The Warehouse is due to report on Friday.
The company's post-Christmas trading update included a downgrade to its September guidance, indicating the downward earnings trend had accelerated.
That supported Craigs' call in October to reduce the weighting of The Warehouse in its New Zealand equities sample portfolio.
The new pairing of chief executive Mark Powell and chairman Graham Evans announced the company's strategy in September, including capital expenditure of $429 million through five years in 14 new stores, and a refurbishment of the more than 60 existing stores, Mr Timms said.
Also, shop-floor staff numbers would be increased to improve the shopping experience.
The group would undertake a large property development in Silverdale, north of Auckland, near a planned residential development of about 3000 houses.
"The company has a poor track record in recent years, with multiple management changes and strategies without an improvement in results. Although the dividend yield appears attractive, earnings recovery is some way off, making any dividend growth unlikely," Mr Timms said.
The Warehouse had an unrivalled store footprint. That added to the defensive strength of the business and was potentially attractive to a third party.
However, the combination of large shareholders made any deal difficult to achieve, he said.
Founder Sir Stephen Tindall and the Tindall Foundation together controlled about 48% of The Warehouse, and ASX-listed Woolworths and domestic co-operative Foodstuffs held about 10% each. Each would have a key role in determining who, if anyone, would be a buyer or strategic partner for The Warehouse.
"We believe there is a reasonable chance that the company will come back into play at some stage, though this is probably a longer-term story," Mr Timms said.
