The Warehouse Group (WHS) H2 2025 earnings summary

Executive summary

• FY25 was marked by challenging economic conditions, with rising unemployment, declining consumer confidence, and increased retail competition impacting discretionary spending and retail margins.

• Group sales rose 1.6% to $3.1 billion, but were flat on a like-for-like basis due to an extra trading week.

• Operating profit dropped to $1.3 million from $28.9 million in FY24, with a reported net loss of $2.8 million, a significant improvement from a $54.2 million loss last year; no dividend was declared for FY25.

• Leadership changes included Mark Stirton becoming CEO and a refreshed executive team focused on cost control, margin improvement, and a brand-led strategy.

• Early signs of improvement were seen in the second half, with better sales and margin trends, though profitability remains below target.

Financial highlights

• Gross profit margin declined by 140 basis points to 32.2%, mainly due to a highly promotional environment and category mix shifts.

• Cost of doing business decreased 40 basis points to 32.2% of sales, with head office costs down 7.8% and depreciation down 7.4%.

• Free cash flow was negative $45.2 million, impacted by timing of year-end payments and the 53rd week.

• Net debt increased to $96.1 million, mainly due to timing of supplier payments and higher goods in transit in the 53rd week.

• Capital expenditure was tightly controlled at $12.4 million, down from $39 million in FY24.

Outlook and guidance

• Retail environment expected to remain challenging through 2025, with low consumer confidence and cost-of-living pressures.

• FY26 focus is on margin recovery, cost reduction, and working capital unlocks, especially in higher margin categories.

• Early FY26 trading shows sales and gross profit at similar levels to last year; management targets cost of doing business below 31% of sales in the medium term.

• Margin recovery will focus on improved sourcing, tighter inflow margin control, and disciplined inventory management.

• Longer-term strategy to be shared later in FY26.