17 Sep 2014

Blue Sheds success points way for Red

7:25 am on 17 September 2014

Analysts are still sceptical about The Warehouse's recovery strategy, but the chief executive points to his success in turning around the Blue Sheds as evidence the company's main earner will soon come right.

The Red Sheds chain still accounts for about 80 percent of the group's operating earnings but its contribution fell 10 percent in the year ended late July, despite a 4.7 percent increase in sales.

Mark Powell, who is now the group chief executive, took on the top job at Warehouse Stationery in April 2009 when that chain's sales and margins had been trending down for several years.

The Blue Sheds chain has now chalked up 20 consecutive quarters of growth in sales at stores open at least 12 months and operating profit rose 14 percent in the latest year.

Mr Powell said the rollout of his strategy for the Red Sheds, began three years ago when he took on the group job, is about two years behind that of Warehouse Stationery.

When he took over the Red Sheds had endured seven years of sales declines, he said. Without that strategy, operating earnings would have been half the latest year's $77 million.

Get the RNZ app

for ad-free news and current affairs