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The Warehouse Group Limited 1999/00 Financial Year Results Presentation

The Warehouse Group Limited 1999/00 Financial Year Results Presentation. Agenda. Financial results summary The Warehouse review The Warehouse operations Warehouse Stationery review Australia Current Trading. FY2000 Group Highlights. FY00 FY99 % Sales 1.075b 0.933b +15.3%

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The Warehouse Group Limited 1999/00 Financial Year Results Presentation

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  1. The Warehouse Group Limited 1999/00 Financial Year Results Presentation

  2. Agenda • Financial results summary • The Warehouse review • The Warehouse operations • Warehouse Stationery review • Australia • Current Trading

  3. FY2000 Group Highlights FY00 FY99 % Sales 1.075b 0.933b +15.3% Same store sales 10.7% 13.4% EBIT 111.3m 85.2m +30.7% NPAT 70.5m 54.4m +29.5% EBIT Margin 10.4% 9.1% +130bp EPS1. 24.3c 18.9% +28.6% Ordinary DPS2. 12.5c 9.5c +31.6% 1. Based on average number of shares 2. Adjusted for 1:1 bonus issue

  4. The Warehouse Group Sales growth in the decade Sales ($m) $1billion sales target surpassed in FY2000

  5. The Warehouse Group Profit growth in the decade NPAT ($m) 29.5% increase in NPAT to $70.5m

  6. The Warehouse Group EPS growth EPS 1. 28.6% increase in EPS 1. Adjusted for 1:1 bonus issue, based on weighted average shares on issue during the year

  7. The Warehouse Group EBIT margin in the decade EBIT % (EBIT/Sales) EBIT in excess of 10%

  8. Financial Performance Summary Year Ended 31 July ($m) 2000 1999 % Change Retail Sales Revenue E B I T Excl. unusuals Incl. options scheme Pre-tax Profit Net Profit After Tax 1,075.3 111.3 1.5 (3.1) 108.1 70.5 932.8 85.2 0.2 (1.6) 82.5 54.4 +15.3% +30.7% +31.0% +29.5%

  9. Financial Performance Summary - Unusual Items Year Ended 31 July 2000 $m Property Sale Profits Australia (preliminary acquisition costs) Business origination costs Goodwill amortisation Tax Post Tax 5.6 (2.2) (1.6) (0.3) 1.5 (1.3) 0.2

  10. Financial Performance Summary - Inventory • Inventory excl GIT of $140m - increase of $24m • Made up of • increase in mobile phone stock $8m • two stores opening early Aug ‘00 $3m • WH Stationery stock increase $4m • ($3.2m relates to new/extended/planned stores) • General increase in stock $9m

  11. Dividends Cents per share adjusted for bonus issue • Total pay-out of 21.5 cents incl. specials (adjusted for 1:1 bonus issue) for 1999/2000 • Ordinary dividends up 32% to 12.5c (adjusting for BI) • No further special dividends planned in the short term

  12. FY2000 Red Shed H1 and H2 EBIT Comparisons

  13. The Warehouse “Red Sheds”

  14. The Warehouse Customer Statistics YE July FY00 FY99 % Paying customers 38.3m 35.1m 9.1% Weekly foot traffic 1.5m 1.4m Average sale $26.07 25.27 3.2%

  15. The Warehouse Property 1999/2000 Review • 2 new stores (Cambridge, Mt Wellington) • 3 replacement stores (Porirua, Wanganui, • New Plymouth • 14 refurbishment's and 1 extension • Retail space 253,717 square metres (up 5.5%)

  16. The Warehouse Property Next 12 months • 5 new stores (Queenstown, Rangiora, Belfast • (ChCh), Auckland Airport, Hillcrest) • 3 replacement stores (Glenfield Mall, Linwood • (Chch), Whangaparoa) • 15 store refurbishment's and 7 store extensions • Total selling space to increase by over 35,000 • square metres by Christmas 2000 (+13.8%)

  17. The WarehouseMerchandise 1999/2000 Highlights and Review • Apparel sales up 30% • Green garden sales up 23% • Books up 18% • BBQ’s and related Y2K product up 31% Next 12 months • Continue to grow apparel business • Sanyo brand to be launched in Warehouse at the end of Oct 2000 • Bigger push into sporting goods

  18. The WarehouseMerchandise Merchandise Forecasting System • Accurate short and long range customer demand forecasts • purchase according to forecast demand instead of replacing sales • share forecasts with suppliers

  19. The WarehouseMerchandise Merchandise Forecasting System • Contribution analysis • work with suppliers to improve performance of poor sellers, optimise good sellers • Implementation Time • Pilot November / December 2000 • Phased implementation starting Q1 2001

  20. The Warehouse Operations “Back dock” to “Red Bag” review • Objectives • standardise procedures in store • review areas such as price change management, checkout design, communication, Merchandising standards, debtors, returns, repairs, rainchecks and layby, Customer service. • 40 projects identified

  21. Improve the checkout processes Objectives Reduction in transaction time by over 30% Improve customer Interaction Labour cost savings Enhance Loss Prevention OSH improvements Implementation being rolled out to new stores retro-fits to selected existing stores The Warehouse Operations Sprint Checkouts

  22. The Warehouse Logistics 1999/2000 Highlights and Review • NIDC extension completed on time for Christmas ‘99 • 300% increase in suppliers moving to cross dock (200 suppliers versus 65 in Aug. 1999) • Escalation of partnership agenda’s with suppliers • Continued to improve forecasting accuracy Next 12 months • Implement 12 major supply chain development projects within Clints • Apparel automation project to support next 5 years growth in apparel • Integration Merch. Planning with Supply Chain development

  23. The Warehouse Operational Performance • Operations highlights • shrinkage down for H2 2000 • Safety • LITFR 1997 - 5.28 • LTIFR 1998 - 3.07 • LTIFR 1999 - 1.64 • LTIFR 2000 - 2.94 The higher rate in 2000 reflects longer time off period per injury rather than an increase in injury frequency • Team Member Satisfaction • 83% of team members agreed that “The Warehouse is where people come first” (up from 76%)

  24. Warehouse Stationery“Blue Sheds”

  25. Warehouse Stationery“Blue Sheds” 1999/2000 Highlights and Review FY00 FY99 % Sales 63.1m 45.9m +37.4% Same store sales 23.3% 29.0% EBIT 5.0m 3.0m +64.9% NPAT 3.2m 2.0m +62.5% EBIT Margin 7.9% 6.6%

  26. FY2000 Blue Shed H1 and H2 EBIT Comparisons

  27. Warehouse Stationery“Blue Sheds” 1999/2000 Highlights and Review • Stores • Six stores added in the year • retail space 29,062 - up 40% • New Categories and initiatives • Gateway computers • Revamp of four major categories • E-Commerce Trial • Exploring alternative markets • NZ’s first priced stationery catalogue

  28. Warehouse Stationery“Blue Sheds” The next 12 months • Store rollout • 7 new stores in FY2001, with 6 in place by Christmas • Pukekohe • Taupo • Paraparaumu • Timaru • Blenheim • Downtown (Auckland)

  29. Australia Clint’s and Solly’s • acquisition effective from 1 August 2000 • expect settlement at the end of September 2000 • debt raising mandate awarded for A$150m Clint’s fund raising • buyback of up to A$33m will begin after settlement, planned start of buyback October 2000 • strategy is to improve infrastructure and systems to provide a sound base for sustainable profitable growth • strategy is long term, with benefits coming from year 3 • seeking ASX Foreign Exempt listing late in 2000

  30. Current Trading and Future Outlook Good start to the new financial year • Warehouse store total sales up 15% on August 1999 • Warehouse Stationery total sales up 40% on August 1999 • Clint’s trading on plan Macro conditions: • Consumers sentiment rattled by higher petrol prices and increased mortgage interest rates • Current trading suggests consumers are still spending but they are being more price sensitive • Too early to draw any conclusions about H1 2001

  31. ‘Where Everyone Gets a Bargain’ Thank you for your attendance from the people at The Warehouse

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