By Tony Field
The Warehouse has had a reality check with net profit down nearly nine percent, on a year ago, to $76 million.
But the company says the core business is sound and it has a three year reinvestment strategy aimed at improving profits.
It is no secret shops are doing it tough with a sluggish economy and competition from the internet but the Warehouse admits its challenges run deeper.
Chairman Graham Evans says primarily they have let our customers down and “that is a sin that no organisation should live with”.
The company says customer satisfaction has suffered; shoppers annoyed by poor product layout, the unavailability of items and stores that sometimes look dated.
They are problems that have even affected the morale of the 8000 staff.
“We have had some issues, primarily driven by cost cutting,” says Mr Evans. “I think cost cutting is short term gain for long term pain.”
Analysts say the Warehouse needs to be clear who its target market is.
The new chief executive, Mark Powell, says they will spend $430 million revamping the stores and are putting more people on the shop floor, a move driven by their own staff.
“They told us we'd complicated the business too much and that we'd created too much administration, so we've taken away a lot of that, simplified a heck of a lot.”
It will not be a quick fix as the company says it will take up to three years to revamp the stores.
It is warning its profit might fall again next year because of the uncertain retail environment and the cost of sprucing up its stores.
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