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 (WHS) has done it tough over the last three years, generating a cumulative operating profit (EBIT pre-IFRS-16) of NZ$91m from FY23 to FY25.</li><li>Kmart NZ delivered +2% sales growth, a c.43% gross margin and a c.13% EBIT margin in the 12-month period to June 2025, while The Warehouse (Red Sheds) made its first operating-profit loss in the 12-month period to July 2025.</li><li>We only expect WHS to be able to return to a 2% operating margin, based on a 33% gross margin and getting to 31% CODB as a percentage of sales.</li></ul>

The Warehouse Group (WHS) has done it tough over the last three years, generating a cumulative operating profit (EBIT pre-IFRS-16) of NZ$91m from FY23 to FY25.Kmart NZ delivered +2% sales growth, a c.43% gross margin and a c.13% EBIT margin in the 12-month period to June 2025, while The Warehouse (Red Sheds) made its first operating-profit loss in the 12-month period to July 2025.We only expect WHS to be able to return to a 2% operating margin, based on a 33% gross margin and getting to 31% CODB as a percentage of sales.

The Warehouse Group Tale of Two Discount Retailers

<ul><li>The Warehouse Group’s 1Q26 update continued the challenging trading conditions NZ retailers have faced over the past 12–24 months.</li><li>WHS has sharply refocused on its cost base, targeting a more sustainable 31% of sales for its cost of doing business (CODB) through both: (1) head office cost reduction; and (2) top-line growth.</li><li>Meanwhile, near-term earnings risk remains negatively skewed: (1) promotional intensity is rising for Black Friday and Christmas; (2) IKEA opens in December; and (3) competitors continue to gain share.</li></ul>

The Warehouse Group’s 1Q26 update continued the challenging trading conditions NZ retailers have faced over the past 12–24 months.WHS has sharply refocused on its cost base, targeting a more sustainable 31% of sales for its cost of doing business (CODB) through both: (1) head office cost reduction; and (2) top-line growth.Meanwhile, near-term earnings risk remains negatively skewed: (1) promotional intensity is rising for Black Friday and Christmas; (2) IKEA opens in December; and (3) competitors continue to gain share.

The Warehouse Group 1Q26 Trading Update—No New Stock

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. 

<ul><li>If Christmas shopping has snuck up on you this year, don’t stress—we’re here to make it simple!</li><li>We've curated a comprehensive Christmas gift guide to offer a variety of ideas for all your family members at any budget.</li><li>Included in this year's top picks are a pickleball set for family fun, a stylish ‘W’ cap (with a donation to Wikipedia), an Oura Ring combining tech and self-care, and a Matakana Village picnic for those who cherish quality time and good wine.</li></ul>

If Christmas shopping has snuck up on you this year, don’t stress—we’re here to make it simple!We've curated a comprehensive Christmas gift guide to offer a variety of ideas for all your family members at any budget.Included in this year's top picks are a pickleball set for family fun, a stylish ‘W’ cap (with a donation to Wikipedia), an Oura Ring combining tech and self-care, and a Matakana Village picnic for those who cherish quality time and good wine.

Retail Sector Santa's Stocking: What's in Store for Christmas?

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 Tale of Two Discount Retailers

The Warehouse Group (WHS) has done it tough over the last three years, generating a cumulative operating profit (EBIT pre-IFRS-16) of NZ$91m from...

Forsyth Barr

The Warehouse Group 1Q26 Trading Update—No New Stock

The Warehouse Group’s 1Q26 update continued the challenging trading conditions NZ retailers have faced over the past 12–24 months. WHS has sharply...

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

Retail Sector Santa's Stocking: What's in Store for Christmas?

If Christmas shopping has snuck up on you this year, don’t stress—we’re here to make it simple! We've curated a comprehensive Christmas gift guide...

Forsyth Barr

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