The struggling retailer says its current cost base 'is not sustainable for a value retailer'

Struggling retailer The Warehouse Group is cutting 270 head office staff roles as it moves to what it describes as a "leaner operating structure".

The company said in a statement to NZX on Wednesday that it was expanding an arrangement with Tata Consultancy Services (TCS) that had originally been announced in September.

As part of the new operating model, TCS will support the delivery of several corporate and administrative functions, including parts of technology, accounting, call centres and payroll.

"TCS will provide the group with access to modern platforms, capacity and capability, including AI, at a scale and cost that would not be possible to build internally," the statement said.

"With TCS supporting these functions, the group’s head office teams will be able to make more progress on critical areas like its in-store experience, merchandise and supply chain."

The Warehouse Group CEO Mark Stirton said the company's cost base "is not sustainable for a value retailer".

"As one of New Zealand’s largest retail employers we must make these tough choices for our 10,000 team members and their families across the country and return the group to sustainable profitability," he said.

The restructure therefore will see around 270 head office roles leave the business, with a small number of areas continuing through consultation, the company says.

"We’re supporting everyone affected with care during what we appreciate is a difficult time for them," Stirton said.

In the financial year ended August 3, 2025, The Warehouse Group reported turnover of $3.1 billion, but an after-tax loss from continuing operations of $2.4 million. It didn't pay a dividend.

The company said the restructure announced on Wednesday would result in redundancy costs of approximately $6 million in FY26.

"This will be recognised as an unusual item and will impact Reported EBIT [earnings before interest and tax] for the year."

The company said the new structure that supports "the co-source model" with  TCS is expected to "significantly lower the Group’s labour cost base".

"Labour cost savings of approximately $3-4 million are expected in FY26, with annualised savings expected to increase to approximately $17 million by FY31. This will deliver total expected savings of approximately $70 million over the initial 5-year contract term. These savings are in addition to the estimated $40 million over five years announced by the group in September 2025 on its licenses and managed services partnership with TCS.

The Warehouse Group says it "will provide a broader update on the cost reset programme as part of its FY26 Half Year Results which will be released on 27 March 2026".

The company and its well-known 'red sheds' was founded by Stephen Tindall, who is no longer on the board (Robert Tindall is), but does, along with the Tindall Foundation still control around 50% of the company's shares. Just under 20% of the shares are controlled by James Pascoe Investments, a vehicle of the Norman family that has extensive retailing interests, including the Farmers department store.