The Warehouse Group has reported a 1.4 percent dip in quarterly sales to $700.8 million as the country’s worst fuel shock in living memory keeps customers at home and cuts the number of shopping trips New Zealanders are making.
Like-for-like sales across the group were flat. Gross profit margin nudged up 50 basis points for the quarter and 10 basis points year to date as the group held the line on pricing in a tightening retail market.
Same-store sales at the flagship Red Sheds banner fell 0.8 percent, with reported sales down 2.5 percent to $405.3 million as a smaller store network took a toll. Warehouse Stationery posted same-store growth of 3.1 percent but total sales of $57.1 million were down 2.9 percent on the prior year. Noel Leeming carried the result, with $236.6 million in sales, up 0.7 percent overall and 1.1 percent on a like-for-like basis.
Foot traffic across the network slipped 1.8 percent. Customers who did walk through the door spent more, with the average basket up 2.7 percent. Online sales jumped 5.4 percent and now account for 6.8 percent of group revenue, up from 6.4 percent a year earlier.
Chief executive Mark Stirton told the market the fuel crisis was reshaping shopping behaviour. “As fuel prices rose, we saw customers become more conscious of travel, making fewer shopping trips but buying more when they visited our stores,” he said.
The April Selected Price Index from Stats NZ showed petrol prices up 13 percent and diesel up 37 percent on the month, the sharpest fuel shock New Zealand has ever recorded as Middle East tensions cut into refining capacity in the region. With a tank of petrol now costing the average household well over 130 dollars, drivers have been combining errands and skipping the discretionary mid-week trips that used to top up retailer revenue.
The Warehouse result mirrors a softer broader picture for goods retail. The performance indexes for both manufacturing and services hovered just above the 50 line that separates expansion from contraction through April, with the manufacturing reading dragged lower by the same diesel price shock that is squeezing households. NZIER’s latest quarterly survey of business opinion, released this week, found firms have grown noticeably more cautious about investing, with more weight placed on liquidity and short-term resilience than at any point since the pandemic.
The bright spot in the result was Noel Leeming, which is preparing to reopen its flagship Queen Street store in September after a five-year absence from the country’s busiest shopping strip. The electronics retailer pulled out of 192 Queen Street in 2021 when the pandemic emptied Auckland’s CBD and lease costs were no longer justified.
Noel Leeming chief executive Jason Bell told RNZ that the central city was waking up again. “There are more people around, there’s energy again. It just feels like the CBD is waking back up,” he said. The new store will open around the same time as the City Rail Link, which is forecast to push tens of thousands of additional commuters and visitors through the Queen Street precinct each day.
The new format will work as a destination rather than a traditional electronics store, with try-before-you-buy zones, gaming events, expert demonstrations and a steady calendar of product launches. Property manager APM described the move as a positive signal for the wider CBD retail market, where vacancy rates have stayed stubbornly high since the pandemic.
The wider question for the group is whether the fuel shock and a wave of cautious household budgets will ease before Christmas. Stirton said the company expected trading conditions to stay challenging, citing inflationary pressures, global instability and continued uncertainty in the domestic economy.
Some of the group’s customers have been pushing back independently. The Commerce Commission’s grocery work and the Reserve Bank’s hesitation over the official cash rate both add to the sense that retailers are operating in a stop-start economy where households can afford the basics and very little else. Recent frustration with how listed companies handle customer service, from accounting platforms to airlines, has also raised the bar that big brands are expected to meet before shoppers return to their old habits.
For now, Noel Leeming’s Queen Street move stands out as the boldest call on the country’s near-term retail future. If the City Rail Link delivers the foot traffic the city’s planners have promised, the group will be one of the first to capture the upside. If it does not, the new store will be a costly bet on a CBD that has never quite recovered from the pandemic.
What do you make of The Warehouse Group result and the Noel Leeming return to Queen Street? Is Auckland’s central city really coming back, or is this an expensive bet on a recovery that is still years away? Drop your thoughts in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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