The Warehouse's purchase of appliance retailer Noel Leeming
Group will help the Red Sheds secure well-known electronics
brands it has been unable to stock in the past, says its
During a press tour of Silverdale's new Warehouse store last
month, chief executive Mark Powell described the challenges
the company had faced in its attempts to secure big-name
appliance brands, saying competing retailers had been
pressuring manufacturers not to supply their products to his
He mentioned that The Warehouse would, for example, like to
stock Samsung televisions at some point.
Yesterday, Powell said the $65 million purchase of Noel
Leeming Group's 92 stores, including the Bond & Bond
chain, would help The Warehouse in its plan to stock more
well-known electronics brands.
But the company would take "a very considered" approach,
"There won't be a sort of wholesale move of brands from Noel
Leeming into The Warehouse."
Tim Morris, an analyst at market research firm Coriolis, said
the purchase was one of the best strategic moves The
Warehouse could have made.
"For 20 years The Warehouse has been struggling to get big
brands, particularly in electronics and whiteware," Morris
said. "Now, in one swoop, they're going to get access to
Powell would not rule out ditching the Bond & Bond retail
brand, which offers a very similar range of products to Noel
Leeming, and rebranding those stores as Noel Leeming.
"We've got no firm, preconceived view [on a rebranding]," he
said. "What I want from each of our retail brands is clear
brand positioning and personality that the customer can
understand. So going into the new year we'll look at how that
all fits together."
The Warehouse said it would fund the purchase through its
existing debt facilities and Noel Leeming would operate as a
separate trading division under its existing management team.
Until yesterday, Noel Leeming was owned by Gresham Group, an
Australian private equity firm that bought the appliance
retail business from Pacific Retail Group for $138 million in
At March 31 Noel Leeming Group held debts of $113.6 million,
according to documents lodged with the Companies Office.
Powell said The Warehouse had not taken on any of the debt.
"That [the debt] is for Gresham to sort out."
Powell said Noel Leeming's debt-laden capital structure was
the cause of the company's $615 million loss in the year to
March 31 this year.
"By buying it debt-free, from an [earnings] point of view it
will contribute to our half-year results."
Noel Leeming would contribute $4 million to $6 million in
earnings to The Warehouse's first-half results, the company
Some past attempts by The Warehouse to grow its business have
failed to yield positive results. A disastrous expansion into
Australia was aborted in 2005, while a move into grocery
retailing was also dropped.
Mark Lister, head of private wealth research at Craigs
Investment Partners, said the acquisition expanded The
Warehouse's footprint but was "not a game-changer".
"It probably is an opportunity for them to grow a little bit
and extract a bit of value out of what they're doing," he
"It's still a very tough market to be in."
The Warehouse is in the midst of a $130 million revamp of its
91-store network of Red Shed stores.
Shares closed up 10c at $3.10.
92 stores, including the Bond & Bond chain
- Christopher Adams, NZ Herald