Warehouse Group Ord New

Thank you for standing by, and welcome to the Warehouse Group Limited Fiscal Year 2026 interim results. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. John Jernay, Group Chief Executive Officer. Please go ahead.

Tena koutou and good morning, everyone. Welcome to the Warehouse Group's FY26 interim results presentation. Thank you for joining us today. I'm John Jernay. It's a privilege to be speaking with you as the first time as chair of the Warehouse Group. Joining me today are Mark Sturton, our group chief executive officer, and Steph Knight, our group chief financial officer. I will start with an update of our first half and then hand to Mark to step through the Group's performance and progress. Steph will then take you through the financial detail and Mark will return at the end of the talk to talk about the second half of the year. As always, there will be an opportunity to ask questions at the end of the presentation. From the Board's perspective, the Group is on the right path and we are seeing execution improve. This progress has been delivered in an extremely challenging retail environment. with volatile macroeconomic conditions. In these circumstances, the Group delivered a solid result for the first half, holding sales, reducing costs and improving profitability. Sales were $1.6 billion, up 0.3% on the prior year half. Gross profit was $520.5 million, down slightly on the prior period with a gross margin of 32.3%. Operating profit improved to $26.9 million, up 37.7% on FY25 H1, reflecting tighter cost control. Most of our new management team were in place by the start of quarter one. They have delivered a leaner operating model and have made progress re-establishing the retail fundamentals, which Mark will cover shortly. I want to acknowledge the hard work of our team members across the business, delivering progress during significant change. There is more work to do to restore sustainable returns and realise the potential of our brands. Looking ahead at the tight economic conditions and now with increased uncertainty from the international conflict in the Middle East, our turnaround will take time. Given the half-year result, and the level of economic uncertainty, the board has made the decision not to declare an interim dividend. I know this will be disappointing for our shareholders. I want to assure you that the board and management are aligned and taking action to rebuild shareholder value quickly and return the group to paying dividends. I sincerely thank our shareholders for their patience and ongoing support. I will now hand over to Mark.

Thank you, John, and good morning, everyone. I'm Mark Stedden, the Group Chief Executive Officer. As John has outlined, we are making progress, but it is happening in a tough environment. I will step through what we are seeing in the market, what the Group achieved in the first half, and the work underway to strengthen the business. I want to spend a moment looking back at the macro conditions during the first half of the financial year. By January, we began to see some early signs of improving consumer confidence. For the first time in four years, more people felt it was a good time to buy a major household item, and 55% of consumers described their financial position as comfortable. These were the first indicators that retail spending might start to increase in 2026. That said, retail spending in January decreased 1.1% due to the severe weather events that disrupted parts of the country. At the same time, inflation has remained high, sitting at just over 3%. That pressure was being felt most sharply through everyday essentials, particularly food and petrol. Unemployment had reached a 10-year high in December, and GDP growth remains muted. While confidence was improving, many households were still cautious, focused on repaying debts, saving where they could, and prioritizing basic needs over discretionary spending. Like all businesses, we are focusing on our ability to respond quickly as conditions change, and I will talk to the current climate at the end of the presentation. Despite a volatile environment, we delivered a solid result in the first half, with disciplined cost control starting to flow through to improve profitability. One of the more positive aspects of the first half was the trading performance across all brands and stores. Warehouse Stationery delivered a standout result with sales margin and operating profits all up on the prior period. As our smallest brand, it has been the fastest to begin turning around. Our focus now is on applying those same learnings at scale in the warehouse as we continue the broader turnaround. Noel Leeming delivered a strong result in an intensely competitive market. Operating profit for the half exceeded the full year results in FY25, which is a meaningful step forward. At the warehouse, customers are responding well to the changes we have made in our stores and across our ranges. For traffic and conversion, we're both up again, supported by new ranges, better pricing and ongoing visual merchandising improvements. As newer ranges landed in the second quarter, we relied less on discounting and delivered higher levels of full price sales. The warehouse held its number one position in the market for toys and health and beauty continued to grow, an increasingly important category for us. Across all three brands, trading was strong during the main summer retail events, including Black Friday, Christmas, and Back to School. Underpinning all of this is a new leaner operating model and a culture of cost control. This will allow us to deliver better value for customers over the long term and improve profitability. None of these highlights would be possible without our people, and I want to acknowledge our 10,000 touch team members across the country. Their work and commitment are making a real difference as we reset the business. We are making good headway on our retail fundamentals. This is the practical work that supports margin improvement at the warehouse and the broader turnaround across how we plan, buy, move, product, and sell and install. In merchandise planning and buying, a new strategy and governance model is now in place. This is improving decisions and giving us better control over ranges, margin, and inventory. We've brought in key talent and broadened our supply base, and we're starting to see better planning discipline and alignment between product pricing and customer demand. Turning to supply chain, we now have peer leadership in place at the executive level. We've changed our shipping supply, improving visibility, control and cost, and a broader review is underway to further improve our cost to serve over time. We have improved delivery windows and helped remove some complexity from how our containers move. And finally, sell. Today I'm excited to announce that we'll be opening a warehouse and a null leaving in Mangifer. This will be the first new warehouse store since Wanaka in 2023. Our store network is our key strength. More than 85% of New Zealanders live within 20 minutes drive of one of our stores, and our stores are central to how we will serve communities and deliver value. Alongside this, we are continuing to invest in store experience, including visual merchandising upgrades and planning is underway for a new flagship store format. We are invigorating our brand to drive reappraisal and preference and actively testing our paid media to find the best value and performance while expanding our own retail media strategy. This work is about fixing the core. It takes time, but it strengthens execution and will support better performance at the warehouse over the long term. Even in a challenging period for the business, we have stayed true to our heritage and the communities we serve. Through the Warehouse Red Bag, we raised close to $700,000 to support local communities through our stores and families in need through our charity partners. I want to recognize the team at the Warehouse Papamoa who used their Red Bag funds to deliver food, water, and sunblock directly to first responders at the cordon during the Mount Manganui landslide. Over Christmas, our annual Be the Joy campaign raised more than $250,000 and collected thousands of gifts for families in need thanks to the generosity of our customers. We were delighted to welcome Santa to 19 of our stores, giving families the opportunity to create special memories. To support our busiest training period, we employed an additional 1,000 team members in local communities across the country. We continue to look after our environment with Scope 1 and 2 emissions down 80% on last year. We're proud that 183 of our sites are now powered by Lodestone's energy solar farms. But we diverted 79% of our operational waste from landfills and increased the amount of post-consumer waste being diverted. 69% of our private label sales now use sustainable packaging, continuing a steady improvement year on year. Doing good remains an important part of who we are as a business as we look ahead. I will now hand over to Steph to take you through our financial performance in more detail.