The Warehouse Group Limited (UXN.SG) Earnings Call Transcript & Summary

[Foreign Language] Good morning, and welcome. My name is Silv Roest, and I'm the Chief Legal and Corporate Affairs Officer and Company Secretary at The Warehouse Group. Before I hand over to our Chair, Dame Joan Withers for the opening of the meeting, I'd like to cover a few points of housekeeping. In the event of an emergency, please follow our team's directions. The fire exits are located through the side doors on both the left- and right-hand sides of the building. Please follow our wardens should the alarm sound. The assembly point is on the far car park. The bathrooms are opposite the entrance you came through and if you walk down here to the right. If you need voting forms, the team at MUFG will be able to help you. Finally, following today's meeting, the Board and management team look forward to you joining us for refreshments over at the end of the room. Thank you, and I now invite the Chair, Dame Joan Withers to open the meeting.

Thank you very much, Silv. [Foreign Language] So good morning, and thank you for joining us here at The Warehouse Group offices. We are thrilled to be able to use our own facilities for this annual meeting. As Silv said, my name is Joan Withers, and I'm Chair of The Warehouse Group. Today's meeting is being conducted, both in-person and online. We are very pleased to welcome those of you participating online through the virtual meeting platform that's provided by our share registrar, MUFG Pension and Market Services. I'll provide you with further instructions as we progress through the meeting. But if you encounter any issues, please refer to the Virtual Meeting online portal guide or you can phone the help line on 0800-200-220. On behalf of your directors, our Group Chief Executive Officer, Mark Stirton; and our executive team, I extend a very warm welcome to you all to our Annual Shareholders Meeting. But to those of you here in-person today -- both to those of you here in person today and to everyone online. Sitting with me up the front today are members of the Board of Directors, and we've also got the executive leadership team here. So starting from your left, please join me in welcoming John Journee, Dean Hamilton, Robbie Tindall, Tony Carter, Rachel Taulelei, Caroline Rainsford; Hamish Rumbold; and our Group CEO, Mark Stirton; and our Group CFO, Stefan Knight. As I said also with us here today are members of the executive leadership team and they're sitting up here in the front row. Finally, I'd like to welcome the team from PricewaterhouseCoopers, who are our company auditor and the team from our share registrar, MUFG Pension and Market Services. They will help conduct the voting on the formal business later in the meeting, and they will act to scrutineer. Now to the agenda. And before we proceed with the formal business, I'm just going to run through the order of events for today's meeting. The agenda will start with the usual formalities, and I will give an overview of the year that has been. Our incoming Chair, John Journee, will then address you and introduce himself. Then our Group CEO, Mark Stirton, will provide an update on our strategy, a recap of our FY '25 annual results, an update on the first quarter of the current financial year and some commentary on the remainder of FY '26. We will then turn to the formal part of the day's business. The resolutions today include the reelection of 2 Directors, Caroline Rainsford; and our new Director, Hamish Rumbold. And it's -- we've also had a resolution authorizing setting of the auditor's fees. We are going to cover each resolution in turn and invite you to submit your questions specific to those items. We will respond to those questions during the Q&A session for each resolution. Voting will take place by poll, and I will outline the process for discussion and voting on the resolutions at that point in the agenda. Voting will remain open for 5 minutes after the conclusion of the meeting. Following the resolutions, we will take questions on the Group's financial performance our operational performance or other general business. And I do ask that you wait to raise any general questions until that time. We'll now move to the formal agenda. The notice convening today's meeting was circulated to shareholders on the 31st of October. I note that a quorum is present so I am pleased to declare the 2025 Annual Shareholders Meeting of The Warehouse Group officially open and underway. Now to proxies. Proxies have been received from 279 shareholders, representing 196,398,462 voting shares. This represents 56.62% of the voting shares in the company. I will provide further details on proxies for each resolution at that time. To the annual report. The financial statements for the 53 weeks ended 3rd of August 2025 together with the auditor's report are set out in the company's 2025 annual report, which was released to the NZX on the 2nd of October 2025. If you'd like a copy or a hard copy of the annual report, please e-mail us. And under the Companies Act 1993, there is no requirement to approve the financial statements or the auditor's report at annual meetings. However, we will be happy to answer any questions you may have during the Q&A session at the end of the meeting. And just turning to the procedures for Q&A. During this annual meeting, anyone in the room or online will be asked -- able to ask questions and to vote and I do encourage you to do so. For those of you online, you can send through your questions at any time through the online portal by clicking the Ask-a-Question button within the Virtual Meeting platform. Select the item of business, type in your question and click submit. I do encourage you to do this as early as possible so we can answer your questions at the appropriate time in the meeting. Please note though that some online questions may be moderated or amalgamated together if we receive multiple questions on one topic. Now we'll move to the substantive part of my presentation, FY '25 review. Financial year '25 was one of the most demanding years in recent memory for the warehouse group, shaped by tough economic conditions and a sharp decline in consumer confidence. Rising unemployment and tighter household budgets led to a significant slowdown in discretionary spending, while competition across the retail sector intensified. We made deliberate choices to reset the business. FY '25 was a year of streamlining our operating model, resetting price points, improving product ranges and applying stronger discipline to cost and capital management. These actions were essential to lay the foundation for a turnaround. During the financial year, our group sales held steady at $3.1 billion, but it is important to note that FY '25 included an additional trading week. So on a like-for-like basis, sales were basically flat, but that reflects resilience in a difficult market. Conversion improved and unit sales grew strongly across all 3 brands with encouraging momentum in the second half, particularly at the warehouse in Noel Leeming. Margin came under pressure and profitability suffered as a result. Gross margin declined across the group by 140 basis points, significantly impacting the Group's bottom line. This was primarily driven by early price resets at the warehouse and a category mix skewed towards lower-margin products. The second half brought some improvement. Category mix strengthened and unit growth lifted across the group, supported by sharper pricing and on-trend products, especially in home, apparel, toys and beauty at the warehouse. We also introduced new brands as part of our range refresh. Cost control remained a very clear focus. Our cost of doing business decreased by 40 basis points to 32.2% of sales despite inflationary pressures on rent, utilities and wages. Capital management was disciplined. Projects were rationalized and elevated IT spend tapered off. So capital expenditure fell to $12.4 million, which was down significantly from $39 million in FY '24. So our operating profit was $1.3 million, and we reported a net loss of $2.8 million. Given this financial performance, the Board determined it should not declare a dividend for FY '25. That is deeply disappointing, and I want to acknowledge the impact on our shareholders. As you will hear through Mark's presentation, we are taking comprehensive action to restore profitability and deliver value back to our shareholders. While we have made progress on cost control during FY '25, it was not enough to offset the margin decline, and as announced with our Q1 trading update earlier this month, work is underway to further reduce our cost base. Again, Mark will take you through additional details on this shortly. We now have a new leadership team in place. They are aligned on our goals, focused on execution and committed to accelerating progress to rebuild profitability and to unlock the full potential of our brands. The appointment of Mark Stirton as Group Chief Executive Officer effective on the 1st of August was a pivotal moment for The Warehouse Group. After a comprehensive global search, the Board was unanimous that Mark is the right person to lead the company forward. Mark brings outstanding experience and capability. His decade at Mr Price Group, including as Group Chief Financial Officer, combined with his chartered accountancy qualifications and an MBA in business transformation give him the qualifications and experience, the commercial credibility and strategic insight to deliver the performance needed to create value for shareholders. He has already hit the ground running. Mark is leading with intent and driving momentum, bringing disciplined control to operating costs and capital expenditure and sharpening the focus on retail fundamentals to turn the business around. Now to the Board of Directors. I would like to take a moment to acknowledge some important changes to our Board. Today, we recognize Robbie Tindall who is retiring from the Board at this Annual Shareholders Meeting. Robbie joined as a Director in 2020 after several years as an alternate Director for Stephen Tindall. His deep understanding of our business, his passion for sustainability and his steady guidance have been invaluable. He has always been a very valued colleague to me and my fellow Directors. Robbie leaves to dedicate more time to K1W1, which is the Tindall entity which invests in early stage start-ups in New Zealand across a diverse range of industries, and we wish him every success. We are delighted to welcome Hamish Rumbold, who joined the Board just on the 19th of November and who is standing for reelection today. Hamish brings. [indiscernible] Extensive experience in brand and customer strategy digital and technology and retail leadership. His skills strengthened the Board's capability. And as I foreshadowed when I stood for reelection back in 2022, this is my last annual shareholders' meeting as Chair and as a Director of The Warehouse Group. Over the past 9 years, I've had the privilege of leading this iconic New Zealand business through periods of growth and through some of the most challenging times in our history. The past few years have been particularly difficult, and I want to acknowledge the impact on our shareholders. The company's performance has weighed heavily on the Board and on me personally. Despite the challenges, I am proud of the. resilience. this company has shown. We are not yet where we want to be, but we have a clearer focus, stronger leadership and a renewed determination to deliver for all of our stakeholders. So to our shareholders, our customers and our team members and, of course, my fellow Directors, thank you. Your support and commitment have meant a great deal to me and it's been an honor to serve as Chair. And I am absolutely delighted that John Journee will succeed me as Chair following today's meeting. John's experience on the Board and an executive roles within the group, including his time as Interim CEO, means he brings both operational insight and strong governance capability. His appointment provides continuity and confidence as the group moves into its next phase of transformation and growth. And I'm now going to hand to John so he can address you all as our incoming Chair. John?

Thank you, Joan. It's a great honor to stand before you today as the incoming Chair of The Warehouse Group. I take this responsibility seriously, and I'm deeply committed to serving and returning value to you, our shareholders. Before I speak about the future, I want to acknowledge Joan's extraordinary contribution. Over the past 9 years, Dame Joan has led the Board with clarity, courage and unwavering commitment. Her leadership has been decisive, her integrity absolute and her belief in this company steadfast, even through our most challenging times, including the COVID-19 pandemic and the tough decisions of the past 18 months. Joan has been instrumental in shaping The Warehouse Group's governance. Under her leadership, we strengthened our focus on sustainability, advanced gender equity and navigated significant transformations. She has ensured the company reflects the communities we serve and our influence has been helped the position The Warehouse Group as a leader in responsible retailing. On behalf of the Board, management and our team, Joan, we thank you. It has been a true privilege to work alongside you. As I step into this role, my focus is clear. While I bring continuity and stability, my priority will be supporting the pace, discipline and initiative required to execute our turnaround. My experience spans more than 40 years in retail, including 23 years with The Warehouse Group in both executive and governance roles. I understand our heritage and what made us great. And most recently, I had the opportunity to serve as interim CEO, which gave me deep insight into the current operational realities of the business and the opportunities for it to improve. I am passionate about the brands, our people and our customers. I know the challenges we face. I also know the potential we have to unlock. My commitment is to work closely with Mark Stirton and the leadership team to ensure we deliver the critical value drivers for this business. That means sharper execution, more relevant customer connection and a relentless focus on rebuilding profitability and creating long-term value for our shareholders. To our shareholders, thank you for your continued support and belief in The Warehouse Group. We have work to do, and I'm confident that we're well positioned to succeed. Thank you. I will now hand over to Mark Stirton to talk to you about the Group's direction and financial performance. Mark?

[Foreign Language] everyone, and welcome. Thank you, Joan and John, and good morning, everyone. It's a privilege to address you today at my first annual shareholder meeting as Group Chief Executive Officer. I want to begin by thanking Dame Joan and John Journee for their leadership and support as I've stepped into this role. Their guidance has been invaluable during this critical time of the Group's history. Since stepping into the CEO role in August, my priority has been to set the playing field and align the organization around clear goals and performance expectations. I firstly want to recognize the commitment of our people. This is a fantastic business with a passionate group of people. Across our stores, distribution centers and support office and our product teams, our people continue to shop every day with the determination in what remains a very challenging retail environment. Their hard work and resilience are crucial to turning this business around. I've said about enabling the business to run at 2 speeds, reducing costs now to recover profitability while continuing to invest in the areas that will strengthen the group for its long-term future, like stores, product, prices and supply chain. I've spent a great deal of time in our stores and in our distribution centers, listening, learning and challenging our teams to solve the issues that affect our customer experience. The reality is that trading conditions are tough. The economy is slow to recover, household budgets remain under pressure and competition is intense. We are working hard to deliver the products and experiences our customers expect and to improve our financial performance at pace. It is clear to me that our competitive advantage lies in our stores, footprint and our footfall. We have the highest number of stores of any New Zealand general retailer with 1.7 million visits per week coming through our doors. We are embedded in New Zealand communities and is within our gift to show up for these communities and customers better than we have to date. It is also apparent that we have work to do on delivering the right range of products at the right prices. We have taken our eye off the ball and our core brands and core categories that make us money, and we're fixing that now. That means bringing back on-trend products in home and apparel and ensuring that essential items our customers need are available at value-driven prices. To enable this, I've set a disciplined direction for the group, one that balances immediate performance with long-term growth and have strengthened our leadership team to improve execution in critical parts of the business. Our executive team. Several changes have been made to our executive leadership team to position the Group for success. During the year, we welcomed 2 new outstanding new leaders Stefan Knight joined us as Group Chief Financial Officer, taking over from me, and he came from Spark New Zealand, bringing deep financial expertise and strategic insight. Shayne Tong came on board as Chief Digital and Transformation Officer from Foodstuffs, adding strong digital and transformation capabilities to our team. We were equally proud to promote high-caliber internal talent. Silv Roest who addressed you a little bit earlier, stepped into the role as Group Chief Legal, Corporate Affairs and Sustainability Officer, while Carrie Fairley was appointed Chief Merchandise Officer for The Warehouse and Warehouse Stationery. Our Group Chief Sourcing and Supply Chain Officer, Mark Anderton, who has been based in China and been with us for the last 10 years, will depart us in March. We thank Mark for his many years of service to the business and have taken the opportunity to rethink our leadership structure. Moving forward, sourcing will become part of the Chief Merchandise Officer role creating a single home for decision-making on our ranges. That's -- at the same time, we have appointed Lyle Brady, he is our current GM of supply chain to the leadership team as Group Chief Supply Chain Officer giving logistics a clear voice at the table. As a team, we are aligned on the priorities that matter most to be building this business, building an unbeatable culture, rebuilding profitability unlocking brand potential and delivering long-term shareholder value. Group direction. As mentioned, we have reset our Group's direction. Our group purpose is to build exceptional retail brands that customers love, our teams take pride in and that deliver sustainable shareholder returns. This is not just a statement, it is the lens through which we are making every decision. Our group ambition is to be a highly desired retail stock. Our strategy is to anchor -- is anchored in restoring profitability through better trading and positioning the business for sustainable future growth. Our group values remain unchanged, think customer, do good and own it. These values continue to guide our culture and our decision-making. Our strategy will revolve around strengthening and growing our 3 New Zealand retail brands enabling each to lead in its market, while leveraging shared services, platforms and capital. Later in FY '26, we will share our longer-term strategy for each of the -- for the Group and each of our brands. The potential of the brands. As we look ahead, one thing is clear, the potential of our brands is vast, and there are signs of progress. What is clear to me on review of our merchandise portfolio is that we have a portfolio of very valuable private label brands, which have been built up over decades, which our customers love. Our job is to further invest in making these brands and products even more desirable. We are starting to see a shift in consumer preference in key categories. In FY '25, The Warehouse reclaimed its #1 spot in toys, with the sales up over 8%. We also saw preference gains in home, apparel, pets, care, party, suppliers, sports and outdoors. We've done a range refresh. Customers told us they wanted more excitement, trend and color in our ranges. Our teams have started refreshing most categories within the portfolio, starting with home and apparel because of the materiality they have to the group. But we've also recently introduced health and beauty, which is doing really well to date. Early feedback is encouraging, and we are just -- and this is just the start. We have a lot more work to do, and our teams are already planning trend-led seasonal collections for summer and winter 2026. Store experience and reach. Our reach remains a strategic advantage. Over 85% of Kiwis live within 20 minutes of our stores. Our key opportunity is to improve our storytelling in the store. We have great value products, but we have work to do to improve our visual merchandising and store experience to make them come to life. Our new BD zones and apparel layout trials are just the beginning of several transformations customers will start to see. Our brand-led strategy is gaining traction. However, we know there is much more work to do to unlock the full potential in the years and months to come. Now moving to FY '25 annual results in more detail. As Joan said, before we look at the numbers, it is important to note that this FY '25 was a 53-week financial year compared to a 52-week in FY '24. Where appropriate, we compare FY '25 on a 52-week same-store sales basis with FY '24, removing the final 53rd week of FY '25. Group sales for the FY '25 financial year were up 1.6% and flat on a 52-week same-store basis. Retail conditions were challenging throughout the year in a low growth economy and the year was a story of 2 halves. While sales declined 1.6% in the first half, we delivered a turnaround in the second half with growth of 1.6% on a like-for-like 26-week basis. The Group pleasingly sold 4.6% more units in FY '25. However, this was offset by a decline of 4.4% in average selling prices. The Group gross profit margin, as Joan mentioned, declined 140 basis points to 32.2% and had the biggest impact on profitability in FY '25. The Group's gross profit margin decreased due to 4 main factors: the strategic reset of everyday low prices, particularly in the warehouse on existing products; lower inventory sell-through due to products that did not resonate sufficiently with customers, which led to additional clearance activity; sales contributions from our lower-margin categories, particularly in the warehouse; and sales growth in Noel Leeming, which had a great year, but is one of our lower-margin brands, which contributed higher to the overall gross margin. The decline in gross margin was smaller in the second half than it was in the first half with more stable pricing and better category mix and lower supply chain costs. To offset these margin impacts, we focused on controlling what we could. CODB was only up 0.2%, mainly due to that extra week. If we had -- not had the extra week, we would have actually gone negative, but slower than sales growth and reduced as a percentage of sales. In FY '26, we are targeting further margin improvements and CODB reduction to drive financial performance. People and communities. Even in challenging years, like FY '25, we stayed committed to looking after our people, our communities and our environment. It's fundamental to who we are at The Warehouse Group. We maintained 100% gender pay equity, and our employee Net Promoter Score rose to 36 from 18 in the prior year. That's a strong signal that our teams feel more engaged as we work to build a high-performance culture. Together with our customers, we raised $2.4 million for New Zealand charities. That impact matters and especially in a year when households and communities are doing it tough. We also made strong progress on our environmental commitments. 66% of our private label sales now use sustainable packaging. Our Scope 1 and 2 emissions are down 45% compared to FY '23 and more than 150 stores and sites are now powered by Lodestone's energy solar farms, and we diverted 79% of operational waste from landfills. These are meaningful steps that reflect our long-term commitment to sustainability and our belief that doing good is part of doing -- being a good business. FY '26 Q1 results, that just came out recently. Group sales were up 0.9% to $674.1 million with like-for-like sales -- same-store sales up 0.1%. At a brand level, The Warehouse delivered sales growth of 0.7%, Warehouse Stationary sales grew 2.6% and Noel Leeming achieved growth of 0.7%. Pleasingly, foot traffic across the group remains up at 0.2% and conversion improving 30 basis points. This shows more customers are visiting stores and responding to improved product lines in key categories. However, margins remain under pressure, with group gross profit margin was down 40 basis points in the quarter. A warmer winter led to slower sell-through at the warehouse, resulting in an increased clearance activity impacting the value perception of our new spring home and apparel ranges. Conversely, Noel Leeming and Warehouse Stationery margins improved. Trading conditions are challenging, while customers are responding to new ranges and in-store experience, margin improvements and cost reductions are an imperative to restoring our profitability. Cost reset. To help restore profitability and make sure our cost base is fit for a competitive value retailer, we are implementing a comprehensive cost reset program. This is needed to deliver on our intention to reduce the cost of doing business to below 31% of sales. This program is about taking decisive action. It will focus on continuing to drive down cost of doing business and includes a proposed reduction in head office roles. We are also pursuing opportunities to expand our partnership with Tata Consulting Services to potentially co-source additional areas of the business to gain more efficiencies and capabilities. These decisions are not made easily and we are committed to supporting our teams through this change and with care and respect. Looking ahead, the retail environment in New Zealand remains challenging. Low consumer confidence and ongoing cost of living pressures continue to impact household spending. These conditions are likely to persist into early 2026. As we look ahead to Christmas, we remain cautious. We will pull every lever we have to deliver a successful peak trading period. We are targeting margin recovery, overhead reductions and unlocking working capital. Profitability depends on scaled improvements in higher-margin categories across the group. Overhead management remains a priority and deep cost transformation projects are underway. Capital investment will be directed to the most impactful projects, and we're actively pursuing selective space growth opportunities. We will share further details of our refresh strategy later in FY '26. I know the words are not what our shareholders, our customers and our team members want right now. You want action, execution and improved performance and that is exactly what we as a team are committed to delivering. The team and I are working tirelessly to improve performance, and we look forward to reporting on our progress in the coming months. However, a turnaround of this magnitude will take time, and we thank you for your patience. I wish you all a happy Christmas and a summer ahead. Thank you, and I now ask Dame Joan to return to the lectern to conduct the formal part of today's business. Thanks.

Thank you very much, Mark. As I said earlier, the Board is working very closely with Mark and the refreshed leadership team to continue to improve our business performance. And I'd like to thank you, our shareholders, again for your continued support, and we look forward to giving you an update at the half year. We now come to the measures requiring resolutions, which are outlined in the Notice of Meeting. All voting at today's meeting will be by way of poll. Shareholders joining us here today where you should have been given a shareholder voting card as you came in. If you are a shareholder and you did not register on arrival and you wish to vote, please make your way to the registration desk outside the room and the staff from MUFG will be there to assist you. Please mark your voting intention for each resolution on your voting card, which will be collected at the conclusion of the meeting. Shareholders joining online will be able to cast their vote using the electronic voting card received when online registration is validated. To vote, click, Get Voting Card within the online platform. You'll be asked to enter your shareholder or proxy number to validate. Please then mark your voting card in the way you wish to vote by clicking For, Against or Abstain on the voting card. Once you've made that selection, please click Submit Vote on the bottom of the card to lodge your vote. There will be an opportunity for shareholders to ask questions on each matter being put to our shareholders. Questions raised should relate directly to the matter being considered. Now when I call for questions, can shareholders who are present in the room, please raise your hand, and I will invite you to the front to the standing microphones that we have here or if you're not able to do that, we can bring a microphone to you. Please clearly state your name and whether you are a shareholder or a proxy holder before asking your question. And please wait until the microphone is provided to you before clearly stating your name and whether you are a shareholder or a proxy voter. So online attendees can submit questions by clicking the Ask-a-Question button and on the Virtual Meeting platform. And please note that online questions may be moderated or amalgamated together, if we receive multiple questions on one topic. Reelection of Directors. We now move to the reelection of Directors. We have, as I said before, 2 Directors standing for reelection: Caroline Rainsford who is retiring by rotation; and then Hamish Rumbold, who was appointed by the Board in November 2025. As I previously mentioned, Robbie Tindall and I are both retiring at this annual meeting and will, therefore, each cease to be a Director of the company at the end of the meeting. Proxy voting for these resolutions will be shown on the presentation screen. So we'll now move to the first resolution, which is the reelection of Caroline Rainsford. Caroline Rainsford was appointed to the Warehouse Group Board in August 2022 following a year with the Board as part of the Future Directors program. She is the Country Director for Google New Zealand, where she is responsible for driving overall revenue and business strategy, and she works closely with the government, with policy teams and business leaders to help New Zealand organizations grow and transform in the digital age. Prior to joining Google in 2017, Caroline held senior roles with Latitude Financial Services, which was formerly known as GE Capital, including marketing and product Director for New Zealand and Brand Director for Australia and New Zealand. Earlier in her career, she worked with Philips, Royal Electronics and international markets across the Middle East, Turkey and Africa. Caroline also serves on the Auckland Art Gallery Toi o Tamaki Advisory Committee, and she is here, a member of the Warehouse Group's Health, Safety and Wellbeing Committee and the People and Remuneration Committee. Proxy voting in respect of this resolution is shown on the presentation screen. And I'll now ask Caroline to make a brief statement to the meeting. Caroline?

Thank you, Joan. Well, good morning, everyone. As Joan said, my name is Caroline Rainsford and I really grew up in New Zealand with the warehouse stores playing an incredible part of my childhood. Having been born in 1982, the very same year that Sir Stephen Tindall opened the first warehouse store on the North Shore, I have very simply never experienced life without the red sheds. And I can assure you that now with 4 children under the age of 13, I am a frequent shopper in most weekends, and it is a bigger part of my life than ever before. But my relationship with the warehouse began at the very, very beginning of my career over 25 years ago, where I was a budding young sales rep selling consumer electronics into then -- to then Noel Leeming and Bond and Bond stores before their acquisition in 2012. Since then, I have remained connected to the Warehouse Group in my various executive roles and feel very privileged to be addressing you today seeking your support from a reappointment on the Board of The Warehouse Group. My 25-year career, as Joan mentioned, has spanned many industries, consumer products, consumer and commercial finance, technology and digital sectors across many countries around the world, but I've always found my way back to New Zealand. I have worked for leading brands such as Philips Royal Electronics, GE Capital and Latitude Financial Services. As Joan mentioned, I now spend my days working as the Country Director for Google here in New Zealand, which I've been doing for the last 8 years. I have the great privilege of working with many New Zealand businesses and New Zealand at large, helping them transform, grow brands internationally and have thriving businesses in a world of AI and technology. My first term on The Warehouse Board has been defined by a deep commitment to our values and clear focus on executing the turnaround of this great New Zealand business that is operating in an environment of relentless change. The line between physical and digital has completely vanished, replaced by a single seamless consumer journey. Whilst I will always advocate for digital acceleration to keep pace with consumer demands, physical stores have never been more important, as they act as the experiential touch point for our customers and cannot simply be replicated online. It also remains a key differentiator of The Warehouse Group's business in a highly, highly competitive world of global competition. Most importantly, my first term has been -- has cemented my passion for The Warehouse Group's business and the enormous turnaround opportunity we have. I still very much believe in this. We have an enormous amount of work to do, but the management team led by Mark, Stefan and teams, one of the best that I worked with in New Zealand. And I believe in our very focused and disciplined turnaround plan that Mark has just outlined. And I'm incredibly excited about to continue my journey with the company, and thank you for your support in doing so. Thank you.

Thank you very much, Caroline. Are there any questions on the reelection of Caroline Rainsford as a Director? There appear to be none. I now move that Caroline Rainsford to be reelected as a Director of the company. The poll on the reelection of Caroline Rainsford will be conducted at the end of formal business. We now move to the second resolution, which is the reelection of Hamish Rumbold. Hamish Rumbold is a Non-Executive Director with multisector expertise across key governance domains: Customer experience; Digital and Data Strategy, Technology; Transformation; Cybersecurity; and Risk and Compliance. He is a governance professional and a graduate of the Australian Institute of Company Directors. Hamish currently serves as a Non-Executive Director for House of Travel Holdings and for Livestock Improvement Corporation. He is also a Non-Executive Director and Chair of Perigee HoldCo Limited, a majority private equity-owned FX remittance business trading as OrbitRemit. Hamish previously held general management and executive roles within New Zealand and Kiwibank. Hamish was appointed to The Warehouse Group Board on the 19th of November as an Independent Non-Executive Director. Proxy voting in respect of this resolution is shown on the presentation screen, and I'll now ask Hamish to make a brief statement to the meeting. Hamish?

Thank you, Joan. [Foreign Language] Thank you for the opportunity to introduce myself and share my background and skills that I bring to The Warehouse Group Board. I am a passionate Kiwi, who has lived and worked in New Zealand, the U.K., India, South America, and I graduated from the University of Auckland with a Bachelor of Commerce degree and a Bachelor of Property, plus ongoing development through many international global executive leadership programs. My career has focused on delivering commercial value through the use of -- through customer experience, the use of technology and data across many industries, including retail. I started my life at Lion Nathan, then moved to Foodtown and Woolworths. And after a decade offshore working with companies like Sainsbury's, BP and South America's largest multinational retailer Cencosud, I returned to New Zealand to join Air New Zealand, initially leading customer engagement team in their Airpoints business, then overseeing their digital data and customer technology globally. I later served as CEO of our New Zealand software engineering company across Australia and New Zealand and most recently as Chief Digital and Technology Officer at Kiwibank for 5 years. During this time, I was an Independent Director on the Fidelity Life Board appointed by the New Zealand Super Fund and a member of the Prime Minister's Office Cybersecurity Advisory Committee. My wife and I also launched, during that time here in New Zealand, a B2B food service ordering platform, technology platform now operating globally in New Zealand, Australia, U.K. and the U.S.A. In 2024, I exited my full-time executive life to focus on governance, aiming to impact many New Zealand businesses. And I currently serve, as Joan mentioned, as Non-Executive Director for the House of Travel New Zealand and Australia Livestock Improvement Corporation and as Non-Executive and Chair of OrbitRemit across New Zealand and Australia, which is a New Zealand born now private equity-owned FX business. My personal ambition over my lifetime and career is to generate or help generate $10 billion in market capitalization growth for both New Zealand and Australian companies. And the resulting growth that drives unemployment investor confidence and national strength. This is why I'm excited to join The Warehouse Group Board. The Warehouse Group is such an integral part of the fabric of New Zealand serving over 1.7 million customers every week and employing 10,000 team members nationwide. And I have a deep personal connection having used The Warehouse Stationery and Noel Leeming in both my personal and business life. There is, however, work -- important work ahead, and I believe that my skills can help the team on the Board and Mark and his team and The Warehouse Group drive success in New Zealand, ensuring long-term sustainable performance. As Joan mentioned, my multisector experience expands across critical governance domains, including technology, data and AI, customer experience, risk management, cybersecurity and transformation. Finally, I'm a graduate of the Australian Institute of Company Directors and have actively served on many subcommittees, including people and remuneration, mergers and acquisition, audit and risk. So I thank you for your time. I look forward to serving the Warehouse Group prioritizing a hands-on approach and engaging directly with customers, the team members and investors as we turn this business around. Thanks for your time.

Thank you, Hamish. Are there any questions on the reelection of Hamish Rumbold as a Director? We've got one here.

My name is [indiscernible]. I'm a shareholder. Welcome Hamish. As it is, your name is Rumbold, you are a very bold man. Now only thing I want -- I'm missing is missing, I don't get his write-up over here in any of the handouts given to us, the reports and all that. So why is that so? And otherwise, I have no objection, I will definitely vote for you. But just I wanted to know whether your write-up is missing over here. I don't have any write-ups for him.

I know. And look, that's our fault, if you like. These processes are often quite protracted at the end where you have to go through and get all sorts of things ticked off before you appoint someone. So I think, Silv, our deadline for the Notice of Meeting was the 31st of October and as we said, Hamish was appointed on the 19th of November. So we're just delighted he's here. We had to pull him across the line and get them, but we've got them. So hopefully, we've given you a very good background and Hamish has added to that. But we take your point, we don't like it to happen that way. We normally have the full CV or certainly a truncated CV in the Notice of Meeting, when we're appointing, putting someone up to shareholders for their first reelection by shareholders that didn't happen this year, and we're very sorry for that. But hopefully, we've convinced you we've got the right guy. Any other questions?

Joan, we have a question online regarding Resolution 2 to reelect Hamish Rumbold from [ Eva Quilding ]. Hamish, with your expansive professional experience in New Zealand and abroad, do you think it's better to a jack of all trade or to be a specialist? If the latter, what you specialized in that can help turn around TWG?

Great question.

Okay. Well, thank you for the question. Great question. Look, I think on a governance board, it is important to be able to contribute across all domains of the business, not just in your specialist area, but also have very specialist areas where you can contribute specifically. So my specialist areas are customer experience, data and technology.

Thank you. Any other questions in the room or online? There appear to be none. I now move that Hamish Rumbold to be reelected as a director of the company. The poll on the reelection of Hamish Rumbold will be conducted at the end of formal business. I'll now turn to the third and final resolution, auditors, fees and expenses. PricewaterhouseCoopers are automatically reappointed as the auditors of the company in accordance with the provisions of Section 207T of the Companies Act 1993. A resolution, however, is required in respect of their remuneration, namely to authorize the directors to fix their remuneration. For the information of the shareholders and as disclosed in the 2025 annual report, the total fees paid to PricewaterhouseCoopers in the financial year ended 3rd of August 2025 were $962,000, of which $803,000 was in respect of auditing the 2025 annual financial statements of the group. Proxy voting in respect of this resolution is shown on the presentation screen. Are there any questions relating to the resolution to authorize the Directors to fix the auditor's fees and expenses? Any online Lizzie?

No.

Thank you. Okay. There appear to be none. I now move that the directors are authorized to fix the fees and expenses of the auditors for the ensuing year. The poll on authorizing the directors to fix the auditor's remuneration will be conducted along with the other resolutions next. Voting. I now declare the voting open on all items of business. I'll just remind you again of the voting procedure. All resolutions are ordinary resolutions, which will be passed if approved by a simple majority that is more than 50% of the votes of shareholders entitled to vote and voting in-person or by proxy or representative. I remind you that you are voting on each separate resolution as detailed in the notice of meeting. If you hold a proxy on behalf of a shareholder, you will need to cast the shareholders' votes in order for them to be counted. We intend to vote all discretionary proxies we have received in favor of these resolutions. Where a shareholder has completed the proxy form but has submitted the name of their proxy or where a shareholders named proxy is not in attendance I will act as that shareholders' proxy and will vote in accordance with that shareholders express direction. Once voting has closed, all votes will be counted by the company's share registrar and scrutinized by the company's auditor. And the results of today's meeting will be released to NZX on completion of the verification of voting. I'm now going to open the meeting up for general discussion. Any shareholder or proxy attending the meeting in-person or remotely is eligible to ask a question. Please note that only shareholders and proxy holders are able to ask a question. Visitors to the meeting are not able to ask questions. For the shareholders present in the room, again, please raise your hand, and I will invite you to the front to one of the standing microphones or a microphone can be provided to you. Again, please clearly state your name and whether you're a shareholder or a proxy holder before asking your question. If you're joining the meeting online and have a question, again, please select the Ask-a-Question tab, type your question into the field and press send, your question will be immediately submitted. So are there any other matters that anybody would like to raise? Before we go to that, I think I've got some questions here that have been submitted earlier, Lizzie, that you want me to go through and address?

That's correct. Thank you, Joan.

Thank you. So the first question we've received or we received a couple of questions in relation to the size of the Board and how many Directors are appropriate for this -- given the size of our company? Well, I would make the point that we actually reduced the size of the Board from 8 Directors to 7 Directors last year. And when Robbie and I step off the stage, we're down to 6 Directors, but that's over to the incoming Chair to decide what sort of quota of Directors we have. I will make the point that this is a very complex company with large scale and with a lot of challenges. And the most important thing, of course, is having the right population of directors with the right skill mix, with the right experience to sit around that board table. And as you've seen, we've supplemented the existing directors that have been sitting here with Hamish's skills, which I'm sure you'll join me and confirming the fact that they're going to be very additive to the skill mix that we have. We do publish the skill mix in the annual report every year, so that's available for you to have a look at. This, as I said, we're down to a market cap of about $277 million, which I think is where the question is coming from. But we still have sales of $3 million. We have 10,000 employees. So as I said at the outset, this is a large-scale, complex company with quite a few challenges. So I certainly think that the level of directors that we've had has been appropriate in the past. Second question that we've got in advance online was a voice and concern regarding staff shortages at The Warehouse Hastings, and we're a bit perplexed about that because we don't know of any staff shortages down there. We actually recruit and I think, about 2,000 Christmas helpers at this time of year to assist us. We had 32 additional part-time team members down in hasting supporting the existing staff. But if anyone's had less than positive experience, we're very, very sorry about that. We do try and make sure that the rosters are adequately purposed, I was going to say manned, but can't say manned anymore, adequately populated. So we take that feedback on board and Ian is in charge of all our store operations. I know he'll take that on board. So thank you for the question. And we have received a few questions in relation to the supply and sales of SodaStream and some of you who came a little bit later to the meeting may have noticed some protests at the gate. We understand that this group, which is the Palestinian support network of our Terra Group are concerned that SodaStream products are being manufactured in Israel. So as you will all be aware, for those of you particularly who've got a SodaStream in your fridge like I have, most large retailers stock SodaStream, and it is a product that is very much enjoyed by our customer base. But we did go back to our suppliers of SodaStream who are actually PepsiCo and they have reassured us of the ethical and manufacturing processes that are used in producing SodaStream. We do require all of our suppliers to meet our ethical sourcing policy, and that policy has been in place at The Warehouse since 2004. We've got those assurances from PepsiCo, but we do appreciate that people do have views on these issues, but we also appreciate that our customers and our consumers certainly like SodaStream. So I hope that's satisfied that question. And the last question that we've received in advance is another sort of question that's raised with a little bit of a geopolitical bend. The questions asked if the company will stop -- commit to stop buying products from the USA. And that's in reference to their participation in the Israeli-Gaza conflict. The answer is no, but we only source about 1.4% in terms of spend of our products from the USA, of course, a much larger proportion comes from China, and we actually have about 16% of our spend is on New Zealand products. So those are the questions that we've received in advance. So we will now ask the room if we have any questions here of a general nature. We have one here.

[ Grant Kamensky ] , shareholder. I've actually got 2 questions. The first one is about groceries. Nobody seems to have mentioned or I've read in the report anything about the warehouse and groceries, which was going to be a big category, but you seem to have forgotten that.

We haven't forgotten and I'll hand it over to Mark. So look, we'll do the questions one at a time? Is that okay? Is that okay? So our grocery, I think FMCG was up about 7% year-on-year, but I'm handing it over to you.

Yes. Thanks, Grant. It is definitely an important category for us. I mean FMCG, we take food and nonfood into grocery, just like a normal grocer. And like Joan says, it's about 27% of our business at the moment. So it is an important category. It's probably the fastest growing, but we're not native grocers. So part of it is that we're learning how to be a grocer and some of that is in milk and the frequency of all those things. So we're having a review on that. But our customers are enjoying it, so we are looking at the category

So that we can expect some growth in that area?

I can't tell you. At the moment, I'm looking at all the categories to look at the profitability of each category and see whether we can grow, which ones we need to grow, which ones we need to shrink, which ones we need to make the business the most profitable style of business we can and which is the most sustainable. So yes, we're looking at grocery again, seriously, yes. But I obviously can't comment because it's not public.

Right. My second question is about communication in general, that it seems now we only get one communication from the Board each year saying that there's an Annual General Meeting, but nothing about what's happening. Could we ask for more regular communication, please?

Yes. I guess, our communications predominantly go out at the half year as well, Grant, that we obviously put out an interim report, and we rely on, I guess, media to put out our messages. Direct communication is obviously incredibly expensive. I thought we used to going back to the early days when I was on The Warehouse Board the first time I think we used to put a mailer out and do things by direct mail. I think that's become prohibitively expensive. But I take your point. And I think we probably met most companies, most listed companies now in terms of our communication, but I take that point on board. Other questions, we have one here.

My name is James, shareholder. A couple of questions. First, the net profit margin. We talked about the gross margin. We could talk about the cost of doing business. So last year as well for the net profit margin. So achievable net profit margin 3 or 2 or 4, an idea about that?

Yes. I mean, we don't have guidance like that in the market. But what I can tell you is that our gross margin is about 32.2% and our cost is about 32.2%. So that's why at the moment, we've got 0 margin, which is why we made a loss or we made the $1.3 million, which is not acceptable. So that's why our target is to get to below 31% cost of doing business. So that all -- you take out about 1.5% to 2%, and then we've got to get our gross margin up. So if you look at Walmart, Walmart is probably around the 3% to 4% mark. They've got a higher index into lower-margin categories than what we would want. I think that anything north of 3% is the right number for us.

Okay. And also you mentioned that the trading market condition is still conservative at this stage. So you still think so for the Christmas because we don't want to see over discounted promotion, which will affect your margin.

Yes. I mean you would have seen one of our competitors come out with their results recently. And as you can see how tough -- one of the businesses -- retail businesses in New Zealand that were considered doing really well is also struggling and talking about margin pressures. But we're doing everything we can. We are seeing a level of buoyancy in the consumer coming back. It's been really tough. I think we've also trained the consumer to hunt for a discount all the time and so that's also making things more difficult. But what I can see is that customers are responding differently to our assortment and the way our stores. I don't know if everyone's been at the store recently, but we're really trying hard to change the experience with how the store looks and feels and flows and customers are giving us amazing feedback from that. So that's part of just the beginning of the staircase of the journey of our transformation and being more coordinated in store and our storytelling. So we don't want to discount. I mean that's the worst thing in retailers to discount your margin. But we've obviously got to respond to the market conditions and what others are doing. But one thing you will know about me is that I'm like disciplined retail is about disciplined retail planning. And that's a massive focus for us. And that's part of -- you'll start to see a lot more disciplined management of margin and stock going forward.

Okay. Regarding the 3% net profit margin, you recommend within a couple of years, we can achieve that or...

Yes, I can't give that to you.

Okay. Second question is about the market, the stock share -- the share price. Okay, 4 years ago, we were talking about $4 per share. Now is $0.80 or $0.78 something like that. Any insight or comments for that or...

Yes. I mean if you look at our balance sheet, the biggest thing that's not valued on our balance sheet is our brand. So I think what the market is seeing is they can't see the future. So why you have a forward PE and you have like -- you trade above book. So if you take the price, your market price divided by your book price, which is your net book value, you should be at 2x your book, that's a good number. We're obviously trading one for one at the moment, which is generally an indication that the market can't see a future for your brands. And so our big job, myself and Stefan and the team is to build the storytelling have to show the market that our brands have future equity and future growth value. And when that happens, generally, what happens, the share price will follow that signal. So I think we're tremendously undervalued. I mean we've got $150 million worth of property, freehold property sitting on our balance sheet, that's not value at the right number. So that in itself is value that's sitting there. That's not in our share price currently. And so there's I think it will -- as soon as the market starts to see signs that our margin recovery is there and we can stop making some of the mistakes and our cost of doing business will get back, our share price should follow that trend.

And also, we noticed that this year, The Warehouse Group was removed from the NZX50. And then the share price has to drop from $1 to $0.80 due to the sell-off from the institutional things they have to. So any plan we can move back to NZX50 or...

Yes. I mean that's we definitely want to get back into NZX50. One thing you'll know about me, I hate losing. So the NZX50 is our goal. I've got a personal ambition, I want to be top 40, top 50. So -- but we've got to walk before we run a little bit. But it won't take a lot. It's who we got displaced by, I think we could -- we definitely could get back. Yes.

Thank you very much, James. Those were excellent questions. [ Coralie ]?

[ Coralie Vancamp ] shareholder. I'm curious about the venue. It looks like a very big new expensive building.

This predates my coming on the Board. JJ, when did this extension go in?

I can actually give you a date on that...

It's quite old. Not as old as I am, but it's quite old.

So does The Warehouse own this or is it...

Yes, we do, yes.

Okay. And do you occupy all of it or are you subleasing some of it out?

Not subleasing anything, are me?

No.

And the space, here, what is this normally used?

Training area predominantly, isn't it? We're still using it for that? Yes.

And can you justify the capital outlay on this of capital holding of it?

Well, I think I would have appreciated would or not, Stef?

Yes.

Yes.

And you're occupying all of this complex?

Yes. Thank you, Coralie. Thanks for always turning up.

Richard Jenkins, shareholder, I've just got 2 questions. In the past, The Warehouse made a commitment to pay the living wage. Are you going to renew that?

I'm not aware that we ever made the commitment to pay the living wage. We pay the retailer wage that's...

Okay. I was under the impression...

No.

Okay.

And I think from memory, our store wages, and you'll correct me, have gone up 56% since 2018. Corresponding inflation over that period is 19.9%. So we think we've done pretty well. Obviously, we don't match all retailers and some of them are paying the living wage, but that's because we employ 10,000 people and many of our competitors employ many more. Our wages and salaries as a percentage of revenue is still running at 17%, which is very high compared to our competitors. So I think, for example, Briscoes is 13% or 14%. So we'd love to pay more, but it's got to be -- we try -- that's one of the big things that the leadership team and the Board have to focus on is calibrating how we keep our people fairly paid, fairly remunerated and balance all of the other things, which -- in what has been an incredibly difficult environment.

I would like The Warehouse to pay the living wage. Funny, you mentioned Briscoes, that was my other comment. I'm a shareholder in Briscoes. In 2015, The Warehouse and Briscoes were both trading at about $3 a share. Now Briscoes is over $5, and we know The Warehouse is $0.80. Any...

Yes. Look, I would certainly acknowledge that Briscoes is a very, very good operator, and we obviously keep a keen eye at our competition, but we're absolutely focused as Mark has said all the way through his presentation on getting back to where we belong, which is certainly improving our share in the homewares area, which is high margin. So we're not pleased or proud of being $0.80, believe me, everyone of us inks every day about it. But I think you've heard the new CEO and the changes that are being made. So just watch the space.

Okay. I'm watching.

Good. Anything else in the room? We've got one here.

[ Barbara ] [indiscernible] shareholder. Two questions. One is about The Warehouse Group and the comment made earlier about sharpening the focus on retail fundamentals. When did that disappear and how can the same board help sharpen it?

Yes. Look, I think that's a very fundamental question. And we've been through the history of what's happened over the last few years a lot, and analyzed what we did sort of 3 or 4 years ago, I think for most of the people in the room who followed the stock, they know that we focused on an ecosystem strategy that we believed that with Amazon going into Australia, there was a massive threat and we had to have a platform. We were told it was existentially important to us. If we're honest, we took our eye off the ball a little bit in terms of the store environment, so the retail fundamentals, which when JJ went back in as interim Group Chief Executive Officer in May 2024, he rolled up his sleeves got on the bridge of the deck and started pulling back to make sure that we've got those retail fundamentals right, and Mark is doubling down on that.

I hope it's the right one this time. My second question is about one of your brands, which I don't seem to see here today except on the sheet of paper and that's the Noel Leeming brand. I noticed with interest that one of the areas that it claims to be really useful in is its tech solutions and I quite like them given my age, but with the customer focus, I went into one store, sorry, they're only here on Tuesday and Friday, come back on Friday. Well, a simple notice on the desk saying, we're only here Tuesday, Friday, would be quite useful. So I drove to another one and waited there for the tech solutions, there was no saying, sorry, were closed on the -- well, I eventually got served about 5 minutes later, sorry, they're out today, we won't be manning the deal.

I'm really sorry to hear of that experience, Barbara.

So was I.

Is Jason here? Jason, can you answer that?

All I'm saying is please but notices on to manage the consumer expectation.

Barbara, I'm a raving fan as well, but I tend to ring them, but they've been phenomenal, so persevere. Any other questions in the room? We've got one, Kyle?

A couple of points.

Just let everybody else know who you are, please.

Yes. I'm Kyle from -- I'm a shareholder, and I work for The Warehouse. Optics, I don't have an issue with the new Board of Directors because all are qualified and all that, but the optics of removing Dame and Tindall from the Board.

I think most people actually look at the caliber of people rather than their titles or their surnames. And I'm just enormously positive about the caliber of the Board going forward. So you should have no concerns on that front.

Yes. I said, I don't have a concern with the stuff, but it's just the optics of removing the Tindall name from the Board of Directors, especially. And in regards to Noel Leeming, when there was a big whole massive crash due to a bad Windows update, we had Noel Leeming come into all The Warehouse stores and fix our computer systems. So we were up and running, while, everyone else was down for days. So it's a big advantage for us to have a tech company associated with us.

Awesome. Thank you, Kyle. Well done. Any other questions in the room? I know I've got one online. Lizzie, do you want to read it out?

Thank you, Dame Joan. Yes, we have a question from Dave and Katrina Wilson. When the Warehouse Group shares were over $3, I bought into The Warehouse. A short time later, it was reported that The Warehouse had trouble with shipping deliveries due to COVID, and there were expenses occurring because of that, which would not be uncommon then, so I decided to run with that drawback. However, nothing was said about the loss in sales that were reported in the year.

Look, I think a lot of people had shared that sentiment about the share price a couple of years ago. The sales actually are not the issue. So sales back then were about $3.2 billion compared to $3 billion this year. We did experience shipping issues around the COVID time as did most companies, but they are largely resolved as far as I understand. The level of profitability, though, I think, is the core of what you're getting at and your question and that, as we said right through this presentation is just not acceptable. As Mark has said, it's the gross profit margin that remains under pressure and that we're addressing and that we obviously know that we need to improve our bottom line profitability, and we're totally focused on doing that. So thank you for the question.

Thank you, Dame Joan. We have another question online from Edwin Stranahan. I am disappointed that your meeting venue is so inaccessible for some shareholders, especially older shareholders. I do not know how it is accessible by public transport. You did not advise how this could be done in your notice of meeting and most companies are encouraging shareholders to use public transport.

Look, we've saved some money doing it here. And the people like canvas before the meeting who are here are very happy with this as a venue. I take the point. But I don't actually know that there was public transport available to get to Elsley easily either. But it is something that we do keep in mind. I apologize if it's proved too difficult for you. But I think as a venue, this has worked out fairly well from our perspective, but acknowledging the fact that almost anywhere where you've got a large enough venue to have an Annual Shareholders Meeting. There are some issues getting public transport, at least you have it in the center of the city, which is probably prohibitively expensive. Next one.

A question from Gary Jarvis. Last year, I did not receive a shareholder discount day letter. Has this scheme been terminated?

I can't answer that question. Has it been terminated our shareholder discount day? No, we've got them being waived in the audience here. So I'm not sure why you didn't receive one. But we will -- have we got the e-mail details or can we get in touch and make sure we've got the right address.

Yes, Joan, and we will get the e-mail details. I can confirm that if you're a shareholder in attendance in-person today, you can collect one from the desk at the front, and then we will be e-mailing all shareholders the discount letter.

Brilliant. Thanks, Lizzie. Next one.

A question from John White. It does relate to when you will push the button to scale on the grocery offering and perhaps we've covered this already. But if you'd like to comment?

Mark, anything else to add?

No, I think I said it all.

Thank you.

Another question from Michael Coventry. What is expected -- what is the expected impact when IKEA begins trading here in New Zealand?

Mark, that's for you as well.

I mean I think any good competition makes you sharper. And in fact, what it's done to our teams has just made our team sharper focus on the categories that they're very strong at. Obviously, flat-pack furniture is what they're known for and they're formidable business. But I think what we've taken a lot of inspiration from them, and we're particularly going to give them some feedback, but in a good way as a Warehouse way. And yes, we're looking at our categories. Even now, we've just been through some new reviews and looked at their product categories and where they're strong and we're going after their price points. And in November, we've got 86 locations, they've got one. So we think that there -- the Sylvia Park, where they're centered around, they're also conscious of the IKEA pool and they're also wanting to get people into the center and back into Sylvia Park. So yes, there's a lot of people wanting us to win as well. So we're not -- definitely not at the wheel sleep -- at the wheel. We all have our own combative things to go after them.

Thank you. I believe we have a question in the room.

Okay. Can you come up to the front, please.

[Foreign Language] In the month of May, it happens to be important Warehouse, in-house brand, Market Kitchen Coffee selling at $28 for 2 packs. Then you have Colombia Coffee, 400 grams, $28 for 2 packs. Then you have Ferrero Rocher, key packing marketing at or retailing at $17. Now next door Pak'nSave, $10. There's a massive 70% difference. Next, main question is inventory management. Both had a very short lifespan of expiry in August. Why do you put a sale during the month of May, which is a very low season, whereas if you do it in December, and during this time, and you can sell goods even faster. If the goods are not sold, what happens, it's going to be a write-down. It's going to impact on your CODB. And if you are pivoting towards FMCG what are you going to do in the future to minimize this wastage.

Very good question. You obviously know a bit about this. Mark?

Yes, you've got some good insights, which is really to the question a little bit earlier or what we're struggling with is exactly that. These -- we grew grocery more that we just responded to the customers' need for more and more, but we didn't necessarily have a conclusive view of where we would end. And so I think what you're experiencing is some of our supply chain and the various different components, we're still catching up. And so we're learning on which areas to be good at and how -- what areas we have to improve on and your questions are spot on. Because if you don't sell it in the right period, you take a markdown and your gross margins there. So yes, I mean it's a difficult subject because I know it's how sensitives for everyone. Everyone wants duopoly to go down and for us to win and -- but there's also things that we've got to strengthen and be good at in order to effectively win and compete. Otherwise, we can't get the prices that Pak'nSave have got, and we need to double the volumes, and we need to do a whole bunch of things to make that true. So I think there's still some work to do, and we're looking at it very closely. And yes, I apologize for your experience. Yes, there are some areas that we need to improve on.

Okay. More online?

Yes. Thank you. We have a question again from Edwin Stranahan. I was surprised that your attention to your computer system problems were able to obtain such a large amount of savings. How much are you now spending on computer systems?

Mark, we've gone through the peak of our spend on replacing the legacy systems. I think we spent -- we spent about $140 million from -- well, up until about FY '24 over that 5-year period. What are we doing now in terms of IT spend?

Yes. I mean I think what we did is, remember, this business was built up over 30 years with legacy systems that were fit for purpose for a moment in time. But as you get complex, you have to have better systems and joined up data, particularly in a world like what Hamish mentioned in his speech is that AI and data is becoming the currency that people are competing with. I mean you just have to look at Walmart's results, majority of what they're actually making their profit on is actually synthetic digital money. It's got nothing to do with what they're selling as products. So the world is changing, and we've got to have a more composite view on data and where data set. So whilst we've got through the fundamentals of a lot of our core spend, we have to transform 1 or 2 more systems, but they're more bolt-on systems than fundamental foundational systems, which we've spent, like Joan said, was the predominant piece of the money that was spent in the past. So we haven't published that sort of number out there, Joan. So I wouldn't be comfortable saying a number, but it's not nowhere near what the past was is that what I can tell you.

All right. Thank you. We got another one there Lizzie?

Yes. Another question from Edwin Stranahan. How many shareholders are at your meeting today. Dame Joan, I can confirm we have approximately 120 online and 100 in-person.

Well done. Thank you, Lizzie.

And finally, a question online from John White asking why can't you outperform Kmart?

We're trying. And our pricing reset is certainly helping, but Mark?

Okay. Yes, John, I mean what I can tell you is I came from a business of 3,000 stores. We put down 300 stores a year. We were a value retailer that was effectively the Kmart of South Africa. What we've done is we took our eye off the ball on apparel and home, which is their 2 pillar categories. So I think my personal view is that we gifted a lot to them. And that's my speciality, if you want to call it that, and it's fundamental to a slight turnaround. Those 2 categories by themselves are over 50% of our turnover and probably 55% of our profit. So they're fundamental to the point a little bit earlier, what do we have to concentrate on, if we don't fix those 2 massive categories. We -- the business won't get the dividends you all want. So part of that is fundamental. So Kmart are good, but we're coming back, and we've got some plans Carrie and the team, and we're working tirelessly to improve our merchandise, our trend the wanted items that surprise and delight. We've looked at our positioning of our pricing versus them and not only them, but I think we've got a lot of amazing products in our stores. I mean we've got a 400 thread count sheet that you go to Farmers or Briscoes and that's $289 as ours is $69 for a 400 thread count sheet. So what we have -- when I explained a little bit earlier in my speech, what is the problem? The problem is our storytelling in store. We got a little bit confused. What Kmart are very clear on is they're very clear on what you there for and what the product stands for and our job to do is to bring that clarity of offer, get our virtual merchandising right and we'll come back. We've got all the -- we've got majority of the product. We just got to coordinate it a bit better.

Well said, and that's a great note to end on. So we've exhausted the questions, or Kyle, we've got one more.

Yes. This is kind of an operational thing -- Kyle again, shareholder and employee. In regards to all the new systems that we've got, we've now got to use our personal devices to get into them and after I have a serious problem getting authenticated to actually get into the system so that I can do my job.

I think you need to go and have a word with Shayne after the meeting over a sandwich and he'll sort you out. Thanks, Kyle. Okay. So that's -- well, one here right. This is the lucky last.

Okay. Really last. Now I have heard all these people complaining about The Warehouse Group and why it is performing so badly. But look at the state of affairs of the country and see the economy, everything is going down. Warehouse is doing quite well. I appreciate your people. You have given a good sterling performance, and we are capable of giving a better return. And I always wish you all the best for the coming days.

Thank you so much for that. That really is a good note to end on. So ladies and gentlemen, that concludes our discussion on the items of business. Please ensure that you have cast your vote on all the resolutions. I'll now pause to allow you a little bit of time to finalize those voting forms. And the voting, as I said earlier, will remain open for 5 minutes after the conclusion of the meeting. The results of these votes will be released to the stock exchange later today. And MUFG are about to come around the room and collect the voting papers. Do I see them moving. Yes, I see them moving. Here they come. So again, I thank you all for your attendance, and I now declare the meeting closed at 11.29 a.m. And whether you are here in-person or online, I really appreciate your continued interest in the company. For those of you who are here in the room, we do have a morning tea over there, please come and join us for those refreshments and have a chat with the Directors and the leadership team. I do hope you all stay safe and well, and I wish you and your families a very happy festive season and a prosperous new year. Thank you.