The Warehouse Group announces six store closures, up to 1080 jobs to be lost

The Warehouse Group says it will cut up to 950 jobs as part of a restructure in which six stores will close.

On Monday, the retailer confirmed it had also started a consultation process at its Northcote head office where more jobs will go, taking the total number of job cuts to over 1000.

The retail stores earmarked for closure are The Warehouse in Whangaparaoa, Johnsonville and Dunedin central, and Warehouse Stationery Te Awamutu. The Noel Leeming Clearance Centre in Henderson and the Noel Leeming store in Tokoroa are also to close.

The Warehouse in Birkenhead is confirmed to close in July. The same month, a Noel Leeming store will open in the Northlink shopping centre in Christchurch, replacing stores in Papanui and The Palms. This brings the current total of store closures under The Warehouse Group to nine.

Group CEO Nick Grayston said that by the end of August, the company will move to an agile working model. As a result, up to 130 jobs will be cut at The Warehouse Group head office.

"We're confident that agile principles will support the business by improving speed to market, collaboration, innovation and productivity, enabling us further to increase our focus on serving New Zealanders' needs in this uncertain environment," Grayston said.

Company research shows that shopping habits are changing. COVID-19 has sped up plans to make stores more efficient. Store locations, profitability and lease arrangements were reviewed.

"Value for money has never been more important to our customers and in order to continue to deliver this, we need to manage our costs and run our business more efficiently," Grayston added.

Operational changes and proposed closures are likely to result in the loss of up to 950 jobs in stores, and up to 130 jobs at head office.  Further store closures aren't ruled out.

"The Group will continue to assess its store network and has flexibility in its lease renewal profile with approximately one quarter of its network coming up for renewal within the next 15 months," Grayston added.

Spending across The Warehouse, Warehouse Stationery and Noel Leeming had increased since moving to COVID-19 alert level two. Strong trading was seen as a release of pent-up demand and the company doesn't expect this to continue under the economic fallout of COVID-19.  

Due to uncertainty around trading performance, the Board said it would withhold full-year 2020 earnings guidance.