This article first appeared on GuruFocus .
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Sales:$1.6 billion, up 0.3% on the prior year half.
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Gross Profit:$520.5 million with a gross margin of 32.3%.
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Operating Profit:$26.9 million, up 37.7% on FY25 H1.
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Same-Store Sales:Increased 0.5% like-for-like.
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Net Debt:Improved to $93 million from $96 million in FY25 full year.
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Inventory:Decreased $26 million or 4.7% compared to the previous year.
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Warehouse Stationery Sales:Up 5.7% with strong growth across all categories.
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Noel Leeming Operating Profit:$13 million, up 52% from the prior period.
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Cost of Doing Business:Decreased 1.7% to 30.6% of sales.
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Free Cash Flow:Positive at $3.1 million.
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Release Date: March 26, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Warehouse Group Ltd (The) ( NZSE:WHS ) delivered a solid result for the first half of FY26, with sales reaching $1.6 billion, up 0.3% from the previous year.
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Operating profit improved significantly to $26.9 million, up 37.7% compared to FY25 H1, reflecting effective cost control measures.
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Warehouse Stationery achieved a standout performance with increased sales, margin, and operating profit, demonstrating successful turnaround efforts.
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The company has made progress in improving retail fundamentals, including better merchandise planning, supply chain enhancements, and a leaner operating model.
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Warehouse Group Ltd (The) ( NZSE:WHS ) has reduced its Scope 1 and 2 emissions by 80% and increased the use of sustainable packaging, highlighting its commitment to environmental sustainability.
Negative Points
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Gross profit was slightly down compared to the prior period, with a gross margin of 32.3%, indicating pressure on profitability.
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The Board decided not to declare an interim dividend due to economic uncertainty, which may disappoint shareholders.
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Retail spending in January decreased by 1.1% due to severe weather events, impacting sales performance.
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Unemployment reached a 10-year high in December, and GDP growth remains muted, contributing to a challenging economic environment.
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The company faces increased uncertainty from international conflicts, which could lead to higher freight costs and impact consumer demand.
Q & A Highlights
Q: Can you provide any color on how sales have tracked over the past couple of weeks, especially with higher fuel prices? A: Sales for the first six weeks were down 0.2%, and the trend has remained flat over the last two weeks. (Stefan Knight, Group CFO)
Q: How are you managing increased freight costs due to the international conflict, and will this lead to price increases or margin impacts? A: It's too early to say definitively. We expect pressure on international freight and domestic transport costs, but value brands like ours typically perform well in tight environments. We are closely monitoring the situation and doing scenario planning. (Stefan Knight, Group CFO)
Q: Why is there a large difference in sales performance between Noel Leeming and competitors like JB Hi-Fi? Are you losing market share? A: We chose to focus on margin rather than sales, which may have led to some short-term market share loss. However, we remain a strong competitor, and our strategy includes focusing on higher-margin categories. (Mark Stirton, Group CFO)
Q: Can you provide guidance on operating expenses for the second half of the year? A: We expect operating expenses to be lower than the second half of FY25, but not at the same rate of reduction as the first half of FY26. (Stefan Knight, Group CFO)
Q: How are you handling aged inventory clearance, and what impact has it had? A: Aged inventory clearance primarily impacted the first quarter. We are systematically working through it to release working capital and reduce supply chain pressure. (Mark Stirton, Group CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
