New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

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).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

Warehouse Group Limited / Equity Bottom-Up

<ul><li>Sales fell -1.6% to NZ$1.61b, which was less severe than anticipated by both FB (-2.5%) and VA Consensus (-2.7%).</li><li>Gross margins were pressured by increased promotional activity during the Christmas/New Year period, with a calculated contraction of -210bps to -300bps.</li><li>1H25 Operating Profit guidance of NZ$18-20m was below expectations (FB 1H25 NZ$25m), with FY25 implied guidance of NZ$4-6m.</li></ul>

Sales fell -1.6% to NZ$1.61b, which was less severe than anticipated by both FB (-2.5%) and VA Consensus (-2.7%).Gross margins were pressured by increased promotional activity during the Christmas/New Year period, with a calculated contraction of -210bps to -300bps.1H25 Operating Profit guidance of NZ$18-20m was below expectations (FB 1H25 NZ$25m), with FY25 implied guidance of NZ$4-6m.

The Warehouse Group (WHS) - 1H25 Trading Update - Doing it tough

<ul><li>The Warehouse Group (WHS) reported a less-worse-than-expected 1H25 result.</li><li>While sales declines moderated in 2Q25, heightened promotional activity and aged inventory resulted in c.-170 bps of group gross margin contraction and a -7% decline in gross profit versus 1H24.</li><li>WHS guided to a 2H25 pre-IFRS 16 EBIT (‘Operating Profit’) loss of -NZ$14m, in line with 2H24. We think there is downside to 2H25 guidance, given: (1) heightened promotional pressure and gross margin exit run-rates in 2Q25; and (2) our expectation that domestic consumer spending remains subdued over the next six months. </li></ul>

The Warehouse Group (WHS) reported a less-worse-than-expected 1H25 result.While sales declines moderated in 2Q25, heightened promotional activity and aged inventory resulted in c.-170 bps of group gross margin contraction and a -7% decline in gross profit versus 1H24.WHS guided to a 2H25 pre-IFRS 16 EBIT (‘Operating Profit’) loss of -NZ$14m, in line with 2H24. We think there is downside to 2H25 guidance, given: (1) heightened promotional pressure and gross margin exit run-rates in 2Q25; and (2) our expectation that domestic consumer spending remains subdued over the next six months. 

The Warehouse Group - 1H25 Result—Tough Going

<ul><li>The Warehouse Group's (WHS) 1H25 trading update highlighted that the January quarter was more challenging than we had feared.</li><li>While sales held up better than anticipated, gross margins came under pressure due to heightened promotional activity.</li><li>First time 1H25 pre-IFRS 16 EBIT (operating profit) guidance provided was NZ$18m–NZ$20m, with another -NZ$14m loss expected in 2H25, implying FY25 operating profit of </li></ul>

The Warehouse Group's (WHS) 1H25 trading update highlighted that the January quarter was more challenging than we had feared.While sales held up better than anticipated, gross margins came under pressure due to heightened promotional activity.First time 1H25 pre-IFRS 16 EBIT (operating profit) guidance provided was NZ$18m–NZ$20m, with another -NZ$14m loss expected in 2H25, implying FY25 operating profit of 

Thematic (Sector/Industry)

<ul><li>NZ retailers sourcing from China could benefit from excess manufacturing capacity and lower input costs.</li><li>A -1% reduction in China sourcing costs could increase sector gross profit dollars between +0.2% to +1.1%.</li><li>KMD Brands is better positioned to mitigate tariff-related headwinds than initially anticipated.</li></ul>

NZ retailers sourcing from China could benefit from excess manufacturing capacity and lower input costs.A -1% reduction in China sourcing costs could increase sector gross profit dollars between +0.2% to +1.1%.KMD Brands is better positioned to mitigate tariff-related headwinds than initially anticipated.

<ul><li>When should investors own listed retailers? Our analysis of over 50 listed retailers suggests that total shareholder returns are strongest when a retailer is in the Optimisation phase—when its store roll-out is complete but it continues to improve per-store profitability through gross profit dollar optimisation and cost control.</li><li>Retailers in our study historically delivered c.20% total shareholder return per year in Optimisation.</li><li>Retailers in the Growth phase (when rolling out stores) also delivered solid returns for investors of c.15% per year. </li></ul>

When should investors own listed retailers? Our analysis of over 50 listed retailers suggests that total shareholder returns are strongest when a retailer is in the Optimisation phase—when its store roll-out is complete but it continues to improve per-store profitability through gross profit dollar optimisation and cost control.Retailers in our study historically delivered c.20% total shareholder return per year in Optimisation.Retailers in the Growth phase (when rolling out stores) also delivered solid returns for investors of c.15% per year. 

New Zealand

The Warehouse Group Limited operates general merchandise and stationery supply retail stores throughout New Zealand.

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Warehouse Group Limited (WHS NZ)

The Warehouse Group (WHS) - 1H25 Trading Update - Doing it tough

Sales fell -1.6% to NZ$1.61b, which was less severe than anticipated by both FB (-2.5%) and VA Consensus (-2.7%). Gross margins were pressured by...

Forsyth Barr

The Warehouse Group - 1H25 Result—Tough Going

While sales declines moderated in 2Q25, heightened promotional activity and aged inventory resulted in c.-170 bps of group gross margin contraction...

Forsyth Barr

The Warehouse Group - Red, Red Sheds

The Warehouse Group's (WHS) 1H25 trading update highlighted that the January quarter was more challenging than we had feared.

Forsyth Barr

Retail Rundown - Getting to the Source

NZ retailers sourcing from China could benefit from excess manufacturing capacity and lower input costs. A -1% reduction in China sourcing costs...

Forsyth Barr

Retail Rundown - Retailer Life Cycles

Retailers that transitioned from Maturity to Optimisation historically delivered c.27% shareholder return CAGR in the three years following their...

Forsyth Barr

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