The Warehouse Group has sold its Torpedo7 outdoor division for the large sum of one dollar. Effectively handing it over, while also transferring associated debts and lease obligations.
This transaction sees the retail behemoth offloading the company to Tahua Partners, a move described as strategic for concentrating on its primary brands and enhancing its financial health.
The Warehouse Group highlights that Torpedo7, with its nationwide presence of approximately 24 outlets, contributes a mere five percent to the conglomerate's sales. Despite an investment of $52.2 million in acquiring the business incrementally over the last 13 years, Torpedo7 reported a loss of $22 million last year.
The deal encompasses assets including inventory, cash reserves within stores, and the Torpedo7 brand itself. It is anticipated to lead to a significant non-cash, pre-tax write-down of between $55 million and $65 million in the forthcoming half-yearly financial disclosure.
Tahua Partners is set to take on existing commitments, such as property leases and the fulfilment of gift cards, online purchases, and returns. Additionally, the firm is committed to retaining the majority of Torpedo7's full-time workforce.
Tahuna's proprietors include Paul and Liz Blackwell, notable for owning the Breakers basketball team and previously managing the Pak’n Save Albany, along with Rob Redwood, who once owned Pak’n Save in Glenn Innes.
Nick Grayston, CEO of The Warehouse Group, remarked that while the sale will markedly affect the fiscal results for the first half of FY24, the net cash impact post-tax is projected to be negligible.
Grayston further stated the group's intention to bolster its flagship brands, including The Warehouse, Warehouse Stationery, and Noel Leeming, in light of Torpedo7's recent performance struggles. He attributed these challenges to reduced consumer demand post-pandemic and a worldwide downturn in the bicycle market, affecting sales and profitability.
Grayston said the decision to divest as a step towards allowing Torpedo7 to rejuvenate under new ownership, with the sale expected to finalise by the end of the following month.
