06 million, with discontinued operations (Torpedo7) contributing a NZD 55.5 million loss.

• Decisive actions are being taken to strengthen fundamentals, cut costs, and focus on long-term profitability and shareholder value.

Financial highlights

• Group sales for the half were NZD 1.6 billion, down 1.6% year-over-year, with gross profit margin at 32.5% (down 180bps), and gross profit of NZD 521.7 million.

• EBIT fell to NZD 19.5 million from NZD 43 million last year; operating profit from continuing operations was NZD 38.9 million, down from NZD 62.8 million.

• Cost of doing business (CODB) reduced by 2.8%, now at 31.3% of sales.

• Operating cash flow was NZD 122.9 million, down NZD 14.6 million year-over-year.

• Free cash flow yield increased to 33.3%; cash conversion improved to 106.1%.

Outlook and guidance

• H2 EBIT expected to be broadly in line with FY2024 H2 loss of around NZD 14 million.

• Guidance assumes continued gross margin pressure from legacy stock clearance and ongoing promotional activity.

• Cost growth assumptions are conservative for H2, with some challenges anticipated.

• Full-year project spend guidance updated to NZD 23–28 million.

• Significant uncertainty remains around economic recovery and H2 FY25 performance.