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>The Warehouse Group’s (WHS) 3Q23 trading update showed Red Sheds sales (~+10% against the prior year) continue to support the wider group, with revenue declines of ~-2% to ~-3% across the other three divisions.</li><li>Group gross margins for the quarter were down on 3Q22 (-160bps) consistent with our expectations for continued margin pressure.</li><li>All brands were affected by year-on-year gross margin reductions, although Red Sheds appears to be faring better with signs of sequential improvement since the interim result.</li></ul>

The Warehouse Group’s (WHS) 3Q23 trading update showed Red Sheds sales (~+10% against the prior year) continue to support the wider group, with revenue declines of ~-2% to ~-3% across the other three divisions.Group gross margins for the quarter were down on 3Q22 (-160bps) consistent with our expectations for continued margin pressure.All brands were affected by year-on-year gross margin reductions, although Red Sheds appears to be faring better with signs of sequential improvement since the interim result.

The Warehouse Group (WHS): 3Q23 Trading Update

<ul><li>The Warehouse Group (WHS) faces a challenging near-term outlook. Inflationary pressures on households continue to weigh on demand at a time when operating leverage in the business is at a peak.</li><li>WHS' key growth opportunity is further expansion of its grocery offering, which is occurring against a favourable regulatory backdrop and may add incremental value.</li><li>WHS appears to be trading in line with its historical multiple, and risk and reward appear balanced.</li></ul>

The Warehouse Group (WHS) faces a challenging near-term outlook. Inflationary pressures on households continue to weigh on demand at a time when operating leverage in the business is at a peak.WHS' key growth opportunity is further expansion of its grocery offering, which is occurring against a favourable regulatory backdrop and may add incremental value.WHS appears to be trading in line with its historical multiple, and risk and reward appear balanced.

The Warehouse Group: Checking Out the Sheds

<ul><li>The Warehouse Group (WHS) reported a disappointing 1H23 result.</li><li>Poor performance over the key Christmas trading period in most of its brands, as well as gross margin pressures and higher costs of doing business (CODB) contributed to materially lower earnings than expected.</li><li>Underlying NPAT (post IFRS 16) was ~-28% lower than our forecast, and the outlook for the company continues to appear very challenging.</li></ul>

The Warehouse Group (WHS) reported a disappointing 1H23 result.Poor performance over the key Christmas trading period in most of its brands, as well as gross margin pressures and higher costs of doing business (CODB) contributed to materially lower earnings than expected.Underlying NPAT (post IFRS 16) was ~-28% lower than our forecast, and the outlook for the company continues to appear very challenging.

The Warehouse Group: 1H23 Result — Red All Over the Sheds

<ul><li>The Warehouse Group (WHS) has reported a disappointing 1H23 result with consumer spending slowing, particularly across Noel Leeming and Torpedo7.</li><li>Gross margins fell across -200bps in the first half, primarily due to category mix (higher groceries) and promotional spend in TheMarket</li><li>Underlying NPAT on a post-IFRS 16 basis is -50% below our forecast, reflecting continued operating deleverage across the business and higher depreciation and interest costs.</li></ul>

The Warehouse Group (WHS) has reported a disappointing 1H23 result with consumer spending slowing, particularly across Noel Leeming and Torpedo7.Gross margins fell across -200bps in the first half, primarily due to category mix (higher groceries) and promotional spend in TheMarketUnderlying NPAT on a post-IFRS 16 basis is -50% below our forecast, reflecting continued operating deleverage across the business and higher depreciation and interest costs.

The Warehouse Group (WHS): 1H23 Result – Initial Impressions

<ul><li>2Q23 trading to date indicates gross margins will be under pressure in 2H23</li><li>Operating expenses will be challenging in the near term as digital and core systems spend continues</li><li>The Warehouse is expected to be the most resilient of WHS' brands but division and product mix have changed adversely</li></ul>

2Q23 trading to date indicates gross margins will be under pressure in 2H23Operating expenses will be challenging in the near term as digital and core systems spend continuesThe Warehouse is expected to be the most resilient of WHS' brands but division and product mix have changed adversely

The Warehouse Group: 2Q23 Sales Checkout; Downgrade to NEUTRAL

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): 3Q23 Trading Update

The Warehouse Group’s (WHS) 3Q23 trading update showed Red Sheds sales (~+10% against the prior year) continue to support the wider group, with...

Forsyth Barr

The Warehouse Group: Checking Out the Sheds

The Warehouse Group (WHS) faces a challenging near-term outlook. Inflationary pressures on households continue to weigh on demand at a time when...

Forsyth Barr

The Warehouse Group: 1H23 Result — Red All Over the Sheds

The Warehouse Group (WHS) reported a disappointing 1H23 result, wherein poor performance over the key Christmas trading period in most of its...

Forsyth Barr

The Warehouse Group (WHS): 1H23 Result – Initial Impressions

The Warehouse Group (WHS) has reported a disappointing 1H23 result with consumer spending slowing, particularly across Noel Leeming and Torpedo7;...

Forsyth Barr

The Warehouse Group: 2Q23 Sales Checkout; Downgrade to NEUTRAL

WHS' trading update to 26 December 2022 (partial 2Q23, representing peak season) indicated reduced sales across all brands and lower gross margin...

Forsyth Barr

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