Warehouse CEO to depart as company fades

LATEST: Warehouse CEO adamant he leaves on his own steam, amid market rumours

Warehouse Group [NZX: WHS] chief executive Mark Powell has resigned and says he will leave the company by February next year to pursue church-based work and directorship roles.

The group released a statement late this afternoon, which said Mr Powell indicated to the board late last year that he did not foresee himself continuing in the role beyond February next year.

The recruitment hunt for a new group chief executive has started, with the board saying up to 10 months will be allowed for a “planned and orderly succession process.”

Earlier this month, The Warehouse posted a disappointing 19% drop in adjusted first-half profit to $37.2 million as unfavourable weather patterns hurt sales of seasonal products, and lowered its forecast for annual profit of between $52 million and $56 million, down from $60.7 million a year earlier.

Shortly after, James Pascoe bumped up its stake.

Warehouse shares are rated an average 'sell' and have shed about 10% of their value over the past year as analysts and investors question whether the company will start producing profit growth after spending hundreds of millions of dollars overhauling stores and buying new businesses.

The Warehouse management has been plugging money into the group over the past few years to complete acquisitions, refit stores, and make a concerted effort to improve its brand image.   

“It’s a tough business for them to try to turn around and management will be under pressure to show results,” Harbour Asset Management analyst Craig Stent told NBR ONLINE recently.

“There might be questions at board level about what’s going on, because it’s spending lots of money trying to turn things around but nothing’s come to the fore for it. This was meant to be the watershed year for recharging the business and clearly it hasn’t had any luck with any of the metrics.”

Mr Powell, who was formerly Warehouse Stationery chief executive and led its turnaround, has been group chief executive for more than four years.

During his time, the company implemented programmes such as the retail learning pathway, the career retailer wage and the retail and business management degree with Massey University.

The company also acquired Noel Leeming and Torpedo 7, and established a financial services business strategy.

Mr Powell said he will not be seeking another executive role. Instead he will look to apply his experience in the “faith based not-for-profit sector” and as a professional company director.

 “When I took this role I never saw myself doing it for more than the four to five years required to establish a new strategic platform and culture for the future,” he said through a statement.

“The last four years have been personally very fulfilling. The group is now very different. Customers and the team have seen the positive difference. The challenge in the next strategic cycle is to fully translate this platform into profitable growth for our shareholders in the future. I know we have the team to do this.”

 The Warehouse Group founder Sir Stephen Tindall and chairman Ted Van Arkel thanked Mr Powell for leading the group through a period of change.

“Much has been achieved and I am confident that the strong base that has been built has set us up for future success. Mark’s commitment to work with us over the next ten months will ensure there is smooth leadership succession for the group,” Mr Van Arkel says.