Bond & Bond merging with Noel Leeming

23:12, Aug 14 2013

The Warehouse Group is pulling the plug on its Bond & Bond store network but says no non-management staff will be forced out of a job.

The group, which is closing 12 Bond & Bond stores around the country and converting or merging 12 others into Noel Leeming stores, says all non-management staff will be offered comparable roles in Noel Leeming stores.

Job cuts were possible amongst management and support staff, but chief executive Mark Powell expected total losses to be minimal. He said "every effort" would be made to offer Bond & Bond store managers suitable roles within Noel Leeming or the wider group.

The group bought Noel Leeming Group, which includes Bond & Bond, in December for $65 million. The merger is expected to be complete by early April and will increase the Noel Leeming network to 75 stores nationwide.

"The Noel Leeming leadership team has determined that Bond & Bond is not sufficiently differentiated, and has too few stores, to operate separately," Powell said.

"The decision will ensure a clear focus on Noel Leeming stores which offer a solid platform for growth as New Zealand's number one electronics retailer."

Bond & Bond would retain an online presence, he said.

The Warehouse Group this morning reported a 97 per cent boost in first-half net profit to $106.3m, on increased sales and gains from selling properties.

Stripping out the impact of property sales, the retailer made a net profit for the six months to January 27 of of $53m, up 13.2 per cent year-on-year. Sales lifted 18.3 per cent to $1.1 billion.

Excluding Noel Leeming Group, which the company bought in December, sales rose 4.5 per cent to $978.8m.

The Noel Leeming Group achieved sales for the two months since its acquisition of $129.3m, while earnings before interest, tax, depreciation and amortisation came in at $5.8m - at the top end of guidance.

Powell said the continued sales growth and gross margin improvement was pleasing.

"While still early in our multi-year transformation, we are pleased with the results of investments in our stores and people," he said.

"We plan to accelerate the number of store re-fits this calendar year to 24 and will continue to invest ahead of the curve in the multi-channel area."

The Warehouse's online sales increased 136 per cent in the half, partly thanks to the launch of its daily deals site Red Alert in the first quarter.

The group bought import specialist Insight Traders - to enhance its bargain sourcing power - for an undisclosed sum in September, and on Monday announced it had bought just over half of Hamilton-based online retailer Torpedo7 for up to $33m.

The group said that, subject to any material change in trading conditions, it expected full-year net profit to land between $73m and $76m - up from $65.2m last financial year.

The Warehouse Group will pay an interim dividend of 15.5 cents per share, up 2c on the previous first-half dividend. Shares in The Warehouse are trading up 25 cents this morning, at $3.75.