One dollar deal: The Warehouse gives away Torpedo7

(Source: Torpedo7/Facebook)

The Warehouse Group has walked away from its Torpedo7 outdoor business, giving it away for $1 – along with debt and lease liabilities.

The listed retail giant sold the company to Tahua Partners in a move it says will allow it to focus on its core brands and improve financial performance.

The Warehouse Group said Torpedo7 – which has about 24 stores nationwide – accounts for just 5 per cent of group sales. But over a period of time The Warehouse had paid $52.2 million for the business, acquiring it in stages over the past 13 years or so. Last year, Torpedo7 lost $22 million.

The sale includes stock, cash in-store, and the brand itself, and is expected to result in a $55 million to $65 million non-cash, pre-tax accounting write-down in the half-year financial results.

Tahua Partners will also assume the obligations including leases and honouring gift cards, online orders, and customer returns and will offer employment to the majority of Torpedo7’s permanent staff.

Tahuna is owned by Pak n Save franchisees including Paul and Liz Blackwell, who also own the basketball team Breakers and formerly owned Pak’n Save Albany, and former Glenn Innes Pak’n Save owner Rob Redwood.

“While this sale will impact our FY24 half-year result significantly, we expect that the net cash impact (post-tax) of the sale will be close to zero,” said The Warehouse Group CEO Nick Grayston.

Grayston added that the company would rather prioritise strengthening The Warehouse, Warehouse Stationery and Noel Leeming retail brands.

“Torpedo7 has faced ongoing challenges to its performance recently. Lower consumer demand post-Covid, driven in part by a global decline in the bike market, has impacted sales and profitability,” said Grayston.

“We’ve decided it’s time to draw a line under it and we have found an owner who can focus more attention to its turnaround.”

The sale is expected to be completed by the end of next month.

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