New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

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New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

Warehouse Group Limited / Equity Bottom-Up

<h2>The Warehouse Group (WHS) 3Q22 Sales – Initial Impressions</h2>
WHS reported a 3Q21 with Omicron impacted in-store sales partially offset by continued growth in online sales. 3Q22 group sales were ~NZ$771m down -2% on the prior period, but +8% of pre-COVID levels. No outlook guidance was provided, but consensus revenue expectations at the group level are NZ$3,342m (below Forsyth Barr expectations NZ$3,400m) implying 4Q22 growth of +3% year on year. 3Q22 group gross margin was 35.6% +90bp on 1H22 (34.7%); this expansion is in line with our expectation for FY22 gross margin of 35.4%.
MSCI has also just announced that WHS will be added to the MSCI Small Cap Index.
Our view
Whilst there remains a reasonable level of uncertainty surrounding the new profit base for the business we continue to like the progression on strategic initiatives.
Divisional breakdown
<ul>
<li>Red Sheds — Recorded sales of ~NZ$402m; a -2.0% decline compared to 3Q21 with lower in-store traffic in the quarter (-11.4%) partially offset by higher online sales during the period. The company noted that grocery was a standout category during the period.</li>
<li>Blue Sheds — Recorded sales of ~NZ$67m; &nbsp;a decline of -6.1% compared to 3Q21. Online sales decreased by -14.2% compared to 3Q21 with the company noting softer back to school sales and, a decline in online traffic and some stock availability issues.</li>
<li>Noel Leeming — Recorded sales of ~NZ$257m; a decline of -2.5% compared to 3Q21. Online sales increased by +13.1%. We continue to expect the reallocation of spending from goods back to services will have a greater impact on Noel Leeming’s sales than the groups other brands.</li>
<li>Torpedo7 — Recorded sales of ~NZ$40m; +3.1% compared to 3Q21, predominantly due to higher online sales +9% on the prior quarter.</li>
</ul>

The Warehouse Group (WHS) 3Q22 Sales – Initial Impressions
WHS reported a 3Q21 with Omicron impacted in-store sales partially offset by continued growth in online sales. 3Q22 group sales were ~NZ$771m down -2% on the prior period, but +8% of pre-COVID levels. No outlook guidance was provided, but consensus revenue expectations at the group level are NZ$3,342m (below Forsyth Barr expectations NZ$3,400m) implying 4Q22 growth of +3% year on year. 3Q22 group gross margin was 35.6% +90bp on 1H22 (34.7%); this expansion is in line with our expectation for FY22 gross margin of 35.4%.
MSCI has also just announced that WHS will be added to the MSCI Small Cap Index.
Our view
Whilst there remains a reasonable level of uncertainty surrounding the new profit base for the business we continue to like the progression on strategic initiatives.
Divisional breakdown

Red Sheds — Recorded sales of ~NZ$402m; a -2.0% decline compared to 3Q21 with lower in-store traffic in the quarter (-11.4%) partially offset by higher online sales during the period. The company noted that grocery was a standout category during the period.
Blue Sheds — Recorded sales of ~NZ$67m; &nbsp;a decline of -6.1% compared to 3Q21. Online sales decreased by -14.2% compared to 3Q21 with the company noting softer back to school sales and, a decline in online traffic and some stock availability issues.
Noel Leeming — Recorded sales of ~NZ$257m; a decline of -2.5% compared to 3Q21. Online sales increased by +13.1%. We continue to expect the reallocation of spending from goods back to services will have a greater impact on Noel Leeming’s sales than the groups other brands.
Torpedo7 — Recorded sales of ~NZ$40m; +3.1% compared to 3Q21, predominantly due to higher online sales +9% on the prior quarter.


The Warehouse Group (WHS): 3Q22 Sales – Initial Impressions