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Warehouse Development

In: Business and Management

Submitted By mystrawberry
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August - Expansion into Australia with the acquisition of Clint's Crazy Bargains and Silly Solly's. The two chains operate along similiar lines to The Warehouse with Clint’s Crazy Bargains trading in New South Wales, ACT and Victoria, and Silly Solly’s in Queensland. The stores will progressively be re-badged as Clint's Warehouse, The Warehouse and Solly's Warehouse. The Clint’s/Solly’s group has 115 stores and six distribution centres. However, the stores are much smaller than New Zealand Warehouse stores, averaging 1,100 square metres compared with The Warehouse average of 3,677 square metres. The group is hoping to gradually increase this average sales area over time.

The acquisition makes good sense - both chains are similiar to The Warehouse and the group is hoping to benefit from economies of scale, whilst improving the profitability of the Australian operations by introducing the latest IT and inventory systems. It will also provide The Warehouse with a valuable opportunity for further growth and expansion.

Following the acquisition, The Warehouse Group has been listed on the Australian Stock Exchange.
August - The Warehouse Financial Services launched.
The Warehouse celebrates its 20th birthday.
June - CEO Greg Muir resigns over differences with the board on the company’s future direction. "Mr Muir's resignation came as a result of ongoing discussions in which the board and the CEO had differing philosophies regarding the direction of the company." According to Mr Muir, the split is unrelated to operational difficulties that have prompted two profit warnings this year or the retailer’s problematic Australian expansion.

July - Founder, Stephen Tindall, agrees to assume the role of acting CEO while the company undertakes a search for a new Group Chief Executive.

November - The Warehouse in New Zealand starts selling own brand bread in its store, moving it a step closer to plunging into the fresh perishables sector. It is believed that the move is a trial to see how the group copes with the logistics and distribution of selling products with a short shelf life.

November - Speaking at the AGM at the end of the month, directors at the group state they remain committed to continuing their current strategy, stating they believe that value retailing will become the dominant retail proposition and that consolidation and internationalisation in the Australasian retail sector is accelerating. With this in mind, the company wants to constantly innovate, both in terms of stores and merchandise mix, in order to differentiate itself from competitors.
November - CEO Ian Morrice warned that the company would remain aggressive on pricing as it sought to build its brand across Australia. Mr Morrice said Warehouse stores were "set up to be a store where everyone gets a bargain and you can't be a store where everyone gets a bargain if you don't have very strong pricing and aggressive promotions".

September - In an interview, Ian Morrice, the new CEO of The Warehouse Group, beleives there are"significant" growth opportunities for the retailer, both in New Zealand and Australia. "The Australian market is five or six times the size of New Zealand's," Morrice noted. "I think there's much more mileage in it yet, as far as this company is concerned." As a result, Morrice said the company won't quit its Australian operations and that he wouldn't have joined the company if he didn't think significant growth could be achieved in Australia. "My immediate personal priority is to this year focus on returning each of the brands to profit growth," Morrice said. "In the short term I'll be doing what I can to make sure we've got the best plans we can have in place for Christmas."

May - The Warehouse Group has appointed Ian Morrice as Managing Director and Chief Executive Officer. Mr Morrice was Managing Director, Commercial for DIY giant B&Q. Mr Morrice will take over the reins as The Warehouse Group Managing Director and CEO from Founder Stephen Tindall early in the new financial year. Mr Tindall has been acting Managing Director since May 2003 and will remain on the Board of Directors. In addition, General Manager - Red Sheds David Wilson will resign at the end of the company’s financial year, 1st August 2004. Glen Inger, current Property Director and a board member, will pick up the running of the Red Sheds on David’s departure.
December - The Warehouse Group Ltd completes the sale of its Australian business. "The directors of the Warehouse Group Ltd today announced that sale of the Warehouse Australia has become unconditional," the company said.

November - As expected, The Warehouse sells its Australian operations to a private equity venture, Catalyst Investment Managers and Castle Harlan Australian Mezzanine Partners Pty Ltd, for AUD200 million. As part of the deal, retailer Miller's also sold its stores to the venture. The Warehouse will receive AUD80 million for the stores sold to the private equity joint venture, plus AUD12 million for the sale of its Australian head office in Sydney to Investec Wentworth Specialised Property Trust. The Warehouse Australia Chief Executive Ian Tsicalas is resigning to take over as head of the combined businesses, with support from The Warehouse Australia and Miller's. The sale is due to be completed in early 2006, subject to regulatory approval and other conditions.

October - COO Owen McCall has revealed plans to possibly run a “live trial” of RFID in one of its stores before Christmas. It is currently proving the technology can work at its Auckland "merchandise display centre", a testing facility. According to Mr McCall, "We hope to use the technology to improve the management of stock. Our aim is to better identify what is in stores and where it is." The company is about three-quarters through the testing, he said. "We would like to set up the technology in a store towards the (trial's) end to get a real-life store result, but this would only be for one to two weeks." He could not comment on a future roll-out of the RFID technology, but said the company would like to use it across the business. "I am not sure how far in the future the roll-out would occur -- we would be talking years not months."

June - Speculation arises that The Warehouse is talking with rival Miller's Retail about a potential combined sale of their Australian discount store chains. Combined, the companies have around 400 stores, and are looking to sell to a number of interested private equity firms. According to local newspaper reports, The Warehouse has appointed Credit Suisse First Boston to pursue the deal on its behalf.

The Warehouse responded by confirming that it is holding talks with several parties regarding "various strategic options" for its Australian business, leading to "a number of parties" over the past "few weeks", but added that the announcement doesn't mean it's going to sell the loss-making chain.

June - Less than a month after Woolworths made its move into New Zealand, The Warehouse Group has confirmed plans to roll out hypermarkets, a version of its general merchandise stores to include a full grocery offering. Chief executive Ian Morrice has indicated the hypermarket rollout at an industry conference, signaling that the first two stores would be opened in about 12 months. A Warehouse spokesman has stated that the company's network has the capacity to roll out more than 20 stores. At the conference, Mr Morrice had said "convergence is inevitable", citing the hypermarket push led by Tesco and Wal-Mart, adding that groceries and consumables would boost patronage of Warehouse stores. The long-planned move to a hypermarket format is being kicked off by a new private brand, Redmark. The new brand is expected to cover all product lines currently offered at The Warehouse stores and eventually groceries when the retail giant introduces a food category. The company has not confirmed what the brand is or when it will be launched but said it is looking at its mix of house brands: "The Warehouse is re-looking at the category hierarchy to present a more consistent message to the customer and to build on perceptions around our house brand and complement our national brand offer."

May - Just days after acquiring Foodland Associated together with Metcash, Australian Woolworths’ chief executive Roger Corbett hinted that The Warehouse Group could be next on his takeover list, saying that the Foodland stores will act as a beachhead in New Zealand to enter the general merchandise market. "The Warehouse is a very successful business in New Zealand and one that has done well for a long time," Mr Corbett said, adding that “We have made some assessment already […] We will continue to assess that and we'll take advantage of whatever is the best way to achieve the objectives of moving into general merchandise."

February - Ian Morris, the incoming CEO of The Warehouse, has announced a restructuring of the company’s executive management. Richard Lewis, the former head of operations for non-food at Sainsbury’s, has been appointed as general manager of store operations. Former trading director for Safeway Stores PLC in the UK, John Durkan, has joined as general manager of grocery and consumables, merchandise and format development. Eileen Chuang has been appointed as direct sourcing manager. Gary Ewen joins the company as strategic sourcing and procurement manager.
December - In a move that could set off a bidding war for New Zealand’s largest listed retailer, Foodstuffs has applied for regulatory approval to buy The Warehouse Group. The New Zealand Commerce Commission said in a statement that Foodstuffs is seeking clearance to buy up to 100% of The Warehouse, which has a market capitalization of around NZD2.13 billion (USD1.3 billion). No official bid has been lodged. Both Foodstuffs and Woolworths of Australia hold a 10% stake in The Warehouse Group.

November - The Warehouse is currently working with Teradata, a division of NCR Corporation, to expand its existing Teradata Warehouse and to implement the current Demand Chain Management (DCM) 3.2 solution. Since 2000, The Warehouse has utilised Teradata DCM to determine the optimum stock and reorder levels for the majority of its SKUs. The system takes into account seasonality and special promotions, pulling detailed information about product demand at the SKU level up through the supply chain and potentially back to manufacturers and suppliers. The upgrade is intended to help the retailer increase sales and decrease inventory and costs by ensuring more accurate forecasting.

November - The chief executive of New Zealand based The Warehouse Group, Ian Morrice, has said that the company is focused on increasing sales and continuing long-term expansion plans for the retailer despite ongoing speculation about its ownership. "It's fair to say it's been a distraction at some points during the last 12 months. But certainly for the last couple of months and hopefully going forward through Christmas we can concentrate as executives on the job in hand, which is to deliver a reasonable Christmas and make sure our plans and results stay on track in terms of the capital investments we're making. We're well placed to put further investment into the business and to grow the business through a variety of different routes and we can do that independently or not," said Morrice. "Clearly our preference at this point is to continue to be given the mandate by our board to develop and implement the growth plans for the company."

November - Speaking at the company’s annual general meeting, the chief executive of Australian retailer Woolworths, Michael Luscombe, has stated that it will retain its 10% stake in New Zealand discount retailer The Warehouse Group acquired in September. Woolworths chairman James Strong said the acquisition in New Zealand enabled customers in that country to enjoy lower prices. 'Woolworths continues to evaluate strategic options in relation to the general merchandise sector in New Zealand. We do not anticipate any immediate further steps under current conditions and will retain our 10% shareholding in the the Warehouse Group,' he said.

November - According to unconfirmed reports in the New Zealand press, Tesco is being suggested as possibly interested in buying The Warehouse. Founder Stephen Tindall had intended to privatise the retailer but withdrew the proposal after Australian retailer Woolworths last month acquired a 10% stake in the company.

October - Stephen Tindall announces he will not make a further offer to privatise the Warehouse.

September - The Warehouse announces that Woolworths Ltd has acquired a 10.0% stake in the company. Woolworths has advised the board that they intend to discuss their acquisition with Stephen Tindall. It is thought that Woolworths' move is an attempt to block Mr Tindall's privatisation bid revealed earlier this month. "We need to understand the motivations and intentions of the new shareholder, and the implications of this for all shareholders and other stakeholders," Tindall said in a brief statement. Also, Woolworths could look to use its stake to block any tie-up between The Warehouse and Foodstuffs, which also holds a 10% stake in the retailer.

September - The Warehouse announces that they have received a notice from Stephen Tindall setting out his intention to submit a proposal to acquire the company by a consortium comprising Mr Tindall, and Pacific Equity Partners (“PEP”). The partners sets out an intention to submit a formal proposal to acquire 100% of the company within the next few weeks.

September - Provenco has announced a new contract with The Warehouse to provide POS and payment technology across the retailer’s 85 stores nationwide. The NZD3.3 million contract will see Provenco’s advanced POS and payment technology installed in more than 1,300 shopping lanes. The contract includes installation of new POS terminals integrated with EMV-compliant EFTPOS payment technology. Provenco and The Warehouse will complete the project within a tight timeframe in time for the Christmas rush. General Manager of Provenco’s Technology division, Andre van Duiven, said: “Consistency in point-of-sale systems and Provenco’s deployment methodology across the business was key for The Warehouse. The Warehouse previously used a mixture of technology across its stores. Having the technology standardised across all outlets will allow the introduction of new applications more easily as well as maintaining technology efficiencies. Additionally, it provides an important path to upgrading the EFTPOS technology to accommodate the new EMV smart cards requirements, which are being phased in around the world.”

July - Foodstuffs announces it has achieved its goal of purchasing 10% of The Warehouse Group.

June - Foodstuffs announced its intention to purchase up to 10% of shares in The Warehouse Group Ltd . Foodstuff is offering USD5 per share. The Managing Director Tony Carter said that the stake is a strategic long-term investment for Foodstuffs and there is no intention to move to a full take-over offer. “We see The Warehouse as an attractive investment opportunity. It is a well-run business in the retail sector which we know and understand, and being New Zealand-owned and controlled its culture is similar to ours.” Foodstuffs will not be seeking representation on The Warehouse’s board. Mr Carter said that the purchase will be funded out of normal working capital facilities and there will be no impact on Foodstuffs’ ongoing development programme. “This level of investment is one which our respective boards are comfortable with,” Mr Carter said. The shares will be purchased on and off-market by subsidiary companies associated with each Foodstuffs company.

The Warehouse Group believes this is a defensive initiative by Foodstuffs intended to protect a reported 57% market share of the food sector in advance of The Warehouse expanding its grocery business. Furthermore The Warehouse believes Foodstuffs has timed this move to coincide with the opening of The Warehouse Extra at Sylvia Park in Auckland. It appears to The Warehouse that Foodstuffs recognises the value that will be created through the new format, and that its market share of the grocery sector is likely to grow to well beyond the market share the company currently enjoys. The board of The Warehouse Group believes that the offer being made by the Foodstuffs Group of companies is not in the best long-term interests of the company. The recent share price is considered to be a significant discount to fair value. The current offer being made by Foodstuffs is not considered to represent any significant premium above fair value. The company’s founder, Mr Stephen Tindall, has confirmed to the board that he and other Tindall interests are not sellers into the Foodstuffs offer.
December - The New Zealand Commerce Commission has announced that it will seek leave to appeal the High Court decision that cleared the way for Foodstuffs and Woolworths to make takeover bids for The Warehouse Group. The High Court last month overturned the commission's earlier decision to decline clearance for either potential cquisition. "Appealing the judgment is important given the precedent it sets for the application of competition law in New Zealand, and the implications this has for the long-term interests of supermarket consumers," according to commission chairwoman Paula Rebstock.

December - CEO Ian Morrice has said that he is standing by claims that he is refining the Extra grocery offering after a High Court judge pointed to a “real prospect” that Extra will be abandoned. Mr Morrice said yesterday that he told the court the same thing he told the market in the results announcement in September. The Warehouse strategy is built around the halo effect where grocery customers increase foot traffic and sales of general goods. “We have said that achieving the halo effect is a critical success factor, and that it is too early to assess this. The normal review process is being conducted.'' Mr Morrice told shareholders that conversion to the Extra format in Whangarei had boosted sales by 30%, which was "an encouraging start'' but still below expectations. The company determined it would have to wait until after its second Extra store in Whangarei had completed a full year. He said that while sales were up as expected, costs for the new format were higher than expected.

December - New Zealand's High Court has released details behind its decision to overturn the country's regulator preventing Foodstuffs and Woolworths from making offers for The Warehouse last month. The Court decided that The Warehouse would pose no current or future threat to competition in the country's grocery sector and even that The Warehouse Extra stores were likely to be scrapped. "We are satisfied that if either Foodstuffs or Woolworths acquire the Warehouse there is not a real risk that prices of groceries in supermarkets will increase and/or service, quality and innovation in supermarkets will decrease in any material way."

November - Following the court ruling that allowed Woolworths and Foodstuffs to bid for The Warehouse, Stephen Tindall, founder and controlling shareholder (52% stake) has announced he is open to offers. "I will consider any offers that might arise on the basis of doing the best I can for shareholders, customers, staff at The Warehouse and the community," Tindall said in a statement.

November - Woolworths and Foodstuffs have both won court clearance to bid for The Warehouse Group. The court decision upheld an appeal by all three companies against an earlier ban on bidding by New Zealand's Competition Commission, which beleived that any takeover of New Zealand's third largest retailer would damage competition in the market. Explaining its decision to oppose Woolworths' and Foodstuffs' acquisition at the time , New Zealand's Commerce Commission explained that the move would destroy a vital "third maverick player" in the supermarket industry, creating a duopoly instead. Woolworths and Foodstuffs said they had not yet decided whether to launch a formal takeover, although a bid by both is widely expected. Both companies hold a 10% stake in The Warehouse.

August - The Warehouse Group advises that it will join the appeals by Woolworths and Foodstuffs against the New Zealand Commerce Commission's decision dated 8 June 2007 declining clearance applications by those companies to acquire up to 100% of shares in or the assets of The Warehouse Group Limited. The Warehouse chairman, Keith Smith, commented that "in exercising its right to join the appeals, the board wished to ensure that the company was appropriately placed to provide such market and other relevant evidence as the High Court may require to determine the appeals. Our advice was that this was best achieved through exercising our statutory right to join the existing appeals."

July - Explaining its decision to oppose Woolworths' and Foodstuffs' acquisition of The Warehouse, New Zealand's Commerce Commission explained that the move would destroy a vital "third maverick player" in the supermarket industry, creating a duopoly instead. "The presence of an independent innovative maverick like The Warehouse is likely to provide an effective competitive constraint on both Woolworths and Foodstuffs," Commission chairwoman Paula Rebstock said. The commission said if The Warehouse were to be bought by Woolworths or rival Foodstuffs it would hamper attempts by a third force to buy The Warehouse as a "springboard" to enter the market as a new rival. "There is a real risk that prices will be materially higher, and quality, service and innovation materially lower," the commission said.

June - Foodstuffs announces it will appeal against the Commerce Commission's decision to reject its bid for The Warehouse Group. The Warehouse said in a statement that Foodstuffs had notified it that an appeal with the High Court of New Zealand had been lodged to overturn the Commerce Commission's decision.

June - Woolworths is appealing to the High Court of New Zealand to challenge a decision by the New Zealand Commerce Commission (NZCC) to block its proposed bid for The Warehouse Group. "Woolworths does not believe that an acquisition of The Warehouse by Woolworths would see the removal of an effective competitor from, or result in a substantial lessening of competition, in any relevant market," the company said. Foodstuffs said it was not ruling anything out, but the company would not say whether it planned to follow suit. "We're still considering our position. There is still plenty of time in which to lodge an appeal," chief executive Tony Carter said.

June - New Zealand's Commerce Commission blocks the potential bids from Woolworths and Foostuffs for The Warehouse. Chairwoman Paula Rebstock said the commission believed the bids could substantially lessen competition. Founder of The Warehouse, Stephen Tindall is reportedly planning to renew a bid to privatise the company with private equity firm Pacific Equity Partners, although an appeal by Woolworths and Foodstuffs is expected.

June - Reacting to speculation that Woolworths has made a NZD2.2 billion bid, The Warehouse states it has not had any takeover offers. "The Warehouse confirms it has not received any offer from any company," Chairman Keith Smith said in a statement.

May - Once again, the New Zealand competition regulator has extended the deadline on rival applications to buy out The Warehouse Group. The Commerce Commission said the deadline for a decision on both applications had been extended to June 8 from May 25. It is thought the Commission may be waiting to see if Woolworths acquires any part of Coles Group in Australia before it makes its decision.

April - The New Zealand competition regulator extended the deadline on Woolworths' and Foodstuffs' applications to buy out The Warehouse Group. The Commerce Commission said the deadline for a decision on both applications had been extended to May 25 from April 27.

March - CEO Ian Morrice has said that The Warehouse may be interested in acquiring some of the assets of the Coles Group. Mr Morrice told Dow Jones Newswires in an interview that The Warehouse is interested in Coles' Target discount department stores and Officeworks, a network of business supply stores. "We would certainly be interested in Australia again for the right business. We'll obviously wait and see what develops and see whether or not a bid is viable and a timely move to make," he said. The Warehouse has the balance sheet strength to bid for the businesses, Mr Morrice said, noting that a bid of more than NZD1 billion (USD692.1 million) "wouldn't be a big challenge. We think there are a couple of businesses within Coles that are very complementary to the Warehouse setup in New Zealand," he said, tagging Target and Officeworks as strong businesses with great management.

February - The Commerce Commission in New Zealand has said it is extending the deadline for a decision on applications by Foodstuffs and Woolworths to take over The Warehouse Group until March 30th.

January - According to unconfirmed reports in the New Zealand press, the founder of The Warehouse Group, Stephen Tindall, may get involved in a new takeover bid for the company alongside Foodstuffs and private equity investor Pacific Equity Partners. It is understood that the three may be seeking to work together on a deal to rival the expected bid from Australian Woolworths, which along with Foodstuffs has applied for regulatory clearance to buy 100% of The Warehouse.

January - Commenting further on Woolworths’ application for clearance to buy up to 100% of The Warehouse, CEO Michael Luscombe announced that it would retain The Warehouse name if it bought the company. “We just think it is a wonderful brand,” he said. “It's an iconic brand in New Zealand. We would continue with that brand should we proceed with our proposal and be successful.” Woolworths has stated that it sees "substantial complementary benefits" from linking the Warehouse Group with its Big W stores in Australia. Woolworths said it sees no competition concerns because it currently has no general merchandise operations in New Zealand. It said a successful acquisition could actually "enhance" competitive tension with Foodstuffs. According to the Woolworths application, acquiring Warehouse would allow the retailer to "slightly expand" its wholesale presence and compete more effectively with Foodstuffs. Woolworths said that if Foodstuffs were cleared to buy the business, it would increase "an already dominant wholesale presence."

January - Woolworths has applied for clearance to make an offer on The Warehouse Group. The application was submitted to the New Zealand Commerce Commission although Woolworths said that it has not yet made a decision on whether the company will follow through with a formal offer. "This application allows us to continue to evaluate all options in relation to our potential entry into the general merchandise sector in New Zealand," said Woolworths chief executive Michael Luscombe. Woolworths already holds 10% stake in The Warehouse Group.

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