Warehouse Group Ord New

Thank you for standing by and welcome to the Warehouse Group Limited Fiscal Year 2026 Annual 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, Warehouse Chair. Please go ahead.

Tēnā koutou kata and good morning everyone. Welcome to the Warehouse Group's FY26 Annual Results Presentation. Thank you for joining us today. I'm John Genet, Chair of the Warehouse Group. Joining me are Mark Sturton, our Group Chief Executive Officer, and Steph Knight, our Group Chief Financial Officer. I will begin with the Board's perspective on the year before handing over to Mark to take you through the Group's performance and progress. Steph will then cover the financial results in more detail. and Mark will return to discuss the year ahead. As always, there will be an opportunity to ask questions at the end of the presentation. Looking back at FY26, the Board is encouraged by the progress made on our turnaround this year. Despite a challenging financial environment, the Group delivered a significantly stronger result. Reported sales were just over $3 billion, down 1.9%. that reflects the additional 53rd week included in FY25. On a comparable 52 week same store basis, sales increased 0.4%. Gross margin increased by 40 basis points and the cost of doing business fell by 40 basis points. restoring operating leverage and lifting operating profit to $22.6 million, up from $1.3 million in FY25. Strong cash generation allowed the Group to reduce net debt by $79.1 million, while increasing investment in our store network. Across our retail brands, Noel Eamon and the Warehouse Stationery delivered much stronger returns. The Warehouse also improved, however, profitability remains below an acceptable level and its recovery remains our most important priority. Overall, the FY26 result was driven by actions taken within the business rather than any meaningful recovery in market conditions, giving the Board confidence that the changes underway are gaining traction and laying the foundations for further progress. While we're encouraged, we're equally clear about the work still ahead. It is important to maintain a momentum in the turnaround and for that reason the Board has decided not to declare a final dividend FY26. Our immediate priority is to rebuild earnings while retaining the financial flexibility needed to support the turnaround and the future growth of the business. The Board recognises the importance of dividends to shareholders and remains committed to returning to paying dividends in the future. On behalf of the board, I'd like to thank Mark, the leadership team and our team members. The progress we've made this year is a direct reflection of their hard work and commitment to our business and our customers. I would also like to thank our shareholders for their continued support. I'll now hand over to Mark.

Thank you, John. Kia ora. My name is Mark Sturton, Group Chief Executive Officer. I will step through the market conditions we faced, what the Group achieved during the year and the work underway to deliver further improvement. FY26 was another difficult year for New Zealand consumers. While consumer confidence showed signs of recovery by the end of summer, the improvement proved temporary as international conflict drove higher fuel prices and added further pressure to household budgets. Confidence recovered somewhat towards the end of the year, but not enough to drive a meaningful recovery in discretionary spending. This year, unemployment reached its highest level since 2015, an inflation increase of 4.1%. With real incomes declining and the first OCR increase in three years adding further pressure, customers became increasingly focused on value. Our customers bought more items at lower selling prices as we protected the consumer from inflation, especially on everyday essentials. This year reinforced the importance of not waiting for an economic recovery. Instead, we remain focused on the factors within our control, like delivering compelling value, relevant ranges, and reducing costs. As John said, we have spent the year lifting margin and execution. For the first time since FY21, gross margin increased and cost of doing business decreased at the same time, enabling us to begin restoring operating leverage with broadly flat sales. This year, we made substantial progress strengthening the balance sheet. Better inventory management improved cash conversion, allowing us to invest more in our stores and reduce debt. As a result, our financial position is more resilient than it was 12 months ago. At the end of FY25, we set out a clear agenda for the year ahead. This slide shows the progress we've made against each of those commitments. We achieved the reduction in overheads, gross margin improved, with pleasing margin expansion in no-leaming and warehouse stationery. The warehouse full-year gross margin was impacted by the clearance of aged inventory in the first half, but encouragingly, gross margin exited the fourth quarter ahead of the prior year. We unlocked significant working capital and maintained discipline around investment, with capital re-weighted towards stores and our supply chain. And with the Board's support, we have established our retail-led strategy with clear priorities underway. The opportunity ahead is to translate these operational gains into sustained earnings and share growth. As we talk to you at the half year, we are rebuilding the retail fundamentals that underpin performance and execution. This includes how we buy a product, move it through our network and sell it to our customers, starting with plan and buyer. Our aim here is to improve inventory productivity, increase sell-through and grow our gross margins. This year we reset our buying and planning disciplines and capability, focusing on our priority categories of home, apparel and health and beauty, all showing good improvement. We refined grocery around a clear purpose as a value-led top-up shop. During the second half, we simplified the grocery range to focus on the products customers buy most often, improving category performance while delivering more compelling value for our customers. These changes helped reduce group inventory The second area is Move Our supply chain represents one of the biggest opportunities to reduce costs and support future growth by improving product availability for our customers We've established a dedicated leadership role completed a full review and have several initiatives underway including a new freight partner As a result, stock turns have begun to lift The third area is Sell By creating better customer experiences, we expect to grow share over time. Across our three brands, we are investing in stores and visual merchandising. From upgrading, lighting, flooring, through to opening our first flagship store in Noel Leemings. We also recently launched This Is Warehouse Country, our new brand platform built on what customers have loved about the warehouse. Together, these initiatives help support positive same-store sales growth in a challenging retail environment, but we know our stores represent the biggest opportunity to elevate customer experience which is central to our new strategy. While we've made good progress improving the fundamentals, our focus now is turning those foundations into winning back share. Our growth opportunity looks different in each of our brands. At the warehouse, that means driving more traffic improving product relevance and value, investing in stores and growing in priority categories. At the Warehouse Stationery, it's about growing business and education, expanding services and reaching more customers through new formats and digital channels. At Noel Leeming, the opportunity is to win share in priority categories, attract the younger customers, differentiate through expert service and continue growing both our store network and online offer. Better performance and growth matters, and so does staying true to what we believe as a business. Looking after our people, our communities and environment has always been central to our DNA. Our stores play an important role in our communities they serve, supporting local fundraising. This year we contributed $1.9 million to charities and community groups across New Zealand. 90% of our electricity was matched by generation from solar farms. helping lower emissions and provide greater certainty over future energy costs. We are also proud to receive a Sustainability Leadership Award for the Good Drop, our clothing reuse and recycling scheme in partnership with the Salvation Army. We also help customers recycle electrical products and soft plastics, something we see as part of our responsibility as one of New Zealand's largest retailers. Our employee promoter score declined this year, Reflecting the significant change that we've gone through as a business in this turnaround. We've asked a lot of people this year to do a lot of hard things and I want to thank them for everything they've done to help put the business in a stronger position while continuing to care for our customers every day. I mentioned our new brand platform. Built on real stories, it's a bold reminder that the warehouse is woven into the fabric of New Zealand. It's also a signal of confidence. We're back. We're giving customers more reasons to reappraise us. This is just the start of the next chapter of For the Warehouse and we've had a great response from customers and our team members so far. I'll now hand over to Steph to take you through our financial performance before I return to discuss the year ahead.