Good morning and welcome. My name is Sylv Roest and I'm the General Counsel and Company Secretary of The Warehouse Group. Before I hand over to our chair, Dame Joan Withers, to open the meeting, I'd just like to cover a couple of brief housekeeping matters. In the event of an emergency, please follow the directions of our staff. The fire exits are located behind me, out to the left through the lobby and at the rear of the room.
The assembly point is on the lawn In front of the building. Bathrooms are available out the left into the main foyer. If you need voting forms, Computershare w ill be able to assist you. Finally, following today's meeting, the board and management team look forward to you joining us for refreshments at the back of the room. Thank you, and I now invite our chair, Dame Joan Withers. Joan, to open the meeting.
Thank you very much, Sylv. [Foreign language] . Good morning and thank you for joining us. My name is Joan Withers and I'm Chair of the Warehouse Group. On behalf of your directors, our Interim Group CEO and our executive team, I extend a very warm welcome to our annual shareholders meeting, both to those of you who are here in person today and to everyone joining online. The notice convening today's meeting was circulated to shareholders on 24th of October. I note that a quorum is present, so I am pleased to declare the 2024 annual shareholders meeting of the Warehouse Group officially open and underway. Now, sitting with me at the front today are members of the Board of Directors and the Executive leadership team.
Starting from your left, please join me in welcoming Dean Hamilton, Robbie Tindall, Tony Carter, our Interim Group Chief Executive, John Journee, Rachel Taulelei, and our Group CFO, Mark Stirton, who's here with us for the first time. We have an apology from our Director, Tony Balfour. Joining us online today is Caroline Rainsford, our Director, who is currently in the United States. Welcome, Caroline. Also with us today are members of the executive leadership team sitting in the front row. To the agenda. Before proceeding with the formal business, I'll run through the order of events for today's meeting. The agenda will start with the usual formalities and then I will provide a recap of the FY 2024 annual results and discuss our dividend distribution to shareholders.
Our Interim Group CEO, John Journee, will then provide some detail on our performance, our refresh strategy, as well as an update on the Q1 of the current financial year and also some commentary on the remainder of FY 2025. We will then turn to the formal part of today's business. So the resolutions today include the re-election of three directors being John Journee, Rachel Taulelei and Tony Carter, and the authorizing of the setting of the auditor's fees. We will cover each resolution in turn and invite you to submit your questions specific to those items which we will respond to. During the Q&A session for each resolution, voting will take place by way of poll. I will outline the process for the discussion and voting on the resolutions at that point in the agenda.
Following the resolutions, we will take questions on the Group's financial performance, operational performance or other general business. I ask that you wait to raise any of your questions of a general nature until that time. If you've joined the meeting online, you will be able to submit a question or vote on the resolutions throughout the course of this meeting. So we'll now move to the formal agenda. Firstly, proxies, p roxies have been received from 429 shareholders representing 199,694,350 voting shares. That represents 57.57% of the voting shares in the company. The valid proxies that we have received support the resolutions to be considered later in the meeting. I will provide further details on proxies in respect of each resolution at that time to the Annual Report.
The financial statements for the 52 weeks ended 28th July, 2024, together with the Auditor's Report are set out in the company's 2024 Annual Report, which was released to the NZX on 26th September, 2024. If you would like a copy, a hard copy of that Annual Report, then please email us. Under the Companies Act 1993, there is no requirement to approve the financial statements or the Auditor's Report at annual meetings. However, we will be happy to answer any questions you may have during the Q&A session at the end of the meeting, just covering those Q&A procedures. For those of you who are joining us online, if you have a question to submit during the live meeting, please select the Q&A tab on the right half of your screen.
At any time, type your question into the field and press submit. Your question will be immediately submitted. Now to the substantive part of my presentation. I want to start by talking about our FY 2024 performance and this year's result has understandably been the focus of much commentary, virtually none of which is positive, and as we reflect on FY 2024, it is clear that it has been one of the most challenging years in our 42-year history. New Zealand's macroeconomic conditions have had a significant impact with New Zealanders facing increasing inflation and a rising cost of living. This has significantly impacted consumer spending and the retail sector has certainly felt and continues to feel that pressure. However, our operational execution has exacerbated the challenges of that difficult environment. We have acknowledged that the poor financial performance we've reported for FY 2024 is not acceptable.
The Board and the executive team are acutely aware of the disappointment shareholders and investors will be experiencing on the back of this result. There is a big job ahead of us to get that company back on track and we've certainly started along that journey. So let me share with you briefly just how we're going to turn this business around. During the early part of this calendar year it became apparent to the Board that we needed to make some significant changes to address the issues that we were confronted with. We did acknowledge that our group ecosystem strategy was too ambitious and based on assumptions that proved to be incorrect. As a result, the financial milestones that we set could not be achieved without further significant investment.
So we took the decision to divest or close underperforming parts of the business including T7, Torpedo7 and TheMarket.com. The loss from the sale of Torpedo7 led to the first financial loss in the history of The Warehouse Group. In May, we replaced Nick Grayston as Group CEO with John Journee as our interim Group CEO. Up until that point, as you know, John was a non-executive Director with a wealth of retail experience both inside The Warehouse Group and externally. Under John's leadership, we have streamlined our executive team and reshaped our business around three core retail brands. The Warehouse, Warehouse Stationery and Noel Leeming. Our dedicated teams within each brand are now intensely focused on delivering great products at competitive prices while providing an outstanding customer service experience.
Additionally, our operating costs have been too high, especially in the context of the difficult trading environment that we continue to face. This prompted action to reduce our cost of doing business and over the past five years we've invested around NZD 139 million on replacing legacy systems. The conflation of that essential capital spend and the very tough operating environment has put additional pressure on our bottom line challenges. Fortunately, we are now past the peak of that capital expenditure cycle and John is maintaining very tight vigilance on both CapEx and wider project spending. Now to cover off dividends. As you're aware, in March the Board declared an interim dividend of NZD 0.05 per share that is a 92% payout ratio exceeding the Group's dividend policy of at least 70% of the group's full- year adjusted net profit.
As a result of the group's subsequent net operating loss in the second half of the financial year, the Board made the decision not to declare a final dividend. This was a difficult but necessary decision. However, we remain confident in the underlying strength of our business and our focus remains on navigating through these challenges to return to paying dividends as our profitability improves. Now some significant events I'd like to take a moment to reflect on some other important milestones during the FY 2024 financial year. The first is acknowledging the changes within our Board. Julia Raue left the Board in April after almost eight years of strong contribution. We were delighted to welcome Tony Carter, whose extensive experience in retail and governance will complement our existing Board capabilities. Tony is up for re-election today so you will have a chance to hear more from him soon.
I would also like to take a moment to acknowledge Tony Balfour who has decided not to seek re-election. Tony has been an invaluable member of our board for 12 years, bringing exceptional global retail marketing and e-commerce expertise along with a strong commitment to our ESG initiatives. His unwavering focus on our customers and his outstanding leadership, particularly as the Chair of People and Remuneration Committee, have made a lasting impact on our business. On behalf of the entire Board, I extend our heartfelt gratitude to Tony for his remarkable contributions. It has been an honor to work alongside him and we wish him all the best in his future endeavors. We do not intend to seek a replacement for Tony's position on the Board at this stage.
The Takeover Approach, second event I'd really like to acknowledge is the non-binding indicative offer that we received in July from private equity firm Adamantem Capital to acquire the company's shares at a price range of between NZD 1.50 and NZD 1.70 per share. Under the rules of a scheme of arrangement, critical shareholder backing beyond that of our majority shareholder would be required in order for a takeover to proceed. The proposal did not have that support. Now to succession the Board is fortunate to have the caliber and experience of John Journee to take on the role of Interim Group CEO and I'm going to speak a little bit more about that later on in the meeting. The search process for a new Group CEO is underway and we are anticipating being at the candidate shortlist stage early in the new calendar year.
As I announced back in November 2022, this will be my last term as a Director and Chair and I will retire from the Board next year in November 2025. We have a strong board with a high caliber of directors, providing a variety and depth of skills and experience. The Board's Corporate Governance and Nominations Committee actively reviews Board succession and will continue to evaluate the optimal mix of skills and experience needed to drive the group's strategic objectives forward, including progressing chair succession. Turning to our involvement in the Future Director scheme, Jeremy O'Brien has made a valuable contribution as our Future Director over the past 18 months and his time with us will end next month in December 2024. This board has been one of the strongest supporters of the Future Director program and we will continue to be so.
But the replacement of the CEO and succession planning for the new Chair will be the priorities for the near term. Now, looking ahead, there is no doubt that we have had a very challenging year. Despite this, we have huge fight drive and confidence that we can turn our performance around. With our dedicated team of 10,000, we are focused on streamlining our operations, reducing our cost of doing business and sharpening our focus on our core brands. I want to thank all of our shareholders, our customers, our team members and my fellow directors for your unwavering support as we navigate through these challenges together. We are committed to rebuilding our brands and continuing our purpose to help Kiwis live better every day.
In closing, I want to reaffirm that we are proud to have three iconic brands that are The Warehouse, Warehouse Stationery and Noel Leeming, each of them playing a vital role in our business. These brands have endured the test of time and we remain steadfast in our commitment to their success. We know there's work to be done and we're fully focused on fixing our business performance and returning value to our shareholders. I'm now going to hand over to John Journee to run through the full year financial results and the plan to turn around performance in more detail. John.
Thank you, Joan and [Foreign language], everybody. I'd like to start by recognizing what a tough year this has been and I want to thank our shareholders, customers and teams for sticking with us. Your support means a lot to us because we know our performance impacts you and your families. There are no two ways about it. Our FY 2024 performance is disappointing and a long way from where we need to be. Our group ecosystem strategy was too ambitious. We invested considerable time and resources into delivering that strategy, which led us to hold onto Torpedo7 and TheMarket.com for longer than we should have. We've made mistakes and we own that. Later in my presentation, I'll provide insight into the positive changes we're making to improve our performance. But first I'll provide an overview of our FY 2024 year.
In FY 2024 our total group sales were NZD 3 billion, a decline of 6.2% on last year. Our sales declined 4.9% in the first half and deteriorated further in the second half declining 7.6%. This was led by a decline in The Warehouse sales. Gross Profit was down 6.2% with margin being flat year- on- year at 33.6%. While the first half delivered strong gross profit margin. This declined in the second half as a result of heavy promotional activity and our product mix weighted towards lower margin categories. Cost of doing business was down 1.3% in dollar terms but higher as a percentage of sales, resulting in NZD 28.9 million operating profit down 65.3%. The group reported a net loss after tax of NZD 54.2 million compared to reported net profit after tax of NZD 29.8 million in the financial year before.
This loss was significantly impacted by the loss on disposal of Torpedo7 and the wind up of the market in the year. I will now take you through a summary of our individual brand performance. As you're aware, The Warehouse, our biggest brand, had a particularly poor result. Our category strategy was off the mark, our execution was poor and our customer offer was inconsistent. As a result, The Warehouse FY 2024 sales were NZD 1.8 billion down 5.3%. While gross profit margin held increasing 10 points or 10 basis points on the prior year. T he second half of the year was particularly challenging, o ur winter range doesn't resonate as well as we expected, leading to heavy discounting. We didn't achieve the right product mix with our customers, shopping more into lower margin categories like Grocery and Everyday Essentials and less in higher margin categories like Homeware and Apparel.
This resulted in operating profit of NZD 17.7 million, down from NZD 71.6 million in FY 2023. In Noel Leeming, sales were NZD 1 billion, down 5.3% and operating profit was NZD 17.3 million. Performance was challenged by tough trading conditions driven by reduced discretionary spend on high ticket items and an increasingly competitive market. Services and tech Solutions, however, showed growth year on year and continues to be a differentiator for Noel Leeming. Warehouse Stationery sales were down 6.7% to NZD 231.9 million and operating profit was NZD 12.9 million. Subdued demand for higher ticket products from small business customers impacted sales and margin performance across the key categories of office furniture and technology. This was partially offset by the continued strong performance of our print and copy centres. In a challenging market.
Customer service is even more critical and it's very pleasing to note that all three brands are achieved i mproved Net Promoter Scores in FY 2024. I would like to thank our store teams who step up when it matters most to deliver exceptional customer service. Our FY 2024 financial results serve as a stark reminder of the challenges we face as a business and of our poor operational execution in the face of those challenges. I know improved performance is on everyone's mind, so please let me outline our game plan for the turnaround. When I first stepped into this role it quickly became clear to me that our group ecosystem strategy was too ambitious and had spread us too thin and consequently we had dropped the ball in our core retailing capabilities. We've changed that. We've made some tough decisions to set us up for the future and to turn around our performance.
We've reset the group's strategy, divested unprofitable businesses and moved away from Agile and the ecosystem strategy to focus on trading our core retail brands. The Warehouse, Warehouse Stationery and Noel Leeming. A shift to a brand led strategy is about strengthening each brand's specific customer value propositions to allow them to compete more effectively. To support this change, we've restructured our senior leadership and changed our operating model to a more fit for purpose retail model. The changes made to the executive leadership team ensure there is clear accountability for the performance of each of our brands and across merchandising, supply chain, store operations and marketing. We have re-established a dedicated Warehouse Stationery leadership and retail team to enable us to improve our execution of our offer to small and medium sized businesses and to the education sector.
A dedicated Noel Leeming leadership and retail team has enabled them to strengthen the brand's market leading position more effectively and assertively compete in a highly competitive, fast moving market. Our Warehouse Group support functions are now solely focused on supporting our retail brands to deliver greater value to our customers and to drive profitable growth. Getting Fighting Fit it's my job to get the company back on track and to set the groundwork for a return to profitable growth. Our Red Sheds are crucial to our recovery so my primary focus is in turning around the Warehouse's performance and reasserting its customer value proposition and market leadership. We have 90 million customers walking through our doors each year and 85% of Kiwis live within a 20-minute drive of the Warehouse. Building on this foundation. Our plan has four key drivers.
The first is strengthening our everyday low price proposition across an improved range of products aimed at Kiwi families. Responding to customer feedback, we've reset our category strategy to include more trend and newness, particularly in the higher margin categories of Home and Apparel. While building on the popularity of our grocery offer, including our fast-moving or fast-growing Market Kitchen range, we've accelerated our efforts to lower our cost of goods and this is supporting our improved everyday low price position. Secondly, we're refreshing our product offer and price position across all our core categories to provide a broader, more relevant on-trend assortment and competitive value propositions for Kiwi families. Thirdly, we've made significant reductions in our operating expenses and in our project spend going into FY 2025. The pressure on reducing our cost of doing business will continue to be a critical part of our turnaround.
The significant investments we've made to modernize our core systems across the group have progressively come on stream over the last year and will be increasingly used to leverage our significant network inventory data and people assets to support decision making, improve operational effectiveness and efficiency. Finally, we have a superpower in our extensive store network and nationwide team of 10,000 that make us an integral part of the communities we serve. Our strategy reset may sound simple, but it is just the simplicity and focus that will enable us to better execute the craft and science required to deliver greater value to our customers, build shareholder value and strengthen our market leadership. Refreshing our ranges offering great affordable essentials is what we do at The Warehouse and remains our core focus.
However, our customers have told us they wanted us to bring back more of the fashion and trend and the color in our product offer. Our teams have put a huge effort into refreshing our product ranges with an initial emphasis on home apparel and home and beauty categories. These new products have started to arrive in our stores this summer and early sales and customer feedback has been very encouraging. Leveraging our private label capability is a key part of this approach. Our Good One range is a great example. Locally made and sourced has been highly successful and we're getting very positive feedback on its value. We've got some of that product for you to take home and try for yourself if you haven't already. In the next few weeks we launch Poppi, our new skincare range aimed specifically at teens and young women.
We're also building on the success of our existing private labels Living & Co, our homeware brand and our biggest brand sold an impressive 18 million units last year and delivers 30% of all our private label sales. H&H, our powerhouse apparel brand has grown into a NZD 200 million annual turnover. Veon is our audio visual brand and we're proud of the fact that Kiwis own more Veon TVs than any other brand, making it New Zealand's number one selling TV with more than 30% market share. Market Kitchen, launched just three years ago, has quickly become a popular grocery essential. This is just a taste of how we're reinvigorating our category strategy and the product improvements customers will see flowing into our stores. Our teams are now working hard on bringing trend and value into the upcoming seasonal ranges for winter, summer and Christmas 2025 and beyond.
In addition to the work we're doing to get The Warehouse back on track, we have programs of work underway to improve the performance of our other two retail brands. Having dedicated leadership and retail teams for both The Warehouse and Noel Leeming enables them to fine tune their respective customer value propositions and to compete more effectively operating in highly competitive markets with well informed value seeking consumers. It's critical that our teams can respond quickly and decisively to changing conditions in their respective markets. An early example of this is a recent announcement of Noel Leeming that have added premium brand Miele to their range of kitchen appliances. FY 2025 Q1 update. In terms of the FY 2025 year we've started trading or shared a trading update on the 8th of November and that underscored how tough retail remains.
We recorded total retail sales of NZD 668 million during our Q1, reflecting a decrease of 2.5% compared to the same period last year. However, it is an improvement on the 5.9% decline we experienced in the last quarter of FY 2024. One of our key areas of focus has been on our pricing strategy. The average retail selling prices were down 7.9% in the quarter as we reset our key price points across categories to reinforce our everyday low price value positioning. This has resulted in a 6.4% increase in the units sold, demonstrating that customers are responding positively to our more competitive pricing. In terms of foot traffic, we saw a slight decline of 0.8% but encouragingly customer conversion once they're in store has improved to 58%.
Although basket sizes are constrained as customers prioritize essential categories and clearance items, we are optimistic and encouraged by what we're seeing in the new product sales. Noel Leeming is growing market share in a contracting market which speaks to the strength and value proposition and the performance of our team in tough trading conditions. The Warehouse margin has been the most challenged during the quarter as lower margin product mixes and higher markdowns occurred within the apparel department post winter and this remains a key focus for us. Looking ahead, our plan to get fighting fit is underway and we're focused firmly on trading each of our core brands and refreshing the key product ranges to provide better value. These changes will take time to fully show results and we're mindful that sustained improvement will also relies on a broader economic recovery.
While we're making progress, we expect our near term results to remain mixed as the benefits of our improved product offer are muted by challenging market conditions. With nearly a 1/3 of all Kiwis continuing to come through our doors each week, we are well placed to seize the opportunities in front of us as our new product assortments land and economic conditions improve. This fuels our conviction that we can course correct and turn our business performance around. We remain cautious though as we look into Christmas and expect the trading environment to remain tight and highly competitive. What I can promise you though is that we will be firmly focused on bringing great value products to our customers as we continue to execute our turnaround plan. I am conscious that words are not what our shareholders and customers or team members want at this time.
You want action and improved performance. The team and I look forward to reporting on that progress in the coming months. I wish you a happy Christmas and a summer ahead. Thank you and I'll ask Joan to return to the.
Thank you very much, John. Before we get to the formal business of the day, I want to take a moment to recognize John for stepping up during what has been a very challenging year. Having John on the board as a former executive with a wealth of relevant retail experience, including both The Warehouse and Noel Leeming, has made this difficult situation more manageable. When asked to step up, John did not hesitate. He has quickly and decisively set about making necessary changes. His extensive experience in retail, particularly with The Warehouse and Noel Leeming, has been an invaluable asset to us. You can truly hear this passion and commitment for turning the group around and again he's jumped into action without missing a beat. John has been embraced by The Warehouse Group team and has already made a substantial difference.
He intends to remain on the Board as an Executive Director until we make a permanent appointment to the CEO role, at which point he will resume his position as a non-executive Director, so thank you John. As I said earlier, the Board is working very closely with John and the team to continue to improve our business performance. Again, I'd like to thank you, our shareholders for your continued support and we look forward to giving you an update at the half year. We now come to the matters requiring resolutions which are outlined in the Notice of Meeting. All voting at today's meeting will be by way of poll and a poll will be held for each of the resolutions. For those of you joining us online, once the voting has been opened, the resolutions and voting options will allow you to vote.
To do so, simply click on the Vote tab and select your voting choice from the options shown on the screen. You can vote for all resolutions at once or by each resolution. Individually your vote has been cast. When the tick appears to change your vote, select change your vote. We will invite questions for each resolution and you can also ask questions of a general nature during the Q&A session at the end of the meeting. For those of you attending the meeting virtually, the Q&A is open, so please feel free to submit questions throughout the meeting and these will be addressed at the relevant time. Please note that online questions may be moderated or amalgamated together if we receive multiple questions on one topic, so now to the re-election of directors.
We now move to the re-election of directors and we have three directors standing for re-election, John Journee and Rachel Taulelei who retired by rotation and Antony Carter who was appointed by the Board since the last annual meeting. As mentioned previously, Tony Balfour, who retires by rotation, is not standing for re-election and will therefore cease to be a Director of the company at the end of this meeting. Proxy voting for these resolutions will be shown on the presentation screen. Firstly, re-election of John Journee. We're going to move to the first resolution which is John, so you've heard from him as our Interim CEO a couple of moments ago. John has been a Director of the Board since October 2013 and was appointed interim CEO in May this year.
At that point he ceased to be an independent Director but as I said before, has continued as an Executive Director of the company. And as I also said, he's got an extensive retail career across the retail, general merchandise, fashion, fmcg, consumer electronics, telecommunications, hospitality and electricity retailing. So very wide range of experiences. His career with The Warehouse Group started as a joint venture partner in 1990 and then he progressed through senior roles to hold a CEO role with Noel Leeming when it was actually owned by private equity. At the moment, John is a member of the Health Safety and Wellbeing Committee and the Environmental Social Sustainability Committee, the Disclosure Committee. I'm now going to ask John to make a brief statement to the meeting. John, thank.
Thanks again Joan and [Foreign language]. Once again it's a privilege to seek re-election to the Board of The Warehouse Group. My journey with this company began over three decades ago as a store manager of the Warehouse Glenfield. Since then, my involvement with The Warehouse Group has been an integral part of my career, including various executive roles for The Warehouse and time as CEO of Noel Leeming Group. After the acquisition of Noel Leeming Group by The Warehouse in 2012, I returned to The Warehouse and transitioned to a governance role. Since May, I've had the privilege of serving as Interim Group CEO of The Warehouse Group where alongside my role as Executive Director I've gained a unique perspective of the inner workings of our business.
My previous experience, refreshed and deepened during my tenure as Interim CEO, provides me with valuable insight into the challenges facing our Board and our company. I've experienced firsthand the challenges and opportunities the company is facing, how our teams are responding as we look to the future. I recognize that any incoming CEO will face a big job and if I have your support to continue to serve as a Director, I can support them as they settle in and get up to speed quickly. The retail environment in New Zealand is evolving quickly and we must adapt to meet the shifting needs of our customers as we get our brands back on track, increase the value we provide to customers and the return that we provide to you as shareholders. Through all of this change, one thing remains constant.
[Foreign language] , the people, our customers, team members, suppliers and communities are at the heart of what we do. Their expectations of us are increasing, whether that be of value, choice, convenience or in how we respond to our social and environmental responsibilities. I'm proud of the steps The Warehouse Group has taken in this regard, but we do have more work to do. I'm fortunate to walk alongside passionate retailers who genuinely care about the company and are determined to see it succeed. As a shareholder, an employee and a director of this company, I am personally and passionately invested in our success and in driving a sustainable return for our shareholders. Thank you for your consideration and s upport.
Thank you, John. Are there any questions on the re-election of John Journee as a director? There appear to be none. I now move that John Journee be re-elected as a director of the company. The poll on the re-election of John Journee will be conducted at the end of the day, the formal business. So now we move to the second resolution, which is the re-election of Rachel Taulelei. Rachel was elected as an independent Director of the company in February 2021. Rachel is a prominent business leader and a strong advocate for the Māori economy. She's values-based, strong on values-based business models, and has been a very high-profile person within the New Zealand's food and beverage industry. Her commitment to [Foreign language] has been evident. Throughout her career, Rachel has held a wide range of governance roles.
She presently chairs Moana New Zealand and the Wellington Regional Stadium Trust. She serves as a Director on the Board of Sealord Group Limited. and ANZCO Foods. She's a member of the APEC Business Advisory Council and acts as an Advisor to Venture Capital firm Movac and also Chairs the Fonterra Sustainability Panel. Rachel is our incoming Chair of the People and Remuneration Committee as well as being a member of the Environmental and Social Sustainability Committee and the Health, Safety and Wellbeing Committee. So I'll now ask Rachel to make a brief statement to the meeting.
Good morning everyone. Thank you very much for inviting me to have the time this morning. My name as I've just shared with you is Rachel Taulelei. And while I currently reside in Wellington, I hail from the mighty metropolis of Ōtaki. Some of you may know that place. I just completed, as you've heard, my first term as a Director of The Warehouse Group and it has been an absolute privilege. As you will be aware, we have had a range of headwinds, some extraordinary headwinds in the time that I've been on the board and there will no doubt be many more to come. But as you've heard from JJ and from Joan, we have an exceptionally strong management team and board who are deeply motivated to improve performance and shareholder value.
The reason I joined the group is because I love stories. I love positive stories and I love stories of Aotearoa and The Warehouse both is and has all of those. The Warehouse has been a pivotal part of New Zealand communities over the last 40 years and we all have our own stories of connection. But at the time that I was approached from an arm's length view, I was under the impression that New Zealanders might have fallen out of love with us for a myriad of reasons. And I knew that it was a story that I believed that I could support, that I could advance and that I could share, that I could play a role in growing the business by reach and performance and connectedness. Over my professional life I have always been around businesses.
I grew up in my parents' businesses and I was a Trade Commissioner for New Zealand and the United States for nearly nine years where it was my responsibility to find a market and a partner for New Zealand food and beverage exporters. I returned to New Zealand in 2006 and established my own company Yellow Brick Road which is a seafood company within which I worked with fishermen and I worked with chefs, disrupting the seafood model and establishing a same day boat- to- restaurant model for the seafood industry with a huge emphasis on value, sustainability, story and provenance. I went on to sell Yellow Brick Road and take on the role of chief executive within the Kono business. This was a Māori food and beverage business who farmed more than 1,000 hectares of land and sea and exported beautifully branded product to more than 35 countries.
Kono is the name of that business that placed a great emphasis on story and as an FMCG business a great amount was also invested into networks, insights and consumers. It is an entity owned by the descendants of the 254 [Foreign language] who were the original settlers to Te Tauihu at the top of the South Island. My great great grandfather Riwai Peni Poke was one of those people. So the business is very dear to my heart and it fundamentally taught me about service that if service is below you, then leadership is beyond you. After six years in that role, I made a change and left to create my third business, Oho, a business and brand strategy company and we're now a little more than three years alongside Oho. I'm also part owner of a professional women's basketball team named the Tokomanawa Queens.
Yes, business in all of its facets is something that I love to be around. Food, services, sports franchises and of course now retail. Like our other directors, I hold, as you heard from Joan, a range of other directorships and governance roles, some of which I chair and they span the primary industry and other facets of New Zealand at the climate. I presently sit in governance roles across businesses who collectively tally nearly NZD 30 billion in revenue and employ in excess of 40,000 people. Everything I do comes from a [Foreign language] standpoint which I think is particularly important as we consider not only diverse lived experiences but also the changing demographics of Aotearoa. One in three people in New Zealand who is under 35 is [Foreign language].
To be able to bring that voice to the table, the Māori part, not the under 35 part, sadly, I think is valuable. I think is an important part of the conversation to have at the table of the Warehouse Group. Look, I tend to follow the rule of the Kumara, not speaking too sweetly, too much of its own sweetness. What I do believe I bring to the table is commercial acumen, perspective, community connectedness and international experience and the mindset of somebody who has built businesses.
My values include [Foreign language]. I'm sure that's a shared value amongst all of us, but they extend through to [Foreign language]. Relentless ambition not for myself, but for whatever I turn my hand to. In this instance it's the Warehouse Group and invincible optimism. So thank you for allowing me the opportunity to reintroduce myself, share a few thoughts and for the first term on the board, as I said, it's been an absolute privilege. [Foreign language] .
Thank you very much Rachel. Are there any questions on the re-election of Rachel Taulelei as a director? It appears there are none. I now move that Rachel Taulelei be re-elected as a Director of the company. The poll on the re-election of Rachel Taulelei will be conducted at the end of the formal business. Now to the third resolution which is the re-election of Antony Carter. Tony was appointed as an independent director in May 2024. Tony, as you all probably know, has a broad range of experience in governance across the consumer, industrial, services, infrastructure and energy sector. Tony currently Chairs the Boards of My Food Bag, The Skin Institute, Datacom, TR Group and The Interiors Group and he's also a Director of Ravensdown.
His previous directorships include roles at Fisher & Paykel Healthcare, Air New Zealand, Fletcher Building, ANZ Bank New Zealand and Vector. He has also served as the Managing Director of supermarket operator Foodstuffs Auckland and Foodstuffs New Zealand and was made a companion of the New Zealand Order of Merit for services to business and governance in 2020. Today Tony is the Chair of the Health, Safety and Wellbeing Committee at The Warehouse as well as being a member of the Audit and Risk Committee. So I'm now going to ask Tony to make a brief statement to the. Meeting. Tony,
Thank you, Joan, and [Foreign language] everyone. I thought I'd start by telling you a little bit about myself. Joan's already done a pretty good job of that anyway. I'm a chemical engineer by training, although I never practiced. My career has largely been in retail, initially with Mitre 10 and then with Foodstuffs. I was Chief Executive of Foodstuffs in the South Island from 1995 to 2000 before relocating to Auckland to becoming Chief Executive of Foodstuffs Auckland and Foodstuffs New Zealand for a decade from 2001 to 2010. Foodstuffs is of course the largest supermarket retailer in New Zealand with its well-known brands PAK'nSAVE, New World and Four Square. In 2010, I decided to retire as a full-time executive to concentrate on governance.
At that time I was already a Non-Executive Director of Vector i n my last couple of years at Foodstuffs and after I left Foodies, I was fortunate to be appointed a Director of some of New Zealand's most successful companies, including Air New Zealand, Fletcher Building, ANZ Bank New Zealand and Fisher & Paykel Healthcare. I was especially privileged to become Chair of both Fisher & Paykel Healthcare and Air New Zealand during a period when those companies enjoyed a very successful run. I retired from most of those companies after nine years between 2019 and 2020. Since then I've tended to work more in private companies including chairing Datacom, which is one of New Zealand's most successful IT companies and also has extensive operations in Australia. I also chair My Food Bag, which has had a difficult period as a listed public company as the world adjusted to a post-COVID world.
Last year I joined the Board of Ravensdown, which is a fertilizer cooperative. This is my first involvement with the primary sector which is so important for the New Zealand economy and I've really enjoyed getting to learn and understand that business. When I was approached by The Warehouse to consider an appointment to this board, I was really excited for a few reasons. I suppose at heart I'm a retailer and being able to contribute to helping an iconic retailer like The Warehouse get its mojo back, it really appealed. I do sincerely believe in the future of The Warehouse and their brands and believe we do have a bright future. As was mentioned during our interim results announcement, that's been repeated today. We acknowledge mistakes have been made, but it's our job to roll up our sleeves and get to work.
The steps that have been taken by JJ to simplify the business, including the sale of Torpedo7 and the shutting of the marketplace, are absolutely the right things to do. I believe my experience can help The Warehouse improve its performance and I would ask for your support for my election to the Board today. Th anks very. Much.
Thank you, Tony. Are there any questions on the re-election of Antony Carter as a director? It appears there are none. I now move that Antony Carter be re-elected as a director of the company. The poll on the re-election of Antony Carter will be conducted at the end of the formal business. So I now turn to the fourth and final resolution, which is auditors' fees and expenses. PricewaterhouseCoopers are automatically reappointed as the auditors of the company in accordance with the provisions of Section 207T of the Companies Act 1993. A resolution, however, is required in respect of their remuneration, namely to authorize the directors to fix their remuneration.
For the information of the shareholders and as disclosed in the 2024 Annual Report, the total fees paid to PricewaterhouseCoopers in the financial year ending 28 July 2024 were NZD 1,081,000 of which NZD 858,000 was in respect of auditing the 2024 Annual Financial Statements for the group. Proxy voting in respect of this resolution is shown on the presentation screen. Are there any questions relating to the resolution to authorize the directors to fix the auditor's fees and. Expenses?
[Foreign language] , Joan. Hello, everyone. My name is Julian Light. I'm the GM of Corporate Affairs, and it's my pleasure to be reading out the questions today that have been submitted online. We have one from Eva Keating, who asks how does the Board intend to fix the next round of auditor fees and expenses, and will those amounts remain unchanged or increase despite the company's financial. Performance?
Thank you very much for that question. It is something that we negotiate with the auditors every year. As you will see, our fees are now above NZD 1 million per annum. It is essential as an NZX listed company that we have the top flight auditors looking at our accounts every year. PwC does a very good job, but I'm sure when we go into negotiations next year that we will be looking at the. You know, we've had some extraordinary situations where they've had to get involved in the more complex elements of the accounts. For example, the work around the write down for Torpedo7 and so forth. But as we hopefully enter a period of less complexity, we will be very much looking at those negotiations.
But I'll turn to Dean Hamilton as Chair of Audit and Risk and see if he has anything to add. Thank you. Any other questions? Okay. There are none. So I will now move that the directors be authorized to fix the fees and expenses of the auditors for the ensuing year. The poll on authorizing the directors to fix the auditors remuneration will be conducted along with the other resolutions. Next, I now declare the voting open on all items of business. I will just remind you of the voting procedure. All resolutions are ordinary resolutions which will be passed if approved by a simple majority, that is more than 50% of the votes of shareholders entitled to vote and voting in person or by proxy or representative. If you are eligible to vote at this meeting, you will be able to cast your vote under the vote tab.
You can change your vote up until the time I declare the voting closed. I remind you that you are voting on each separate resolution as detailed in the notice of meeting. If you hold a proxy on behalf of a shareholder, you will need to cast the shareholder's votes in order for them to be counted. We intend to vote all discretionary proxies we have received in favor of these resolutions. Where a shareholder has completed the proxy form but omitted the names of the proxy or the name of their proxy, or where a shareholder's named proxy is not in attendance, I will act as that shareholder's proxy and will vote in accordance with that shareholder's express direction. I will give you a warning before I move to close the voting.
Once voting is closed, all votes will be counted by the company's share registrar and scrutinized by the company's auditor. The results of today's meeting will be released to the NZX on completion of the verification of the voting. Okay, so general business. I will now open up the meeting for general discussion. Julian, where are y ou?
We have a question here online from Christopher Harkin and Stephen Hart. It's about grocery and what is the ongoing role of grocery in The Warehouse's business? Is there a risk of having just a few lines with poor attention to keeping stock on the shelves? Or might The Warehouse ensure there is a better focus on keeping lines fully stocked rather than empty spots on the shelves? And what is the plan generally around g rocery?
I'm going to hand over to JJ for that, but noting that our grocery sales, which obviously includes those categories you spoke about like health and beauty. So that's now representing about 25% of the Red Shed sales. JJ?
Yeah, thanks Joan. Yeah, that's right. We actually regard groceries as part of our fast moving consumables section, which is about a quarter of our sales. That provides a valuable part of our overall offer and that's about frequent sales. That's for the products that people use frequently and therefore visit us frequently and that drives a lot of our foot traffic. So we believe that that part is important, which is why we have been investing in it and our customers are responding to it, so they see value in it as well. So it'll remain part of our offer, but it is part of a mix of categories and it's the mix of categories which is important overall for our. Offer.
So if you're here in person, we welcome you to come up to the front of the room. We've got microphones up here. If anyone is not able to come up, then we've got roving mics. Do we have any other questions? We've got Coralie. Welcome.
Hello. I'd like to talk about customer experience again. I think I do this every year. So I went out to Sylvia Park Warehouse last week and I was very pleased to see there was a young woman who was actually scanning for us so that we didn't have to go through self service. And people were all queuing up with their baskets to go through tills rather than do the self service. And that was good because somehow a value pack that I bought scanned up at three times the price.
So I was able to go back into the queue and have the refund put straight onto my card. So it was much better. It was quiet there though, considering how many people were in the mall. It was rather quiet at the store. But then, just a question. I looked at a heavy garden seat in your home area and I wondered, with no people on the floor to help me, how would I actually go about buying that?
I'm sure JJ will be able to give you the answer to That.
Yeah, thanks, Coralie. We are predominantly a self service business and that enables us to keep our prices where they are. But obviously customer service is important. So the customer service desk would arrange for someone to get that and we've got team members that would help either arrange for it to be delivered, if that was your preference, or a trolley to help you get that to the store.
Okay, so I'd have to find someone on the customer service d esk.
Yeah, the customer service desk is normally manned now. They might be currently serving another customer, but there is a dedicated service point in most of our s tores.
Okay, well, I still think you're a bit short on staff on the ground, but that's just me. Okay,
Thank you. Coralie.
Thank. You.
Do we have any other questions? I've got one here. Welcome. Can you let us know your name? Please?
Yeah, I am. Shabir.
Shabir.
Yeah. Okay, one question to. John. Do you pay the staff only salary or is there any? Incentive salary?
Yeah, yeah, yeah. He's addressing it to you.
Yeah. We have a mix of different remuneration options depending on what the roles are across our group. So we have different environment, the salary and commission environments. For example,
I'll tell you an. Incident. I went into the New Lynn. Shop of Noel Leeming, and that's not on one occasion, on many occasions I have gone there and the people over there, the staff over there, is absolutely. Insensitive to my entering and my looking. Out. Nobody is asking me whether I'm. Interested in anything? Or I'm okay? Or something like. That. And if I went to a. particular person, he directs me to go to some other person or some other people. He is not interested in selling the. Product. And sometimes you know what happens. This is a technological. Field. The things are. Changing. You know, that particular in technology. It keeps on updating and all.
That. So a customer who walks in wants to know more and he is expecting that the customer service representative will help him, but instead of helping him, he is being shoved around and shown nothing else. That is one. More. So I think you should, if. You give some incentive, the customer service representative will work better, and another thing is, just for Antony, since you have worked in Foodstuffs. I think you should recommend that we. Just come into the grocery business quickly. Thanks.
Thank you, Shabir. Okay, just a reminder, if you're joining online and have a question, please select the Q&A tag, type the question in into that field and press send and that will come through immediately. Do we have any other questions? We've got one about Agile, I think, haven't we. Julian?
We do indeed, Joan. So one from Robin Capper. What was the approximate cost of the Agile implementation and undoing those? Changes?
Yeah, it's pretty much impossible to untangle the cost of Agile itself from the ongoing operation of the business. We were very public about the fact we'd involved McKinsey as expert advisors to assist us on that, but I don't think we can actually split that out as a separate cost. What we have done, John Journee and the team have been able to do very quickly now that we're focusing on the three brands rather than the ecosystem strategy is de- Agile the organizational structure and just put the focus back on those three core brands. Anything you want to add to. That, JJ,
I will probably just add in the last part of that because I was personally involved with the team. What I would say is that the team did a remarkable job in getting themselves out of one organizational structure into another. Not a trivial exercise. They did that in two months while trading the business and they did a very good job of that. And I would say as cost effectively as it was could have ever been done. So I think we, we're in good shape with the team support on t hat.
Yep, excellent I'll endorse that. Do we have any other questions? We've got someone coming up. Please come up to the m icrophone.
Hello, Joan. I know, Ron, here I am again. This is James.
Hello.
Yep, I was here last year as.
Yes, I remember.
Yeah. So just a question about our performance for the second half year last year. So from my memory, that last year we think we were on the track to improve the performance which has been evidenced for the first financial year last year. But the second year is a little bit, honestly is very big surprise for me for the drop of the gross margin and everything. So honestly, I read many years about the financial reports of The Warehouse Group. I think this is a very poor performance for the second half year of last year.
So if we can get back on the right track for the previous performance, I think we don't need to worry about. But currently what I worry about is about what happened and what is happening, especially about the gross margin, for example, for the Q1 of this financial year. Are they coming back to the normal standard or what's our target? Thank you
Yeah, look, I think you've hit the nail on the head and I don't follow rugby closely, although I sit with my husband, he watches the test matches. But it was a game of two halves, very much and FY 2024. We made significant margin gains in H1, H2 unfortunately, I think JJ, the winter stock didn't land as well as we hoped. So the margin growth that we'd made in H1 basically got undone in the second half of the financial year. We don't disclose in the current. We've given a trading update on the 8th of November. So in JJ's recounted that in his presentation this morning. We don't disclose specific margin performance until the half year.
But you know, that is absolutely a focus, and obviously JJ and the team are delivering new exciting products now which are landing in store, and we're hopeful that New Zealanders respond to that so we get more share back in those very margin rich categores of Homeware and Apparel which will help the overall composition of. Margin. But JJ?
I think you've covered most of it. Joan, the second half, we're also, because of the first half and the track, the previous year was going quite well. The imported product we buy, which is committed a long way out, there was a lot of that coming into the second half. So as demand did drop off across the market, we were caught with more product than we expected to have left at that time. So we were having to clear that out so we could free up our inventory to buy the new product. Plus, as I mentioned before, our winter range was disappointing, so that created seasonal markdowns. So the combination of that was pretty tough and meant that the half was a poor. Result.
Thank you.
And also for the cost of doing business last year. I remember that for the software cost things I think it's proven reduced very well. So for this year are we expecting the same level of last year for the software cost whatever.
Yeah, well, the comparison year- on- year was, I think, we were at a project and CapEx combined was about NZD 150 million in FY 2023, and that came down to about 80 in FY 2024. That's including CapEx and project spend. But you've got to even further reduce CapEx spend at the moment. I don't know if we've disclosed. That specifically, but
we've talked to that. Do you want to pick up that?
Yeah, I mean obviously when you came in to the role in April, I've just, you know, even for our budgeted period we need to trim back CapEx. We've made massive investments into core systems as John alluded to earlier. The good thing is those are like heart surgery type systems and we've put them in so we've. The forward view of CapEx is actually quite reduced, quite considerably. This financial year our CapEx is NZD 27 million and our total project budget is about NZD 33-NZD 39 million. So it's really, really reduced, really getting that free cash flow going. So what I can say is we've made the big core investments which you don't, you know, almost make every 10 years, every decade we've made those big investments.
So I don't foresee. I think where we will need to make some potential upgrades in our store environments. You know, I'm not talking ginormous but there's definitely needs to be some facelifts here and there in order to reinvigorate the brand and bring that identity that the lady earlier was talking to. So yeah, that's, that's where we are.
Okay, thank You.
Thank you, Ron. Brilliant. Thank you. Okay, it appears we have no further questions. Got one. Here. Okay,
lady coming up here on the.
Right. Okay, brilliant. Who's going, who's going first? Can we go? Ladies. First.
Thank you. Joe. Barbara O'Connor from the New Zealand Shareholders Association.
Welcome. Barbara.
And I acknowledge the fact that. You hope you can say something about a new CEO early in 2025. I guess I'm interested to know what the board is thinking about, so? That a new CEO doesn't come in, change the strategy again and we have. More mistakes than we've had in the. Past.
Very astute question. We spent an hour or so with search firm earlier this week. I don't know if he's going to be offended if I say it, but we're probably looking for a younger version of John Journee. You know, I think your points. She is not. But, you know, I think the most important thing, as you say is now we've got, you know, starting to turn the ship around. John is. He's alluded to right the way through his presentation and the team have done an amazing job of putting things back on track. So we've got a very clear focus and we formed a subcommittee of the board to work through that recruitment process. So we've got not only a position description, but a person specification as well.
Because obviously with The Warehouse, a lot of values inherent of what we're looking for, as well as those, you know, formidable retail skills. But thank you for the question, Barbara. I've lost my man. Oh, there he.
Hello, can you hear? Me?
Yes. Can I have your name? Please?
Okay. Name [Unknown speaker], joint shareholder. First of all, I just want to highlight it a bit more that in the year just before Christmas 2022, the share price was NZD 4 over j ust over NZD 4. Then it slid down. Yesterday was below NZD 1. In that time nobody sorted out how to fix it. I know it's only a slow, what you call, short period of time of two years. It was probably hard to spot. So I won't rub it in anymore. I just leave it. I just wanted to highlight it. Right? The only thing I want to suggest might help the company and also the society as a whole that I was there. I think you people were having a meeting at Westgate. I happened to be there, I saw your face and the lady there. I asked at Westgate.
Yesterday. We used to say yesterday,
that's not. Relevant.
We were. There. Yeah,
yeah. I asked one of the staff what was the working opening hours, and he said about 8:00 A.M. to 10:00 A.M. Is that right, sir? Now, isn't it an essential service? It's not a chemist. It's not a petrol station. It's not a dairy. Why do you have to open it at 8:00 A.M.? Now, I suggest that you open it maybe half past eight, and then if you want late hours, you can have it on Thursday or Friday. It used to be in the past. That's better for the company, better for the society. On Saturday, you got all the games, rugby, football, whatever events there. And then people have their social events, concerts, and things like that. I think because you try to provide a bit longer hours for the workers. But are you really doing them a favor because socially they are disadvantaged.
They rather be with their families, watching the sports, relaxing and all that. So I suggest that also it will be helpful to the company that your probably expense will lower and reduce the hour maybe from 8:30 P.M. to 7:00 P.M. if you want to compete with Kmart, or later on Thursdays or Fridays. Another thing with the CEO, in the past we have seen, we have selected CEO from overseas country like England, America or Canada, which is not relevant to us because we know the market here well. What fits in, probably Australians will be more relevant than any other we know we had the CEO from. You know it, I wouldn't name it, or any other country, not to be rude to them, but I think Joan would be most appropriate in the interim period to step in as the CEO. Thank you
Thank you very much. And we note all your comments and certainly we share your dismay at where the share price is at the moment. Hey, any other questions? Got one online. Welcome.
My name is Ian Walker.
Ian, w elcome.
Thank you. Some time ago I read a media report which compared The Warehouse with Kmart and the comment was made that Kmart are eating the lunch and breakfast of The Warehouse. Based on that, I took a drive down to my local Warehouse store in Manukau, had a quick look around and then immediately drove to the fairly new Kmart store about 500 m down the road. The comparison that I made was The Warehouse Manukau. The Warehouse Manukau was virtually empty of customers and a little bit dismal in its ambiance. Kmart, with the advantage of a brand new store, was full of customers and seemed a more cheerful ambiance. So my question is, are we confident that the Red Sheds are still fit for? Purpose?
Ian, it's a very apposite question and as JJ has demonstrated through his presentation, that is a key focus for us is getting the excitement back into the stores. And you know, that happens over a range of things. And obviously the sort of products that we're offering are very important and we're already starting to see the revitalization of some of those ranges coming in now. We went into Westgate, so the other gentleman had obviously seen us up there as a board last yesterday actually, and had part of our board meeting there. And that store, I guess is one of the ones that really is firing now in terms of getting the excitement and the product ranges probably a little bit too much stock that they're having to manage with. But at this time of year, obviously that's far more preferable.
But yes, the Kmart scenario we are absolutely focused on and we've been very overt about the fact that we've lost. Certainly leading up to the summer season, we'd lost market share in Homeware and Apparel to Kmart, but we're coming back with a vengeance. So I'd say watch this space and look out for the brilliant stuff that we'll be putting into stores. And I think you've seen other indications that we're changing our approach even to the marketing and the way that we're positioning the red sheds in particular. But JJ.
Yeah. Our Manukau store is one of our top three stores, so it does get a fair bit of visitation. It was obviously in a quiet period where you went there. But some of our stores, as Mark referred to before, are due for a facelift. So there are stores that are in good condition. If you go down the road to Takanini, it's a great looking store and you'll see a totally different ambiance there. Our Manukau store is probably due more of a facelift given the high traffic numbers it does deal with over the year. And it is our job to get around those stores on a regular basis to give them a lift where we need it. So very focused on the whole customer experience. The Warehouse has got a particular. We are a different model.
The larger product ranges we have, the bigger, bulkier products we sometimes sell requires different equipment and different layouts. And we have got a position around our stores that was unique to our heritage and our brand. But we're conscious that we need to continue to refine and evolve that to meet our customer expectations going forward.
Thank. You.
Thank you. Ian.
My compliments to the person who buys the store's bananas. They are delicious. They are the best on the. Market.
Brilliant. Thank. You.
Thanks. Ian. Okay, we've got one on Tony, haven't. We? We do indeed. We've got a few questions online. So the first is from Eva Keating. Around Tony. So why isn't Tony seeking re-election? And does the board conduct exit interviews with departing board. Directors?
Good question. Tony has served 12 years, so today would have been his 12-year anniversary. Well, firstly, going to The Warehouse. Certainly since I've been in the Chair's role, we've looked at Director rotation and succession very carefully. Every second year we have a full, full external review where we evaluate our individual and collective performance, but also look at what the needs of the business are going to be in terms of skills and think about the rotation of directors. The norm in New Zealand is sort of nine years is where a lot of companies say that's about the time that directors should rotate out. I don't personally have a view that it should be strictly at that juncture. I think you've got to have the institutional knowledge within the business to make sure that you've got the right skills and experience.
I think our average tenure once Tony leaves goes down to about 4.6 years. But also the wider market, the proxy advisers, for example, who are far more engaged in Australian listed companies, certainly are starting to vote down people who've been there too long. So there will always be valid exceptions. But 12 years is a very reasonable tenure. That's an interesting concept about exit interviews. I think I do have ongoing conversations with directors, both formally and informally. And as I said, the individual performance evaluations that go on with the externally facilitated reviews do provide very good insights from individual directors as to how they see the board functioning and what they're feeling about it. But very good question. Thank.
We have another question here from David Prebble. He asks, John spoke of the strength of The Warehouse products. Is there an opportunity to sell wholesale to third party b usinesses?
That's above my pay grade, JJ?
Yeah, that's a good question. It's certainly an opportunity. It's not one we're focused on at the moment, but as you build up private labels that have credibility, as some of our private labels have developed into, that is an opportunity for a wider market. But I suspect that's a future opportunity for us. At the moment we're focused pretty much on the current. Customers.
I guess the TWG is sort of does a bit of that in the services. Perspective.
Thanks, Joan. We do have the ability to redirect product into non-retail sectors. That gives us a wholesale opportunity into businesses there. We pick that up through both our Warehouse Stationery business and our Commercial division under Noel Leeming. So it is an opportunity which typically wholesale into business as opposed to B2C.
Okay, thank you very much, David, for that. Question.
We have another question online, one from Peter Hill. Are you performing benchmarking analysis of The Warehouse against Kmart?
on an ongoing basis? The board gets reports every month virtually in terms of market share performance. So we do see how we're trading. Obviously that's only top line versus top line. So yeah, we're very conscious of that market share perspective. But JJ, do you want to add to t hat?
Yeah, I think probably our primary feedback for improvement is from our customers, but actually a really important opportunity for improvement and opportunity is looking at our competitive set and seeing where they are moving ahead of us on any particular metric, and that gives us pause for thought around how we might lean into that, and also equally, how do we lean into other metrics that outperform them, so it's actually a very strong part of getting fit or keeping fit is making sure that you're on or above your competitor Metrics.
Okay, thank you, Peter. Anything else? Julian?
We have another one from Eva, Eva Keating. And asks, what's Rachel's view on whether Māori whānau or customers are preferring to shop at The Warehouse or. Kmart?
Are you happy to answer that? Rachel?
I'm happy to answer it, but I might not have a very satisfactory answer to the question because I don't have the data that tells me our statistics as against Kmart. But what I can say is that we have a groundswell of young mums and we have a groundswell of young people, and they're always looking for great product and product on trend and product at great prices. So in that respect, I think we're an absolute sitter for that demographic and s ociographic,
and we have fabulous promotion. About six weeks ago, with the Kia Kaha Māori language, we did it.
was [Foreign language] i, and for the first time ever, Te Taura Whiri, who are the Māori Language Commission, worked with The Warehouse, or worked with anyone, in fact, and it was The Warehouse as the partner of choice to make the products available. You might have seen them there with the [Foreign language] emblem on them, and we sold out, I think, by 8:00 A.M. in most of our stores, and we sold out online, and we created an absolute frenzy among people who were interested in that product, and it was a real testament to the fact that everyone in Aotearoa, I think, who was shopping with us who was interested in that range of products, it was a really, really great partnership that we were very, very proud of l eading.
Okay, thank you very much. Eva.
And there are no more questions. Online.
Great. And we've got none here either. We've got one here. Can you come up to the front? I'm sorry. That's why I asked people to come up to the front because. Carl, how are you? Good to see.
Well, I'm Carl and I work for The Warehouse.
We know that, and welcome b ack.
First up, in regards to a comment made earlier about staffing issues, even our own staff know that we have a lack of staff because we feed that back all the time, that we do not have enough staff in our stores, et cetera, especially at the right times. But a separate question, the lack of our Christmas club, is that hurting our sales?
Yeah, I don't have the data from the previous year, Carl, so I can't actually compare and I'm not sure we got the comparative data to say what the absence of it is doing, but I can say that we're looking at what financial products and that's one of them might be suitable for our customers going forward. So I think we're relooking at what that offered. Does it look like a Christmas club? Is it something else? I think financial products or different ways of paying are very much on people's minds. So I think probably back in the frame would be the answer to that, Carl.
Yeah, because it's been over a year and it's been being looked at and it's like it's still being looked at now customers are asking what's h appened?
Yeah, the whole loyalty space is changing quite materially as we've seen with Flybuys scenario, but it is something that is being looked at actively. So thank. You.
Yeah, and as for the financial thing, I will just leave finance now out of.
Thank you. Thank you. Yes. Okay, there are no other questions, so thank you very much everyone who submitted those. Oh, we've got one more. Here we go. Welcome.
David Harper, s hareholder.
David. Welcome.
First of all, I'll ask a question. How many of The Warehouse Red Sheds share the platform with Warehouse. Stationery?
What's our number of. is?
Ian? I think I'll let you to. Ian's our Head of Operations. I'll get Ian to give us the current. Number.
There's about 2/3s of them now are SWAS, aren't? They?
Yeah, I think Ian's in the back row behind you there.
Right.
35. SWAS.
I've long been of the opinion that Warehouse Stationery as a specialized business should be on a separate premises which would then free up store space for added groceries, for instance. And I think we should be competing with the big two in the grocery trade. Give them a bit more of a hurry up. What's your thoughts on that.
Please? Yes, I don't think we are intending to be competing with the two supermarket chains at all. Obviously JJ outlined that at the moment our grocery, our FMCG products are about 25% of our s ales.
Right.
So I think we've got a variety of store footprints. So it's not a matter of one size fits a ll, b ut..
I will say that with the reforming of the Warehouse Stationery team back to a dedicated team, that's exactly one question they're looking at is what the mix of standalone stores which we do have for specialist business and those that are within a Warehouse store, and there's pros and cons for both of those, and that is being re looked at. That's probably more of a fine tuning than a particular swing one way or the other.
But I still think that you could make a big impact in the grocery s ector.
Yes. I think we've got probably the best qualified director of all in terms of groceries sitting around the table with us now. So we listen carefully to his views and assessment. Thank. You.
Because what I saw recently when Stephen Tindall and his associates wanted to buy The Warehouse Group and turn it into a grocery chain. What does that tell you? He's a pretty smart operator, isn't. He?
Yeah. I've got no idea what the operating model was intended to be if the takeover had been successful, s o I won't hypothesize on.
Now just one comment. Your new CEO, can he please be a New Zealander?
Yes, we've had that feedback. Thank you for the. Invitation.
I'll give you an example of Fonterra. They had NZD 6 million-NZD 7 million Canadian as a CEO and then an NZD 8 million Dutchie, and look where it got them. They made decisions that got the Fonterra Group into big financial trouble in China. So you really need to have a CEO who understands the New Zealand. Sector.
I think the context is very important. I agree with that. Thank you very much indeed. Thank you. Okay. It really appears like we have no further questions, so that concludes our discussion on the items of business. In a minute, I'm going to close the voting, so please ensure that you have cast your vote on all resolutions. I will now pause to allow you time to finalize those votes. So we'll wait for 60 seconds. Somebody got a timer? So Antony Carter tells me 60 seconds are up. So voting is now closed. The results of these votes will be released to the Stock Exchange later today. Computershare will now collect the voting papers from shareholders in the room.
I now also declare the meeting closed at 11:32 A.M. I want to thank you all very much for your attendance, whether it's here in person or online, and of course, for your continued interest in the company. For those of you in the room, please join the board and the senior leadership team for some refreshments, which will be at the back of the room. I hope you all stay safe and well, and I wish you and your families a very happy festive season and a prosperous new year. Thank.