Company of the Year

With its first billion
dollar year, The Warehouse continues
its extraordinary success story. The figures speak for themselves. Group sales of $1,075 billion for the year to July 2000 were up $142 million (15.3 percent) on the 1999 year and there was an audited net surplus after tax of $70.1 million, $16 million (29.6 percent) up from the previous year.
Growth is, in the words of managing director Stephen Tindall, “a controlled explosion”. In the last financial year, five new Warehouse stores were opened, 14 were refurbished and one extended, representing 5.5 percent increase in retail space. Warehouse Stationery added six new stores to increase its retail space by 40 percent and by the end of 2000, another six will be opened.
October saw the opening of three new stores, including the biggest ever, at 9300 square metres in Linwood, Christchurch. And three more will be opened by the end of 2000. Tindall predicts similar number of openings in 2001, saying that while there will not be huge increase in net numbers of stores, existing stores will be made bigger.
He foresees another 40 percent increase in square footage before The Warehouse matures in New Zealand.
On August 1, The Warehouse took possession of its first Australian outlets. The discount merchandise group trades as Clint’s Crazy Bargains in New South Wales, ACT and Victoria, and Silly Solly’s in Queensland. The 115 stores will be progressively re-badged as Clint’s Warehouse, Where Everyone Gets Bargain and Solly’s Warehouse, Where Everyone Gets Bargain. Once the Australian market starts to understand The Warehouse, says Tindall, the old names will go.
The stores are at present much smaller than New Zealand Warehouse stores, averaging 1100 square metres compared with The Warehouse average of 3677 square metres. The plan is to enlarge the existing stores by approximately three times.
“We have lot to do,” says Tindall. “The group is in the same state we were eight years ago. It is fairly immature in terms of logistic and IT systems and the size of the stores. We cannot get the same range on show, with the larger number of categories we have in New Zealand.”
He believes that it will take two to three years for the stores to reach New Zealand standards. After that establishment period, he is confident of acceleration in growth of store size, sales and profits.
Tindall is cautious about further offshore ventures. “At nearly six times our population, Australia is big one for us,” he says. “We will digest that before we move on.”
The Warehouse is now successful e-business, communicating electronically with its suppliers. Not only are goods ordered online, but at click of the mouse suppliers can discover how their products are selling in individual stores. The Warehouse is currently installing forecasting engine so that accurate predictions can be made of how products will sell on day-to-day basis, thus enabling manufacturers to plan production and delivery. It also means that warehouses do not need to hold too much stock, only what they are confident of selling.
“E-business helps to mitigate what retailers have always dreaded,” says Tindall. “And that is having too much of anything, especially fashion product. You can have far less markdown, can work on lower margins and do volumes. It means having much better control.”
Warehouse Stationery has just launched full e-commerce service so that its big customers, especially corporates, can order on the Internet.
But the greatest change for The Warehouse will come at the end of the 2001 financial year, when, after 19 years as managing director, Stephen Tindall will withdraw from day-to-day management and hand over the reins to Greg Muir.