The Warehouse swings to net loss amid lower sales, Torpedo7 exit

The Warehouse Group swung to a net loss in the fiscal first half, attributed to lower sales, impairment of Torpedo7 assets and restructuring costs.

The group’s net loss totalled $23.7 million as retail sales fell 4.9 per cent to $1.63 billion.

Sales at the core Warehouse division slid 4.7 per cent to $965.6 million while Warehouse Stationery sales declined 5 per cent to $117.9 million. Noel Leeming’s sales dropped 2.2 per cent to $544.4 million.

During the period, The Warehouse Group sold its Torpedo7 outdoor business to Tahua Partners for $1, along with debt and lease liabilities. The company said the sale will allow it to focus on its core brands and improve financial performance.

“The sale of Torpedo7 has had a severe impact on the group’s financial performance this half,” said Nick Grayston, The Warehouse group CEO.

“While the disposal of Torpedo7 means we have incurred significant write-downs, it allows us to redirect our focus towards our core brands and build on the $30.7 million in adjusted NPAT from our continuing operations.

“As a further part of our strategic reset, we intend to sell or close by the end of the financial year.”

Grayston added that it is time for the company to draw a line under as a separate entity and shift its marketplace focus to The Warehouse.

Meanwhile, the company expects tough retail conditions to persist, with customers prioritising essentials, putting pressure on big-ticket items.

“Our second half is now underway, and we’ve seen much tougher trade in February with sales decline in the low teens. In March, we’ve seen some improvement with our sales decline returning to be more in line with the level of decline experienced in our first half,” Grayston said.

The company did not provide an outlook for the year-end due to economic uncertainty.

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