It currently has 84 stores for The Warehouse and a total of 219 across the group.
The Warehouse Group chief executive Mark Stirton said the strategy was grounded in knowing its customers better, offering the right products and running the business with greater discipline.
“We welcome around 1.7 million customer visits to our three iconic retail brands every week, and we have a national store and distribution network that is enviable.
“Over time the business lost sight of what customers wanted from us and as a result, has not performed to its potential,” Stirton said.
“We have a credible and realistic pathway to achieving our target of $100m in operating profit within three to five years, which does not rely on any single initiative.”
The Warehouse Group chief executive Mark Stirton said growing The Warehouse was the group’s biggest opportunity.
The group said three levers provided the pathway to its goal, including optimising its base, growing the performance of existing stores, and adding new stores.
The first priority is to grow the group’s top-line earnings, with a targeted annual growth rate (AGR) of about 2%. In the group’s last full-year result, it reported an AGR of 0.4%.
Supporting this is a targeted increase in gross margin by 150 basis points from 32.6% to 34.1%, driven by an improved mix of higher-margin categories, selling more products at full price and better sourcing from its suppliers.
The other optimisation will be the group’s cost of doing business (CODB), which is targeted to below 31% of sales.
With those measures in place, the group expects stores to increase earnings by 10-15 basis points per annum.
The group has planned capital expenditure of $40m-$60m annually, with 50% prioritised for new stores and core infrastructure.
It opened a new Queen St Noel Leeming store in September and plans to open a Pāpāmoa store early 2027 with another in Mangawhai, set to open later in 2027.
The investment will be released selectively and funded from operating cashflow rather than borrowing, with intent to invest when the business case stacks up.
The group’s board has also revised its dividend policy to target an annual ordinary dividend payout ratio of 50% to 70% of adjusted net profit after tax.
It intends to consider resuming dividends for the 2027 financial year, although any dividend remains subject to the group’s performance, financial position and board approval.
The group said it would report on its progress against 10 measures every half to show its progress.
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.
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