The Warehouse Group to cut 130 head office roles, close 6 stores

The Warehouse Group confirmed on Monday that it is moving forward with its shift to the agile operating model that it first announced in February as a way to keep up with customers’ rapidly changing needs.

At the time, the group focused on role changes for its senior leadership team, as it shifted away from having CEOs for each of its retail businesses – The Warehouse, Warehouse Stationery, Noel Leeming, Torpedo7 and TheMarket – and instead formed a “leadership squad” for the entire company.

However, on Monday, June 8, The Warehouse Group CEO Nick Grayston revealed that the new structure will result in 100-130 roles being cut completely from the head office in the Auckland suburb of Northcote.

“Value for money has never been more important to our customers and in order to continue to deliver this, we need to manage our costs and run our business more efficiently,” Grayston said.

In addition to the head office job cuts, the company also expects to cut approximately 700-950 roles, or 410 full-time equivalent store roles, as a result of store closures and operating model changes in its bricks-and-mortar network.

The company on Monday announced plans to close six stores in the coming months, on top of the three Noel Leeming, The Warehouse and Warehouse Stationery store closures that have already been confirmed.

The six additional store closures include the Noel Leeming Henderson Clearance Centre and Tokoroa store, The Warehouse Whangaparaoa, Johnsonsville and Dunedin Central stores and Warehouse Stationery Te Awamutu store. However, a full consultation process will still to be carried out.

Grayston said that some of these changes had already been planned but were accelerated due to COVID-19.

“Based on our insights into changing shopping habits and the anticipated economic impacts caused by COVID-19, we are accelerating some changes that had already been planned,” he said.

In a trading update on Monday, The Warehouse Group reported strong trading across its brands since the move to Level 2, but attributed it largely to pent-up demand said it’s unlikely to continue as the economic impacts of COVID-19 are realised.

Given the continued uncertainty around trading performance, the board reaffirmed its position on withholding guidance on FY20 earnings.

The retailer said it will shift to the new agile way of working from August 31 of this year and will continue to assess its bricks-and-mortar footprint moving forward.

The retailer said it has flexibility in its lease renewal profile with approximately one quarter of its network coming up for renewal within the next 15 months.

According to The Warehouse Group, its proposed footprint changes are based on factors including proximity to other stores, shopping habits of those in the area, store profitability and lease arrangements.

Last month, the company opened new The Warehouse and Noel Leeming stores in Lunn Avenue in Auckland. In July, it plans to open a Noel Leeming Northlink store in Christchurch, which will replace its Papanui and The Palms stores, and close its Birkenhead The Warehouse store.

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