The Warehouse Group Limited (WHS) Earnings Call Transcript & Summary

Good morning, and welcome. My name is Silv Roest, and I'm the General Counsel and Company Secretary of The Warehouse Group. Before I hand over to our Chair, Dame Joan Withers, to open the meeting, I'd just like to cover a couple of brief housekeeping matters. In the event of emergency, please follow the directions of our staff. The fire exits are located behind me, out the left through the lobby and at the rear of the room. Assembly point is on the lawn in front of the building. Bathrooms are available out the left into the main foyer. If you need voting forms, Computershare will be able to assist you. Finally, following today's meeting, the Board and management team look forward to you joining us for refreshments at the back of the room. Thank you, and I now invite our Chair, Dame Joan, to open the meeting.

Thank you very much, Silv. [Foreign Language] Good morning, and thank you for joining us. My name is Joan Withers, and I'm Chair of The Warehouse Group. On behalf of your directors, our interim Group Chief Executive Officer; and our executive team, I extend a very warm welcome to our Annual Shareholders Meeting, both to those of you who are here in person today, and to everyone joining online. The notice convening today's meeting was circulated to shareholders on the 24th of October. I note that a quorum is present so I am pleased to declare the 2024 Annual Shareholders' Meeting of The Warehouse Group officially open and underway. Now sitting with me at the front today are members of the Board of Directors and the executive leadership team. So starting from your left, please join me in welcoming Dean Hamilton, Robbie Tindall, Tony Carter; our interim Group Chief Executive, John Journee; Rachel Taulelei; and our Group CFO, Mark Stirton, who's here with us for the first time. We have an apology from our director, Tony Balfour, and joining us online today is Caroline Rainsford, our Director, who is currently in the United States. So welcome, Carolyn. Also with us today are members of the executive leadership team sitting in the front row. To the agenda. Before proceeding with the formal business, I'll run through the order of events for today's meeting. The agenda will start with the usual formalities and then I will provide a recap of the FY '24 annual results and discuss our dividend distribution to shareholders. Our interim Group CEO, John Journee, will then provide some detail on our performance, our refresh strategy as well as an update on the first quarter of the current financial year, and also some commentary on the remainder of FY '25. We will then turn to the formal part of today's business. So the resolutions today include the reelection of 3 directors, being John Journee, Rachel Taulelei and Tony Carter and the authorizing of the setting of the auditor's fees. We will cover each resolution in turn and invite you to submit your questions specific to those items, which we will respond to during the Q&A session for each resolution. Voting will take place by way of poll. I will outline the process for the discussion and voting on the resolutions at that point in the agenda. Following the resolutions, we will take questions on the group's financial performance, operational performance or other general business. I ask that you wait to raise any of your questions of a general nature until that time. If you've joined the meeting online, you will be able to submit a question or vote on the resolutions throughout the course of this meeting. So we'll now move to the formal agenda. Firstly, proxies. Proxies have been received from 429 shareholders representing 199,694,350 voting shares. That represents 57.57% of the voting shares in the company. The valid proxies that we have received support the resolutions to be considered later in the meeting. I will provide further details on proxies in respect of each resolution at that time to the annual report. The financial statements for the 52 weeks ended the 28th of July 2024, together with the auditor's report, are set out in the company's 2024 annual report, which was released to the NZX on the 26th of September 2024. If you would like a copy, a hard copy of that annual report, then please e-mail us. 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. Now just covering those Q&A procedures. For those of you who are joining us online, if you have a question to submit during the live meeting, please select the Q&A tab on the right half of your screen at any time, type your question into the field and press Submit. Your question will be immediately submitted. Now to the substantive part of my presentation. I want to start by talking about our FY '24 performance. And this year's result has understandably been the focus of much commentary, virtually none of which is positive. And as we get into -- reflect on FY '24, it is clear that it has been 1 of the most challenging years in our 42-year history. New Zealand's macroeconomic conditions have had a significant impact with New Zealanders facing increasing inflation and a rise in cost of living. This has significantly impacted consumer spending, and the retail sector has certainly felt and continues to feel that pressure. However, our operational execution has exacerbated the changes of that difficult environment. We have acknowledged that the poor financial performance we've reported for FY '24 is not acceptable. The Board and the executive team are acutely aware of the disappointment shareholders and investors will be experiencing on the back of this result. There is a big job ahead of us, to get that company back on track, and we've certainly started along that journey. So let me share with you briefly just how we're going to turn this business around. During the early part of this calendar year, it became apparent to the Board that we needed to make some significant changes to address the issues that we were confronted with. We did acknowledge that our group ecosystem strategy was too ambitious and based on assumptions that prove to be incorrect. As a result, the financial milestones that we set could not be achieved without further significant investment. So we took the decision to divest or close underperforming parts of the business, including T7, Torpedo7 and TheMarket.com. The loss from the sale of Torpedo7 led to the first financial loss in the history of The Warehouse Group. In May, we replaced Nick Grayston as Group CEO with John Journee as our interim group CEO. Up until that point, as you know, John was a Non-Executive Director with a wealth of retail experience both inside The Warehouse Group and externally. Under John's leadership, we have streamlined our executive team and reshaped our business around 3 core retail brands, The Warehouse, Warehouse Stationery and Noel Leeming. Our dedicated teams within each brand are now intensely focused on delivering great products at competitive prices, while providing an outstanding customer service experience. Additionally, our operating costs have been too high, especially in the context of the difficult trading environment that we continue to face. This prompted action to reduce our cost of doing business. And over the past 5 years, we've invested around $139 million on replacing legacy systems. The conflation of that essential capital spend and the very tough operating environment has put additional pressure on our bottom line challenges. Fortunately, we are now past the peak of that capital expenditure cycle, and John is maintaining very tight vigilance on both CapEx and into wider project spending. Now to cover off dividends. As you're aware, in March, the Board declared an interim dividend of $0.05 per share. That is a 92% payout ratio exceeding the company's -- the group's dividend policy of at least 70% of the group's full year adjusted net profit. As a result of this group's subsequent net operating loss in the second half of the financial year, the Board made the decision not to declare a final dividend. This was a difficult but necessary decision. However, we remain confident in the underlying strength of our business, and our focus remains on navigating through these challenges to return to paying dividends as our profitability improves. Now some significant events. I'd like to take a moment to reflect on some other important milestones during the FY '24 financial year. The first is acknowledging the changes within our Board. Julia Raue left the Board in April after almost 8 years of strong contribution. We were delighted to welcome Tony Carter, whose extensive experience in retail and governance will complement our existing board capabilities. Tony is up for reelection today. So you will have a chance to hear from -- more from him soon. I would also like to take a moment to acknowledge Tony Balfour, who has decided not to seek reelection. Tony has been an invaluable member of our Board for 12 years, bringing exceptional global, retail, marketing and e-commerce expertise, along with a strong commitment to our ESG initiatives. His unwavering focus on our customers and his outstanding leadership, particularly as the Chair of People and Remuneration Committee have made a lasting impact on our business. On behalf of the entire Board, I extend our heartfelt gratitude to Tony for his remarkable contributions. It has been an honor to work alongside them, and we wish him all the best in his future endeavors. We do not intend to seek a replacement for Tony's position on the board at this stage. The takeover approach second event, I'd really like to acknowledge is the nonbinding indicative offer that we received in July from private equity firm Adamantem Capital to acquire the company's shares at a price range of between $1.50 and $1.70 per share. Under the rules of a scheme of arrangement, critical shareholder backing beyond that of our majority shareholder would be required in order for a takeover to proceed. The proposal did not have that support. Now to succession. The Board is fortunate to have the caliber and experience of John Journee to take on the role of Interim Group CEO, and I'm going to speak a little bit more about that later on in the meeting. The search process for a new group CEO is underway, and we are anticipating being at the candidate shortlist stage early in the new calendar year. And as I announced back in November 2022, this will be my last term as a Director and Chair, and I will retire from the Board next year in November 2025. We have a strong onboard with a high caliber of directors providing a variety and depth of skills and experience. The Board's Corporate Governance and Nominations Committee actively reviews Board succession and we'll continue to evaluate the optimal mix of skills and experience needed to drive the group's strategic objectives forward, including progressing chair succession. Turning to our involvement in the Future Directors scheme, Jeremy O'Brien has made a valuable contribution as our Future Director over the past 18 months, and his time with us will end next month in December 2024. This Board has been one of the strongest supporters of the Future Director program, and we will continue to be so. But the replacement of the CEO and succession planning for the new chair will be the priorities for the near term. Now looking ahead, there is no doubt that we have had a very challenging year. Despite this, we have huge fight, drive and confidence that we can turn our performance around. With our dedicated team of 10,000, we are focused on streamlining our operations, reducing our cost of doing business and sharpening our focus on our core brands. I want to thank all of our shareholders, our customers, our team members and my fellow directors for your unwavering support as we navigate through these challenges. Together, we are committed to rebuilding our brands and continuing our purpose to help Kiwis live better every day. In closing, I want to reaffirm that we are proud to have 3 iconic brands, The Warehouse, Warehouse Stationery and Noel Leeming, each of them playing a vital role in our business. These brands have enjoyed the test of time, and we remain steadfast in our commitment to their success. We know there's work to be done, and we're fully focused on fixing our business performance and returning value to our shareholders. I'm now going to hand over to John Journee to run through the full year financial results and the plan to turn around performance in more detail. John?

Thank you, Joan, and Marina, everybody. I'd like to start by recognizing what a tough year this has been. And I want to thank our shareholders, customers and teams for sticking with us. Your support means a lot to us because we know your performance -- our performance impacts you and your families. There are no 2 ways about it. Our FY '24 performance is disappointing and a long way from where we need to be. Our group ecosystem strategy was too ambitious. We invested considerable time and resources into delivering that strategy, which led us to hold on to Torpedo7 and TheMarket for longer than we should have. We've made mistakes and we own that. Later in my presentation, I'll provide insight into the positive changes we're making to improve our performance. But first, I'll provide an overview of our FY '24 year. In FY '24, our total group sales were $3 billion, a decline of 6.2% on last year. Our sales declined 4.9% in the first half and deteriorated further in the second half, declining 7.6%. This was led in a decline in The Warehouse sales. Gross profit was down 6.2% with margin being flat year-on-year at 33.6%. While the first half delivered strong gross profit margin, this [Technical Difficulty] in the second half as a result of heavy promotional activity and our product mix weighted towards lower-margin categories. Cost of doing business was down 1.3% in dollar terms, but higher as a percentage of sales resulting in $28.9 million operating profit, down 65.3%. The group reported a net loss after tax of $54.2 million compared to reported net profit after tax of $29.8 million in the financial year before. This loss was significantly impacted by the loss on disposal of Torpedo7 and the wind up of TheMarket in the year. I will now take you through a summary of our individual brand performance. As you're aware, The Warehouse, our biggest brand, had a particularly poor result. Our category strategy was off the mark. Our execution was poor and our customer offer was inconsistent. As a result, The Warehouse FY '24 sales were $1.8 billion, down 5.3%, while gross profit margin held increasing 10 points or 10 basis points on the prior year. The second half of the year was particularly challenging. Our winter range doesn't resonate as well as we expected, leading to a heavy discounting. We didn't achieve the right product mix with our customers shopping more into lower margin categories like grocery and everyday essentials and less in higher-margin categories like homeware and apparel. This resulted in operating profit of $17.7 million, down from $71.6 million in FY '23. At Noel Leeming, sales were $1 billion, down 5.3% and operating profit was $17.3 million. Performance was challenged by tough trading conditions driven by reduced discretionary spend on high ticket items and an increasingly competitive market. Services and Tech Solutions, however, showed growth year-on-year and continues to be a differentiator for Noel Leeming. Warehouse stationery sales were down 6.7% to $231.9 million, operating profit was $12.9 million. Subdued demand for higher-ticket products from small business customers impacted sales and margin performance across the key categories of office furniture and technology. This was partially offset by the continued strong performance of our print and copy centers. In a challenging market, customer service is even more critical, and it's very pleasing to note that all 3 brands achieved improved Net Promoter Scores in FY '24. I would like to thank our store teams who step up when it matters most to deliver exceptional customer service. Our FY '24 financial results serve as a stark reminder of the challenges we face as a business and of our poor operational execution in face of those challenges. I know improved performance is on everyone's mind. So please let me outline our game plan for the turnaround. When I first stepped into this role, it quickly became clear to me that our group ecosystem strategy was too ambitious and had spread us too thin. And consequently, we had dropped the ball in our core retailing capabilities. We've changed there. We've made some tough decisions to set us up for the future and to turn around our performance. We've reset the group strategy, divested unprofitable businesses and moved away from agile and ecosystem strategy, to focus on trading, our core retail brands, The Warehouse, Warehouse Stationery and Noel Leeming. A shift to a brand-led strategy is about strengthening each brand's specific customer value propositions to allow them to compete more effectively. To support this change, we've restructured our senior leadership and changed our operating model to a more fit-for-purpose retail model. The changes made to the executive leadership team ensured there is clear accountability for the performance of each of our brands across merchandising, supply chain, store operations and marketing. We have reestablished a dedicated Warehouse Stationery leadership and retail team to enable us to improve our execution of our offer to small and medium-sized businesses and to the education sector. A dedicated Noel Leeming leadership and retail team has enabled them to strengthen the brand's market-leading position and more effectively and assertively compete in a highly competitive fast-moving market. Our leaner group support functions are now solely focused on supporting our retail brands to deliver greater value to our customers and to drive profitable growth. Getting fighting fit. That's my job to get the company back on track and to set the ground work for a return to profitable growth. Our red sheds are crucial to our recovery. So my primary focus is in turning around The Warehouse's performance and reasserting its customer value proposition and market leadership. We have 90 million customers walking through our doors each year, and 85% of Kiwis live within a 20-minute drive of the warehouse. Building on this foundation, our plan has 4 key drivers. The first is strengthening our everyday low price proposition across an improved range of products aimed at Kiwi families. Responding to customer feedback, we've reset our category strategy to include more trimmed and newness, particularly in the higher-margin categories of home and apparel, while building on the popularity of our grocery offer, including our fast-moving or fast-growing market kitchen range. We've accelerated our efforts to lower our cost of goods, and this is supporting our improved everyday low price position. Secondly, we're refreshing our product offer and price position across all our core categories to provide a broader, more relevant on-trend assortment and competitive value propositions for Kiwi families. Thirdly, we've made significant reductions in our operating expenses and in our project spend going into FY '25. The pressure on reducing our cost of doing business will continue to be a critical part of our turnaround. The significant investments were made to modernize our core systems across the group, have progressively come on stream over the last year, and we'll be increasingly used to leverage our significant network, inventory, data and people assets to support decision-making, improve operational effectiveness and efficiency. Finally, we have a super power and our extensive store network and nationwide team of 10,000 that make us an integral part of the communities we serve. Our strategy reset may sound simple, but it is just the simplicity and focus that will enable us to better execute the craft and science required to deliver greater value to our customers, build shareholder value and strengthen our market leadership. Refreshing our ranges. Offering great affordable essentials is what we do at The Warehouse, it remains our core focus. However, our customers have told us they wanted us to bring back more of the fashion and trend and the color in our product offer. Our teams have put a huge effort into refreshing our product ranges with an initial emphasis on home, apparel and home and beauty categories. These new products have started to arrive in our stores this summer and early sales and customer feedback has been very encouraging. Leveraging our private label capability is a key part of this approach. Our Good One range is a great example, locally made and sourced has been highly successful, and we're getting very positive feedback on its value. We've got some of that product for you to take home, try for yourself if you haven't already. In the next few weeks, we launch Poppi, our new skin care range aimed specifically at teens and young women. We're also building on the success of our existing private labels. Living & Co, our Homeware brand and our biggest brand, sold an impressive 18 million units last year and delivers 30% of all our private label sales. H&H, our powerhouse apparel brand has grown into a $200 million annual turnover. Veon is our audio visual brand, and we're proud of the fact that Kiwis own more Veon TVs than any other brand, making New Zealand's #1 selling TV with more than 30% market share. Market Kitchen, launched just 3 years ago, has quickly become a popular grocery essential. This is just a taste of how we're reinvigorating our category strategy and the product improvements customers will see flowing out into our stores. Our teams are now working hard on bringing trend and value into the upcoming seasonal ranges for winter, summer and Christmas 2025 and beyond. In addition to the work we're doing to get The Warehouse back on track, we have programs of work underway to improve our performance of our other 2 retail brands. Having dedicated leadership and retail teams for both The Warehouse and Noel Leeming enables them to fine-tune their respective customer value propositions and to compete more effectively. Operating in highly competitive markets with well-informed value-seeking consumers, it's critical that our teams can respond quickly and decisively to changing conditions in their respective markets. An early example of this is a recent announcement of Noel Leeming that have added premium brand [indiscernible] to the range of kitchen appliances. FY '25 Q1 update. In terms of the FY '25 year, we've started trading or shared a trading update on the eighth of November, and that underscored how tough retail remains. We recorded total retail sales of $668 million during our first quarter, reflecting a decrease of 2.5% compared to the same period last year. However, an improvement on the 5.9% decline we experienced in the last quarter of FY '24. One of our key areas of focus has been on our pricing strategy. The average retail selling prices were down 7.9% in the quarter as we reset our key price points across categories to reinforce our everyday low price value positioning. This has resulted in a 6.4% increase in the units sold, demonstrating that customers are responding positively to our more competitive pricing. In terms of foot traffic, we saw a slight decline of 0.8%. But encouragingly, customer conversion once they are in store has improved to 58%. Although basket sizes are constrained as customers prioritize essential categories, and clearance items, we are optimistic and encouraged by what we're seeing in the new product sales. Noel Leeming is growing market share in a contracting market, which speaks to the strength and value proposition and the performance of our team in tough trading conditions. The Warehouse margin has been the most challenged during the quarter as lower margin product mixes and higher markdowns occurred within the apparel department post winter. And this remains a key focus for us. Looking ahead, our plan to get fighting fit is underway, and we are focused firmly on trading each of our core brands and refreshing the key product ranges to provide better value. These changes will take time to fully show results, and we're mindful that sustained improvement also relies on a broader economic recovery. While we're making progress, we expect our near-term results to remain mixed, as the benefits of our improved product offer are muted by challenging market conditions. With nearly 1/3 of all Kiwis continuing to come through our doors each week, we are well placed to seize the opportunities in front of us as our new product stents land and economic conditions improve. This fuels our conviction that we can course correct and turn our business performance around. We remain cautious, though, as we look into Christmas, and expect the trading environment to remain tight and highly competitive. What I can promise you though, is that we will be firmly focused on bringing great value products to our customers as we continue to execute our turnaround plan. I'm conscious that words are not what our shareholders and customers or team members want at this time. You want action and improved performance. The team and I look forward to reporting on that progress in the coming months. I wish you happy Christmas and a summer ahead. Thank you, and I'll ask Joan to return to lector.

Thank you very much, John. Before we get to the formal business of the day, I want to take a moment to recognize John for stepping up during what has been a very challenging year. Having John on the Board as a former executive with a wealth of relevant retail experience, including both The Warehouse and Noel Leeming, has made this difficult situation more manageable. When asked to step up, John did not hesitate. He has quickly and decisively set about making necessary changes. His extensive experience in retail, particularly with The Warehouse and Noel Leeming has been an invaluable asset to us. You can truly hear his passion and commitment for turning the group around. And again, he's jumped into action without missing a beat. John has been embraced by The Warehouse Group team and has already made a substantial difference. He intends to remain on the Board as an Executive Director until we make a permanent appointment to the CEO role, at which point, he will resume his position as a Nonexecutive Director. So thank you, John. As I said earlier, the Board is working very closely with John and the team to continue to improve our business performance. Again, I'd like to thank you, our shareholders, 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, and a poll will be held for each of the resolutions. For those of you joining us online, once the voting has been opened, the resolutions and voting options will allow you to vote. To do so, simply click on the Vote tab and select your voting choice from the options shown on the screen. You can vote for all resolutions at once or by each resolution individually. Your vote has been cast when the tick appears. To change your vote, select Change Your Vote. We'll invite questions for each resolution, and you can also ask questions of a general nature during the Q&A session at the end of the meeting. For those of you attending the meeting virtually, the Q&A is open. So please feel free to submit questions throughout the meeting and these will be addressed at the relevant time. Please note that online questions may be moderated or amalgamated together if we receive multiple questions on one topic. So now to the reelection of directors. We now move to the reelection of directors, and we have 3 directors standing for reelection. John Journee and Rachel Taulelei, who retired by rotation and Anthony Carter, who was appointed by the Board since the last annual meeting. As mentioned previously, Tony Balfour, who retires by rotation is not standing for reelection and will therefore cease to be a Director of the company at the end of this meeting. Proxy voting for these resolutions will be shown on the presentation screen. So firstly, reelection of John Journee. We're going to move to the first resolution which is John. So you've heard from him as our interim CEO a couple of moments ago. John has been a Director of the Board since October 2013 and was appointed interim CEO in May this year. At that point, he ceased to be an independent director, but as I said before, has continued as an Executive Director of the company. And as I also said, he's got an extensive retail career, across the retail general merchandise, fashion, FMCG, consumer electronics, telecommunications, hospitality and electricity retailing. So a very wide range of experiences. His career with The Warehouse group started as a joint venture partner in 1990, and then he progressed through senior roles to hold a CEO role with Noel Leeming when it was actually owned by private equity. At the moment, John is a member of the Health, Safety and Wellbeing Committee and the Environmental Social Sustainability Committee and the Disclosure Committee. I'm now going to ask John to make a brief statement to the meeting. John? Back again.

Thanks, again, Joan and Marina, once again. It's a privilege to seek reelection to the Board of the ways. My journey with this company began over 3 decades ago, as a store manager of The Warehouse, Glenfield. Since then, my involvement with The Warehouse Group has been an integral part of my career, including various executive roles for the warehouse and time as CEO of Noel Leeming Group. After the acquisition of Noel Leeming Group by The Warehouse in 2012, I returned to The Warehouse and transitioned to a governance role. Since May, I've had the privilege of serving as interim group CEO of The Warehouse Group, where alongside my role as Executive Director, I've gained a unique perspective of the inner workings of our business. My previous experience refreshed by deep and deepened during my tenure as interim CEO, provides me with valuable insight into the challenges facing our Board and our company. I've experienced firsthand the challenges and opportunities the company is facing and how our teams are responding. As we look to the future, I recognize that any incoming CEO will face a big job. And if I have your support to continue to serve as a director, I can support them as they settle in and get up to speed quickly. Retail environment in New Zealand is evolving quickly, and we must adapt to meet the shifting needs of our customers as we get our brands back on track, increase the value we provide to customers and the return that we provide to you, our shareholders. Through all of this change, one thing remains constant [Foreign Language] the people. Our customers, team members, suppliers and communities are at the heart of what we do. Their expectations of us are increasing, whether that be of value, choice, convenience or in how we respond to our social and environmental responsibilities. I'm proud of the steps The Warehouse Group has taken in this regard, but we do have more work to do. I'm fortunate to work along a passionate -- to work alongside passionate retailers who genuinely care about the company and are determined to see it succeed. As a shareholder, an employee and a Director of this company, I am personally and passionately invested in our success. And driving a sustainable return for our shareholders. Thank you for your consideration and support.

Thank you, John. Are there any questions on the reelection of John Journee as a director. There appear to be none. I now move that John Journee be reelected as a director of the company. The poll on the reelection of John Journee will be conducted at the end of the formal business. So now we move to the second resolution, which is the reelection of Rachel Taulelei. Rachel was elected as an independent Director of the company in February 2021. Rachel is a prominent business leader and a strong advocate for the Maori economy. She has values-based -- strong on values-based business models and has been a very high profile person within the New Zealand's food and beverage industry. Her commitment to Kaitiakitanga has been evident throughout her career. Rachel has held a wide range of governance roles. She presently chairs Moana New Zealand and the Wellington Regional Stadium Trust. She serves as a Director on the Board of Sealord Group Limited and ANZCO Foods. She's a member of the APEC Business Advisory Council and as an adviser to venture capital firm Movac and also chairs the Fonterra Sustainability Panel. Rachel is our incoming Chair of the People and Remuneration Committee as well as being a member of the Environmental and Social Sustainability Committee and the Health, Safety and Wellbeing Committee. So I'll now ask Rachel to make a brief statement to the meeting. Rachel?

[Foreign Language] Good morning, everyone. Thank you very much for inviting me to hit the time this morning. My name is I've just shared with you is Rachel Taulelei. And whilst I currently reside in Wellington, I hail from the mighty metropolis of Autarky. Some of you may know that place. I just completed, as you've heard my first term as a Director of The Warehouse Group, and it has been an absolute privilege. As you will be aware, we have had a range of headwinds, some extraordinary headwinds in the time that I've been on the Board, and there will no doubt be many more to come. But as you've heard from J.J. and from Joan, we have an exceptionally strong management team and board, who are deeply motivated to improve performance and shareholder value. The reason I joined the group is because I love stories. I love positive stories, and I love stories of [indiscernible]. And The Warehouse, both is and has all of those. The Warehouse has been a pivotal part of New Zealand communities over the last 40 years, and we all have our own stories of connection. But at the time that I was approached from an arms-length view, I was under the impression that New Zealanders might have fallen out of love with us for a myriad of reasons. And I knew that it was a story that I believed that I could support, that I could advance and that I could share, that I could play a role in growing the business by reach and performance and connectedness. Over my professional life, I have always been around businesses. I grew up in my parents' businesses, and I was a trade commissioner for New Zealand in the United States for nearly 9 years where it was my responsibility to find a market and a partner for New Zealand food and beverage exporters. I returned to New Zealand in 2006 and established my own company, Yellow Brick Road, which is a seafood company, within which I worked with fishermen, and I worked with chefs disrupting the seafood model and establishing a same-day boat-to-restaurant model for the seafood industry with a huge emphasis on value, sustainability, story and provenance. I went on to sell Yellow Brick Road and take on the role of Chief Executive within the acquiring business. This was a Maori food and beverage business, we found more than 1,000 hectares of land and sea and exported beautifully branded product to more than 35 countries. Cornell is the name of that business, placed a great emphasis on story. And as an FMCG business, a great amount was also invested into networks, insights and consumers. It is an entity owned by the descendents of the 254 whanau, who were the original settlers to Te Tau Ihu at the top of the South Island. My great, great grandfather, [indiscernible] was one of those people. So the business is very dear to my heart, and it fundamentally taught me about service, that if service is below you then leadership is beyond you. After 6 years in that role, I made a change and left to create my food business, Oho, a business and brand strategy company, and we're now a little more than 3 years old. Alongside Oho, I'm also part owner or a professional women's basketball team named the Tokomanawa Queens. So yes, business and all of its facets is something that I love to be around. Food, services, sports franchises and of course, now retail. Like our other directors, I hold, as you heard from Joan, a range of other directorships and governance roles, some of which I share and they spend the primary industry and other facets of New Zealand economy. I presently sit in governance role across businesses, who collectively telling nearly $30 billion in revenue and employ in excess of 40,000 people. Everything I do comes from a Te Ao Maori standpoint, which I think is particularly important as we consider not only diverse lived experiences, but also the changing demographics of [indiscernible]. 1 in 3 people in New Zealand who is under 35 is Maori. So to be able to bring that voice to the table, the Maori part, not the under 35 parts sadly, I think it's valuable. I think it's an important part of the conversation to have at the table of The Warehouse Group. And look, I tend to follow the role of the kumara, not speaking too sweetly or to much of its own sweetness. But what I do believe I bring to the table is commercial acumen, perspective, community connectedness and international experience and the mindset of somebody who has built businesses. My values include whanau. I'm sure that's a shared value amongst all of us, but they seem through to whanau. Relentless ambition, not for myself, but for whatever I turn my hand to and in this instance, it's The Warehouse Group and invincible optimism. So thank you for allowing me the opportunity to reintroduce myself, share a few thoughts and for the first time on the Board, as I said, it's been an absolute privilege. [Foreign Language].

Thank you very much, Rachel. Are there any questions on the reelection of Rachel Taulelei as a director. It appears there are none. I now move that Rachel Taulelei be reelected as a director of the company. The poll on the reelection of Rachel Taulelei will be conducted at the end of the formal business. Now to the third resolution, which is the reelection of Anthony Carter. Tony was appointed as an Independent Director in May 2024. Tony, as you all probably know, has a broad range of experience in governance across the consumer, industrial services, infrastructure and energy sector. Tony currently chairs the Board of My Food Bag, The Skin Institute, Datacom, TR Group and The Interiors Group, and he's also a Director of Ravensdown. His previous directorships include roles at Fisher & Paykel Healthcare, Air New Zealand, Fletcher Building, ANZ Bank New Zealand and Vector. He has also served as the Managing Director of supermarket operator, Foodstuffs Auckland and Foodstuffs New Zealand and was made a companion of the New Zealand Order of Merit for services to business and governance in 2020. Today, Tony is the Chair of the Health, Safety and Wellbeing Committee at The Warehouse as well as being a member of the Audit and Risk Committee. So I'm now going to ask Tony to make a brief statement to the meeting. Tony?

Thank you, Joan, and [Foreign Language] everyone. I thought I'd start by telling you a little bit about myself, Joan's already done a pretty good job with that anyway. I'm a chemical engineer by training, although I never practiced. My career has largely been in retail, initially with Mitre 10, and then with Foodstuffs. I was Chief Executive of Foodstuffs in the South Island from 1995 to 2000, before relocating to Auckland and becoming Chief Executive of Foodstuffs Auckland and Foodstuffs New Zealand for a decade from 2001 to 2010. Foodstuffs is, of course, the largest supermarket retailer in New Zealand of its well-known brands, PAK'nSAVE, New World and Four Square. In 2010, I decided to retire as a full-time executive to concentrate on governance. At that time, I was already a Nonexecutive Director of Vector in my last couple of years at Foodstuffs. And after I left Foodies, I was fortunate to be appointed as a director of some of New Zealand's most successful companies, including Air New Zealand, Fletcher Building, ANZ Bank New Zealand Limited and Fisher & Paykel Healthcare. I was especially privileged to become Chair of both Fisher & Paykel Healthcare and Air New Zealand during a period when those companies enjoyed a very successful run. I retired from most of those companies after 9 years between 2019 and 2020. Since then, I've tended to work more in private companies, including Chairing Datacom, which is 1 of New Zealand's most successful IT companies and also has extensive operations in Australia. I also Chaired My Food Bag, which has had a difficult period as a listed company as the world adjusted to a post-COVID world. Last year, I joined the Board of Ravensdown, which is a fertilizer cooperative. This is my first involvement with the primary sector, which is so important for the New Zealand economy, and I've really enjoyed getting to learn and understand that business. When I was approached by The Warehouse to consider an appointment to this Board, I was really excited for a few reasons. I suppose at heart, I'm a retailer, and being able to contribute to helping an iconic retail like The Warehouse get its mojo back, it really appealed. I do sincerely believe in the future of The Warehouse and their brands and believe we do have a bright future. As was mentioned during our interim results announcement and been repeated today, we acknowledge mistakes have been made, but it's our job to roll up our sleeves and get to work. The steps that have been taken by J.J. to simplify the business, including the sale of Torpedo7 and the shutting of the marketplace are absolutely the right things to do. I believe my experience can help The Warehouse improve its performance, and I would ask for your support for my election to the Board today. Thanks very much.

Thank you, Tony. Are there any questions on the reelection of Anthony Carter as a Director. It appears there are none. I now move that Anthony Carter be reelected as a Director of the company. The poll on the reelection of Anthony Carter will be conducted at the end of the formal business. So I now turn to the fourth and final resolution, which is auditor's fees and expenses. PricewaterhouseCoopers are automatically reappointed as the auditors of the company in accordance with the provisions of Section [indiscernible] of the Companies Act 1993. A resolution, however, is required in respect of the remuneration, namely to authorize the directors to fix their remuneration. For the information of the shareholders and as disclosed in the 2024 annual report, the total fees paid to PricewaterhouseCoopers in the financial year ending 28th of July 2024 were $1,081,000, of which $858,000 was in respect of auditing the 2024 annual financial statements for 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 fix the auditor's fees and expenses.

Hello, everyone. My name is Julian Light. I'm the GM of Corporate Affairs. And it's my pleasure to be reading out the questions today that have been submitted online. And we have one from Eva Kwitting, who asks, How does the Board intend to fix the next round of auditor fees and expenses? And will those amounts remain unchanged or increase despite the company's financial performance.

Thank you very much for that question. It is something that we negotiate with the auditors every year. As you will see, our fees are now above $1 million per annum. It is essential as an NZX-listed company that we have the top flight auditors looking at our accounts every year. PwC do do a very good job. But I'm sure when we go into negotiations next year that we will be looking at the -- we've had some extraordinary situations where they've had to get involved in the more complex elements of the accounts for example, the work around the write-down for Torpedo7 and so forth. But as we hopefully enter a period of less complexity, we will be very much looking at those negotiations. But I'll turn to Dean Hamilton as Chair of Audit and Risk and see if he has anything to add. Thank you. Any other questions? Okay. There are none. So I will now move that the directors be authorized to fix the fees and expenses of the auditors for the ensuing year. Poll on authorizing the directors to fix the auditor's remuneration will be conducted along with the other resolutions next. I now declare the voting open on all items of business. I will just remind you 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. If you are eligible to vote at this meeting, you will be able to cast your vote under the vote tab. You can change your vote up until the time I declare the voting closed. 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 admitted the names of the proxy or the name of their proxy or where a shareholders named proxy is not in attendance, I will act as that shareholders' proxy and we'll vote in accordance with that shareholders expressed direction. I will give you a warning before I move to close the voting. Once voting is closed, all votes will be counted by the company's share registrar and scrutinized by the company's auditor. The results of today's meeting will be released to the NZX on completion of the verification of the voting. Okay. So general business, I will now open up the meeting for general discussion. Julian, where are you?

We have a question here online from Christopher Hakan and Stephen Hart. It's about grocery. And what is the ongoing role of grocery in The Warehouses business? Is there a risk of having just a few lines with poor attention to keeping stock on the shelves or might The Warehouse ensure there is a bit of focus on keeping lines fully stocked rather than empty spots on the shelves? And what is the plan generally around grocery?

I'm going to hand over to JJ for that, but noting that we're -- our grocery sales, which obviously includes those categories you spoke about like health and beauty. So that's now representing about 25% of the red sheds sales. But J.J.?

Yes. Thanks, Joan. Yes, that's right. We actually regard groceries as part of our fast-moving consumables section, which is about 1/4 of our sales. That provides a valuable part of our overall offer, and that's about frequent sales. That's for the products that people use frequently and therefore, visit us frequently. And that drives a lot of our foot traffic. So we believe that, that part is important, which is why we have been investing in it, and our customers are responding to it. So they see value in it as well. So it will remain part of our offer, but it is part of a mix of categories, and it's a mix of categories, which is important overall for offer.

So if you hear in person, we welcome you to come up to the front of the room. We've got microphones up here. If anyone is not able to come up, then we've got roving mics. Do we have any other questions? We've got [ Coralie ], welcome.

I'd like to talk about customer experience, again, I think I do this every year. So I went out to Sylvia Park warehouse last week. And I was very pleased to see there was a young woman who was actually scanning for us so that we didn't have to go through self service, and people are all queuing up with their basket to go through her rather than do the self-service. And that was good because somehow a value pack that I bought scanned up at 3x the price. So I was able to go back into the queue and have the refund put straight onto my card. So it was much better. It was quiet there, though, considering how many people were in the mall, it was rather quiet at the store. But then just a question. I looked at a heavy garden seat in your home area. And I wondered with no people on the floor to help me how would I actually go about buying it?

I'm sure J.J. will be able to give you the answer to that.

Yes. Thanks, [ Coralie ]. We are predominantly a self-service business and that enables us to keep our prices where they are. But obviously, customer service is important. So the customer service desk would arrange for someone to get there, and we've got team members that would help either to get it -- arrange for it to be delivered, if that was your preference, or a trolley to help you get that to the store -- to the car.

Okay. So I'd have to find someone on the customer service desk.

The customer service desk is normally manned. Now they might be currently serving another customer, but there is a dedicated service point in most of our stores.

Okay. Well, I still think you're a bit short on staff on the ground, but that's just me, okay?

Thank you, [ Coralie ]. Do we have any other questions? Got 1 here. Welcome. Can you let us know your name, please?

Yes. I'm Shabir. Yes. Okay. One question to John. Do you pay the staff only salary? Or is there any incentive?

Salary. Yes, yes, yes, he is addressing to -- yes.

We have a mix of different remuneration options depending on what the roles are across our group. So we have different environment, the salary and commission environments, for example...

I'll tell you an incident, I went into the New Lynn shop of Noel Leeming, and that's not on 1 occasion, on many occasions have gone there. And the people or the staff over there is absolutely insensitive to my entering and my looking out. Nobody is asking me whether I'm interested in anything or I'm okay or something like that. And if I went to a particular person, he directs me to go to some other person or some other people. He is not interested in selling the product. And sometimes you know what happens. This is a technological field. The things are changing that particular in technology. It keeps on updating and all that. So a customer who walks in, wants to know more and he is expecting that the customer service representative will help him. But instead of helping him, he is being shoved around and showed nothing else. That is one more -- so I think you should -- if you give some incentive, the customer service representative will work better. And another thing is just for Anthony, since you have worked in Foodstuffs, I think you should recommend that we just come into the grocery business quickly. Thank you.

Thank you, Shabir. Okay. Just a reminder, if you're joining online and have a question, please select the Q&A tab, type the question into that field and press send and that will come through immediately. Do we have any other questions? We've got 1 about Agile, I think, Julian?

We do indeed, Joan. So one from Robin Kaper. What was the approximate cost of the Agile implementation and undoing those changes?

Yes, it's pretty much impossible to untangle the cost of Agile itself from the ongoing operation of the business. We were very public about the fact we'd involved McKinsey as expert advisers to assist us on that, but I don't think we can actually split that out as a separate cost. What we have done, John Journee and the team have been able to do very quickly now that we're focusing on the 3 brands rather than the ecosystem strategy is de-agile the organizational structure, and just put the focus back on those 3 core brands. Anything you want to add to that, J.J.?

I will probably just add on the last part of that because I was personally involved with the team. What I would say is that the team did a remarkable job in getting themself out of one organizational structure into another, not a trivial exercise they did that in 2 months while trading the business and they do a very good job with that. I would say, as cost effectively as it could have ever been done. So I think we -- we're in good shape with the teams support on that.

Yes. Excellent. I'll endorse that. Do we have any other questions? We've got someone coming up. Please come up to the microphone.

Here I am again. [indiscernible] Yes. I was here last year as well.

Yes, I remember.

Yes. So just a question about our performance for the second half year last year. So from my memory that last year, we think we were on the track to improve the performance, which has been evidenced for the first financial year last year. But the second year is a little bit, honestly, a very big surprise for me for the drop of the gross margin and everything. So honestly, I read many years about the financial report of The Warehouse Group. I think this is a very unusual performance for the second half year of last year. So if we can get back on the right track for the previous performance, I think we don't need to worry about. But currently, what I worry about is what happened and what is happening, especially about the gross margin. For example, for the first quarter of this financial year, are they coming back to the normal standard -- or what's our target?

Yes. Look, I think we've hit the nail on the head, and I don't follow Rugby closely although I sit with my husband who watches the test matches, but it was a game of 2 halves very much. And FY '24, we made significant margin gains in H1. H2 unfortunately, I think J.J., the winter stock didn't land as well as we hoped. So the margin growth that we made in H1 basically got undone in the second half of the financial year. We don't disclose in the current -- we've given a trading update on the 8th of November. So -- and J.J. has recounted that in this presentation this morning. We don't disclose specific margin performance until the half year, but that is absolutely a focus. And obviously, J.J. and the team are delivering new exciting products now, which are landing in store, and we're hopeful that New Zealanders respond to that, so we get more share back on those very margin-rich categories of homeware and apparel, which will help the overall composition of margin. But J.J.?

I think you've covered most of it, Joan. The second half were also because of the first half and the track the previous year was going quite well. the imported product we buy, which is committed a long way out, there was a lot of that coming in the second half. So as demand would drop off across the market, but you were caught with product -- more product than we expected to have left at that time. So we were having to clear that out so we could free up our inventory to buy the new product, plus, as I mentioned before, our winter range was disappointing. So that created seasonal markdown. So the combination of that was pretty tough and meant that the half was a poor result.

And also for the cost of business, last year, I remember that for the software cost things, I think it's proven reduced very well. So for this year, are we expecting the same level of last year for the software cost to whatever or...

Yes. Well, the comparison year-on-year was I think we were at a project gained CapEx combined was about $150 million in FY '23, and that came down to about $80 million in FY '24. That's including CapEx and project spend but you've got to even further reduce CapEx spend at the moment. I don't know if we've disclosed that specifically, but...

No, we've talked to that, Mark, do you want to pick up that?

Yes. I mean, obviously, when you came into the role in April, just even for our budgeted period, we need to trim back CapEx. We've made massive investments into core systems, as Joan alluded to earlier. The good thing is those are like heart surgery type systems, and we've put them in. So we've -- the forward view of CapEx is actually quite -- has reduced quite considerably. This financial year, our CapEx is $27 million and our total project budget is about $33 million to $39 million. So it's really reduced, really getting that free cash flow going. So what I can say is we've made the big core investments, which you don't almost make every 10 years, every decade, we've made those big investments. So I don't foresee, I think where we will need to make some potential upgrades is in our store environment. I'm not talking ginormous, but there's definitely needs to be some face lifts here and then in order to reinvigorate the brand and bring that identity that the lady earlier was talking to. So yes, that's where we are.

Thank you, Ron. Thank you. It appears we have no further questions. You've got one here. okay.

Lady coming up here on the right.

Okay. Brilliant. Who's going first? Can we go ladies first?

Barbara Cohen from the New Zealand Shareholders Association.

Welcome, Barbara.

And I acknowledge the fact that you hope you can say something our new CEO early in 2025. I guess I'm interested to know what the Board is thinking about so that a new CEO doesn't come in, change the strategy again, and we have more mistakes than we've had in the past.

Very astute question. We spent an hour or so with search firm earlier this week. I don't know if he's going to be offended if I say it, but we're probably looking for a younger version of John Journee. I think your point -- it's not. But I think the most important thing, as you say, is now we've got starting to turn the ship around. John he's alluded to right the way through his presentation and the team have done an amazing job of putting things back on track. So we've got a very clear focus. And we formed a subcommittee of the Board to work through that recruitment process. So we've got not only a position description but a person specification as well because obviously, with The Warehouse lot of values inherent in what we're looking for as well as those formidable retail skills. But thank you for the question, Barbara. I've lost my man, there he is.

Can you hear me?

Yes. Can I have your name, please?

Okay. Name, [indiscernible], joint shareholder. First of all, I just want to highlight a bit more. Just before Christmas 2022, the share price was $4 -- or just over $4, then it slided down. Yesterday was below $1. In that time, nobody spotted it out how to fix it. I know it's only slow, you call short period of time of 2 years because probably hard to spot. So I won't rub it in anymore. I just leave it. I just wanted to highlight it, right? The only thing I want to suggest might help the company and also the society as a whole that I was there. I think if people were having a meeting at Westgate, I happened to be there. I saw your face and the lady there. And.

We say yesterday -- we used to...

That's not relevant.

We were there.

Yes, I asked one of the [indiscernible] opening hours, and you said about 8:00 to 10:00, is that right sir? No, isn't it is an essential service. It's not a chemist, not a petrol station. It's not a dairy. Why do you have to open at 8:00. Now I suggest that you open at maybe 8:30. And then if you want late hours, you can have it on Thursday or Friday, used to be in the past. That's better for the company, better for the society. On Saturday, you've got all the games, rugby, football, whatever events they are. And then people have their social events, concerts and then things like that. I think because you try to provide a bit longer hours for the workers. But are you really doing them favor because socially, they are disadvantaged. They rather be with their families watching the sports, relaxing and all that. So I suggest that also it will be helpful to the company that you'll probably expense will lower and reduce the hours maybe from 8:30 to 7:00, if you want to compete with Kmart or later on is Thursday or Friday. And another thing with the CEO. In the past, we have seen -- we have selected CEO from overseas countries like England, America or Canada, which is not relevant to us because we know the market here well, what fits in probably Australians will be more relevant than any other, we know, we had the CEO from you know it, I won't name it or any other country, not to be rude to them, but I think John would be most appropriate in the interim period to step in as the CEO. Thank you.

Thank you very much, and we note all your comments. And certainly, we share your dismay at where the share price is at the moment. Any other questions? We got one online. Welcome.

My name is Ian Walker. Some time ago, I read a media report which compared The Warehouse with Kmart. And the comment we've made that Kmart are eating the lunch and breakfast of The Warehouse. Based on that, I took a drive down to my local Warehouse store in Manukau, had a quick look around and then immediately drove to the fairly new Kmart store about 500 meters down the road. The comparison that I made was The Warehouse manager -- The Warehouse Manukau was virtually empty of customers. And a little bit dismal in its ambience, Kmart with the advantage of a brand-new store was full of customers and seemed a more cheerful ambience. So my question is, are we confident that the red sheds are still fit for purpose?

Ian, That's a very apposite question. And as J.J. has demonstrated through his presentation that is a key focus for us is getting the excitement back into the stores. And that happens over a range of things. And obviously, the sort of products that we're offering are very important, and we're already starting to see the revitalization of some of those ranges coming in now. We went into Westgate. So the other gentleman had obviously seen us up there as a Board last -- yesterday, actually and had part of our Board meeting there. And that store, I guess, is one of the ones that really is firing now in terms of getting the excitement in the product ranges, probably a little bit too much stock that they're having to manage with. But at this time of year, obviously, that's far more preferable. But yes, the Kmart scenario, we are absolutely focused on, and we've been very overt about the fact that we've lost certainly leading up to the summer season. We lost market share in homeware and apparel to Kmart, but we're coming back with a vengeance. So I'd say watch the space. And look out for the brilliant stuff that we'll be putting into stores. And I think you've seen other indications that we're changing our approach even to the market and in the way that we're positioning the red sheds in particular. But J.J.?

Yes. Our Manukau store is one of our top 3 stores. So it does get a fair bit of visitation, it was obviously in a quiet period where you went there. But some of our stores, as Mark referred to before, are due for a facelift. So there are stores that are in good condition if you get down the road to Takanini, it's a great-looking store, and you'll see a totally different ambience there. Our Manukau store is probably due more of a facelift given the high traffic numbers it does deal with over the year. And it is our job to get around the stores to get a basis to give them a lift however needed. So we're very focused on the whole customer experience. The Warehouse has got a particular -- we are a different model. The larger product ranges we have, the bigger bulkier products we sometimes sell requires different equipment and different payouts. And we have got a position around our stores. It was unique to our heritage and our brand, but we're conscious that we need to continue to refine and evolve that to meet our customer expectations going forward.

Thank you. My compliments to the person who buys the store's bananas, they are delicious. They are the best on the market.

Thank you. Okay. Julian, I believe we've got one on Tony, haven't we?

We do, indeed. We've got a few questions online. So the first is from Eva Kwitting, around Tony. So why isn't Tony seeking reelection? And does the Board conduct exit interviews with departing Board Directors?

Good question. Tony has served 12 years. So today would have been his 12-year anniversary -- in corporate government. Well, firstly, going to The Warehouse certainly, since I've been in the Chair's role, we've looked at director rotation and succession very carefully. Every second year, we have a full external review where we evaluate our individual and collective performance, but also look at what the needs of the business is going to be in terms of skills and think about the rotation of directors. The normal New Zealand is sort of 9 years is where a lot of companies say that's about the time that directors should rotate out. I don't personally have a view that it should be strictly at that juncture. I think you've got to have the institutional knowledge within the business to make sure that you've got the right skills and experience. And I think our average tenure once Tony leaves goes down to about 4.6 years. But also the wider market, the proxy advisers, for example, who are far more engaged in Australian listed companies, certainly are starting to vote down people who've been there too long. So there will always be valid exceptions, but 12 years is a very reasonable tenure. That's an interesting concept about exit interviews. I think I do have ongoing conversations with directors, both formally and informally. And as I said, the individual performance evaluations that go on with the externally facilitated reviews do provide very good insights from individual directors as to how they see the Board functioning and what they're feeling about it, but very good question. Thank you.

We have another question here from David [indiscernible]. He asks John spoke of the strength of the warehouse products. Is there an opportunity to sell wholesale to third-party businesses?

That's above my pay grade, J.J.?

Yes, that's a good question. It's certainly an opportunity. It's not one we're focused on at the moment. But as you build up private labels that have credibility of some of our private levels have developed into. There isn't an opportunity for a wider market, but I suspect that's a future opportunity for us at the moment. We're focused pretty much on the current customers.

The TWGB sort of does a bit of that in the services perspective here.

Thanks, Joan. We do have the ability to redirect product into nonretail sectors. That gives us a wholesale opportunity into businesses there. We picked that up through both our Warehouse Stationery business and our commercial division under Noel Leeming. So that is an opportunity which is typically wholesale and the business as opposed to B2C.

Okay. Thank you very much, David, for that question.

We have another question from online, one from Peter Hill. Are you performing benchmarking analysis of The Warehouse against Kmart?

On an ongoing basis, the Board gets reports every month virtually in terms of market share performance. So we do see how we're trading. Obviously, that's only top line versus top line. So yes, we're very conscious of that market share perspective. But J. J., do you want to add to that?

Yes. I think probably our primary feedback for improvement is from our customers, but actually a really important opportunity for improvement and opportunity is looking at our competitive set and seeing where they are moving ahead of us on any particular metric. And that gives us pause for thought around how we might lean into that. And also equally how do we lend into other metrics that outperform them. So it's actually a very strong part of getting fit or keeping fit is making sure that you're on or above your competitor metrics.

Okay. Thank you, Peter. Anything else, Julian?

We have one -- another one from Eva, Eva Kwitting, and asks what's Rachel's view on whether Maori Whanau or customers are preferring to shop at The Warehouse or Kmart?

Are you happy to answer that, Rachel?

I'm happy to answer it, but I might not have a very satisfactory answer to the question because I don't have the data that tells me what our statistics is as against Kmart. But what I can say is that we have a groundswell of young moms, and we have a groundswell of young people, and they're always looking for great product and product entree and a product at great prices. So in that respect, I think we're an absolute set up for that demographic and sociographic.

And we have fabulous promotion what, 6 weeks ago was a [indiscernible].

[indiscernible] Maori and for the first time ever, [indiscernible] Maori Language Commission worked with The Warehouse and worked with any one effect, and it was The Warehouse as the partner of choice to make the products available. You may have seen them there with the [indiscernible] Maori emblem on them. And we sold out, I think, by 8:00 am in most of our stores, and we sold out online, and we created an absolute frenzy amongst people who were interested in that product. And it was a real testament to the fact that everyone in [indiscernible], I think, was who is shopping with us, who was interested in that range of products. It was a really, really great partnership that we were very, very proud of leading.

Okay. Thank you very much, Eva.

And there are no more questions online.

Right. And we've got none here either. We've got one here. Can you come up to the front, I'm sorry, that's why I ask people to come up with the front consent. Carl, how are you? Good to see you.

All right. Well, I'm Carl and I work for The Warehouse. First up, in regards to the comment made earlier about staffing issues, even our own staff know that we have a lack of staff because we feed that back all the time that we do not have enough staff in our stores, et cetera, especially at the right times. But a separate question. The lack of our Christmas club is that hurting our sales?

J.J.?

Yes, I don't have the data from the previous Carl so I can't actually compare. I mean I'm not sure we've got the comparative data to say what the absence of it is doing. But I can say that we're looking at what financial products, and that's one of them might be suitable for our customers going forward. So I think we're relooking at what they offered. Does it look like a Christmas club, it's something else? I think financial products or different ways of pain are very much on people's minds. So I think probably back in the frame would be the answer to that, Carl.

Yes, because it's been over a year and has been being looked at, and it's like it's still being looked at. Customers are asking what's happened.

Yes, the whole loyalty space is changing quite materially as we've seen with fly-buy scenario, but it is something that is being looked at actively. So thank you.

And as for the financial thing, I will just leave finance now out of that.

Thank you. Well, yes,. okay. There are no other questions. So thank you very much, everyone, who submitted those -- we've got one more. Here we go. Welcome.

David Harper, shareholder.

David, welcome.

I've long looked at -- first of all, I asked a question, how many of The Warehouse red sheds share the platform with Warehouse Stationery?

What's our number of [indiscernible]?

Ian, I think I'll give you to -- Ian is our Head of Operations. I'll get him to give us the current number.

It's about 2/3 of them now [indiscernible].

I think Ian is on the back row behind you there.

I've long been of the opinion that The Warehouse Stationary is a specialized business should be on a separate premises, which would then free up store space for added groceries, for instance. And I think we should be competing with the big 2 in the grocery trade, give them a bit more of a hurry up. What's your thoughts on that, please?

Yes. I don't think we are intending to be competing with the 2 supermarket chains at all. Obviously, J.J. outlined that at the moment, our grocery, our FMCG products are about 25% of our sales -- so I think we've got a variety of store footprint. So it's not a matter of one size fits all, but.

I will say that the reforming of The Warehouse Stationery team back to a dedicated team. That's exactly one question here looking at is what the mix of stand-alone stores, which we do have for specialist business and those that are with a pros and cons for both of those. And that is being relooked at. That's probably more of a fine churning than a particular swing one way or the other.

But I still think that you could make a big impact in the grocery.

Yes. I think we've got probably the best qualified director of all in terms of grocery sitting around the table with us now. So we listen carefully to his views and assessment. Thank you.

Because what I saw recently when Stephen Tindall and his associates wanted to buy The Warehouse Group and turn it into a grocery chain. What does that tell you? He's a pretty smart operator, isn't he?

Yes, I've got no idea what the operating model was intended to be if the takeover have been successful. So I won't hypothesize on that.

All right. Okay. Just one comment your new CEO. Can you please be a New Zealander?

Yes, we've had that feedback.

Because I'll give you an example of Fonterra. They had $6 million to $7 million Canadian as a CEO and then an $8 million Dutchie and look where it got them. They made decisions that got the Fonterra Group into a big financial trouble in China. So you really need to have a CEO who understands the New Zealand sector.

I think the context is very important. I agree with that. Thank you very much indeed. Thank you. Okay. It really appears like we have no further questions. So that concludes our discussion on the items of business. In a minute, I'm going to close the voting. So please ensure that you have cast your vote on all resolutions. I will now pause to allow you time to finalize those votes. So we'll wait for 60 seconds. Julian, you got the timer? [Voting]

So Anthony Carter tells me 60 seconds are up. So voting is now closed. The results of these votes will be released to the stock exchange later today. Computershare will now collect the voting papers from shareholders in the room. I now also declare the meeting closed at 11:32 am. I want to thank you all very much for your attendance, whether it's here in person or online, and of course, for your continued interest in the company. For those of you in the room, please join the Board and the senior leadership team for some refreshments, which will be at the back of the room. I 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.