The Warehouse Group sets $100m operating profit target and plans new stores
The Warehouse Group has released a plan to more than quadruple its operating profit over the next three to five years and boost its store numbers.
Speaking to shareholders and analysts at its 2026 Investor Day today, the retailer set a target to achieve $100 million in operating profit within three to five years, compared with the $22.6m in operating profit it reported in its 2026 full-year result.
The last time the group reported an operating profit above $100m was in 2023, when the company made an operating profit of $122.2m.
Delivering the $100m target means the company needs to lift its operating margin from 0.7% to close to 3%, something it hasn’t achieved since 2022.
The group also plans to open four to five new stores a year across its three brands from year two of its target window.
It currently has 84 stores for The Warehouse and a total of 219 across the group.
The Warehouse Group chief executive Mark Stirton said the strategy was grounded in knowing its customers better, offering the right products and running the business with greater discipline.
“We welcome around 1.7 million customer visits to our three iconic retail brands every week, and we have a national store and distribution network that is enviable.
“Over time the business lost sight of what customers wanted from us and as a result, has not performed to its potential,” Stirton said.
“We have a credible and realistic pathway to achieving our target of $100m in operating profit within three to five years, which does not rely on any single initiative.”
The group said three levers provided the pathway to its goal, including optimising its base, growing the performance of existing stores, and adding new stores.
The first priority is to grow the group’s top-line earnings, with a targeted annual growth rate (AGR) of about 2%. In the group’s last full-year result, it reported an AGR of 0.4%.
Supporting this is a targeted increase in gross margin by 150 basis points from 32.6% to 34.1%, driven by an improved mix of higher-margin categories, selling more products at full price and better sourcing from its suppliers.
The other optimisation will be the group’s cost of doing business (CODB), which is targeted to below 31% of sales.
With those measures in place, the group expects stores to increase earnings by 10-15 basis points per annum.
The group has planned capital expenditure of $40m-$60m annually, with 50% prioritised for new stores and core infrastructure.
It opened a new Queen St Noel Leeming store in September and plans to open a Pāpāmoa store early 2027 with another in Mangawhai, set to open later in 2027.
The investment will be released selectively and funded from operating cashflow rather than borrowing, with intent to invest when the business case stacks up.
The group’s board has also revised its dividend policy to target an annual ordinary dividend payout ratio of 50% to 70% of adjusted net profit after tax.
It intends to consider resuming dividends for the 2027 financial year, although any dividend remains subject to the group’s performance, financial position and board approval.
The group said it would report on its progress against 10 measures every half to show its progress.
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.
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