Tindall says he'll act 'with integrity'

Founder Stephen Tindall has told shareholders in The Warehouse that whatever takeover offers he gets for his controlling stake in the company, he will act with integrity and in the best interests of shareholders, customers, staff and the community.

Mr Tindall's comments to The Warehouse's annual meeting in Auckland today came less than 24 hours after supermarket giants Woolworths and Foodstuffs had been given High Court clearance to bid for the owner of the Red Sheds.

Through personal holdings and the philanthropic Tindall Foundation, Mr Tindall holds about 52 per cent control of The Warehouse and is key to its future ownership. After attempting to privatise the company last year, Mr Tindall is now believed to be willing to sell - at the right price. Market observers believe this will be somewhere north of $7 per share.

Expectations in the marketplace are that offers from both Foodstuffs and Woolworths will be on the table well before Christmas.

Mr Tindall was, however, not saying much on the possibilities till he had seen the full court ruling - which has yet to be released - and till he knew whether the Commerce Commission would be appealing the decision. The court overturned the commission's June ruling blocking the supermarket companies.

Shareholders were given a fairly downbeat assessment of the company's current performance and overall retail market conditions.

Chairman Keith Smith said a 1.7 per cent drop in first quarter sales for the company to $374.5 million, released earlier this month, had highlighted the unpredictable nature of the current trading environment. He reiterated that the profit for the full year was not likely to be higher than the $97.9 million made in the past year.

Managing director Ian Morrice provided an update on the performance of the company's fledgling Warehouse Extra hypermarket concept, which offers fresh groceries in competition with existing supermarkets. It was the introduction of this concept that led the Commerce Commission to block the two supermarket companies from bidding for The Warehouse.

There are now three Extra stores, including one in Whangarei, which has been open for one year today. Mr Morrice said that sales had increased by 29 per cent since this store had been converted from a traditional Red Shed into the new Extra format. However, he said that this increase was not as much as had been expected due to margin and cost pressure. He said that The Warehouse would not be opening more Extra stores till the performance improved.

Mr Morrice said The Warehouse faced considerable expenditure in the next few years, particularly on refurbishment of the Red Sheds.

- © Fairfax NZ News