Warehouse changes dividend policy to fund financial unit 20 Nov 2015
Related articles
- NZ consumers grow more upbeat, may resume spending Business
- Knowles quits as CEO of KiwiBank Business
- NZ migration bolstered by British invasion Migration
- NZ manufacturing activity reaches highest since 04 Business
- NZ dollar hits 22-month high vs euro Business
- OceanaGold finds new gold deposits at Fraser mine Business
- Transpower gets go-ahead for $170m SI upgrade Business
- NZ home sales creep up in March, still subdued Property
- NZ economy expands at fastest pace in two years Business
- New Zealand food prices fall in February Business
Warehouse changes dividend payout to help fund new financial services arm
By Fiona Rotherham
Nov.
20 (BusinessDesk) - Warehouse Group, the country’s largest
listed retailer, has changed its dividend policy to allow
eventual profits from its new financial services group to be
ploughed back into building up its lending book.
The dividend policy has been to pay out between 75 percent and 85 percent of adjusted net profit after tax and that’s now been modified to apply only to the retail group, excluding financial services, shareholders were told at today’s annual meeting in Auckland.
Chairman Ted van Arkel
said the financial services arm is expected to post losses
for the next two years as Warehouse builds up that business,
and when it does begin generating profits, the company
intends “reinvesting for a period to provide a capital
base to fund growth”.
The dividend payout for the
2015 financial year was 16 cents per share, which equates to
93.7 percent of adjusted net profit after tax. That's higher
than the normal policy range because the company had
promised shareholders when it raised $115 million for the
financial services business in March last year that it would
pay a 19 cents per share dividend for the next two
years.
The board revised that back to 16 cents after a
profit downgrade in early 2015, and now plans to pay out
within the modified policy range in the 2016 year.
In response to a shareholder question, van Arkel said the board was considering introducing a dividend reinvestment plan next year. Chief financial officer Mark Yeoman said he had raised the idea with the board as the business will be requiring a lot more working capital in the future and a dividend reinvestment plan was “one of the tools we could use”.
Given that Warehouse makes most of its profits in the second quarter and uncertainty around early losses from its financial services business, the board has said it will hold off providing earnings guidance for the 2016 financial year until the half-year result announcement in March 2016. Still, van Arkel said the board’s view remains that adjusted net profit for the 2016 financial year will be broadly in line with the $57.1 million achieved in 2015, which was down on the $60.7 million posted in 2014.
While trading had been good in the first
quarter, van Arkel said Warehouse continued to face strong
competition, and when combined with foreign exchange
headwinds, this would put pressure on prices and margins.
He said the declining New Zealand dollar exchange rate was a
reality facing all Kiwi importers and retailers and that
coupled with low inflation and a slower domestic economy,
means the ability to reflect changing costs in prices would
be the key challenge this year.
The board and founder
Stephen Tindall paid tribute to outgoing chief executive
Mark Powell who was attending his last annual meeting after
13 years with the retailer, five in the top role. His
successor is former Sears executive Nick Grayston who joins
the group next month.
Powell reshaped the business
during the past five years, diversifying its earnings from
just the 'red' discount department stores and the 'blue'
stationery stores to one including appliance retailer Noel
Leeming, outdoor adventure business Torpedo 7, and the
recent launch of its own financial services business
offering credit cards and insurance tailored to its
customers.
Tindall said before Powell started, the
business was “experiencing sales decline and the stores
had become pretty shabby because we hadn’t reinvested in
the business to the level we needed to.”
“Mark has
come in and turned things around with energy, enthusiasm and
strong leadership and returned to the company ethos of the
first 20 years where people feel valued to be team members,"
he said.
Powell said the company was well on the way
to delivering Tindall’s original vision of building a
100-year company that delivers long-term sustainable profit
growth and helps New Zealand flourish.
“After a
period of significant change, investment and reshaping, the
medium-term focus is to deliver the current priorities, to
leverage them, and drive a profit trend”, he
said.
Powell said the Warehouse's six key strategic
priorities included keeping the core 'red shed' strong,
growing 'non-red' to be as large as 'red', be the leading
multichannel and digital retailer in New Zealand, source
better products at better prices, be a leading New Zealand
retail financial services company, and leverage the group
competencies and scale.
Online sales rose to $149.2
million in the 2015 financial year, up from just $18.8
million in 2011.
It has more than 1 million unique
visitors to its sites each month which is second only to
auction house Trade Me in New Zealand, he said. The 'red'
online business grew 32 percent year on year and digital
marketing has moved from less than 5 percent of spend five
years ago to nearly a quarter
now.
(BusinessDesk)
News
Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students
29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more
New Zealand reaffirms support for Flight MH17 judicial process
7 Mar 2020 News
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more
Business
NZ Government's Economic package to fight COVID-19
17 Mar 2020 Business News
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more
NZ Government announces aviation relief package
19 Mar 2020 Business News
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more
Living
Diversity was Key at New Zealand Trade Tasting in London
6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall.
It was the first... more
Kiwi author stuns Behind the Butterfly Gate
12 Jan 2022 Arts
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...
New Zealand writer Merryn Corcoran’s... more
Property
Fairer rules for tenants and landlords
17 Nov 2019 Property
17 NOVEMBER 2019
The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more
New Zealand Government will not implement a Capital Gains Tax
17 Apr 2019 Property
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more
Migration
Boosting border security with electronic travel authority – now over 500,000 issued
19 Nov 2019 Migration
19 NOVEMBER 2019
We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more
Christchurch reinstated as refugee settlement location
18 Aug 2018 Migration
18 AUGUST 2018
HON IAIN LEES-GALLOWAY
The announcement that Christchurch can once again be a settlement location for refugees... more
Travel
Gallipoli Anzac Day services cancelled
19 Mar 2020 Travel & Tourism
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more
New Zealanders advised not to travel overseas
19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas
more
Sport
The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners
27 Oct 2019 Cricket
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more
PREVIEW: All Blacks v England semi-final
26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more
Columns
Gordon Campbell on the Gareth Morgan crusade
11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade
First published on Werewolf
The ghastly likes of Marine Le Pen in France and Geert ... more
Gordon Campbell on the US election outcome
10 Nov 2016 Opinion
Column - Gordon Campbell
Gordon Campbell on the US election outcome
Well um.. on the bright side, there (probably)... more
Kiwi Success
Congratulations to Loder Cup winner
26 Sep 2018 People
25 SEPTEMBER 2018
The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more
Appointments to New Zealand National Commission for UNESCO
16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO
HON JENNY SALESA
Associate Education Minister Jenny Salesa is... more
Recruitment
Historic pay equity settlement for education support workers
14 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more
Historic pay equity settlement for education support workers
22 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more