Warehouse takes 50% stake in Shane Bradley’s Shop HQ
UPDATE: Scroll to end of story for comments from Warehouse CEO Mark Powell; the company's 2013 annual report revealed it paid $3 million of its 50% stake.
The Warehouse [NZX:WHS] has taken a 50% stake in Shane Bradley’s startup Shop HQ.
Mr Bradley tells NBR ONLINE the deal was closed last week. He had been planning to keep the news “nice and quiet” for a while, but was foiled when a rival tipped off this newspaper.
The Shop HQ founder refuses to put a value on the deal, which The Warehouse did not report to the NZX.
Warehouse CFO Stephen Small won’t talk about the price either, but tells NBR his company would consider disclosing any deal in the double digit millions.
Mr Bradley said the deal came about after a general meeting with Warehouse CEO Mark Powell and Mr Small - one of a series of discussions with various retailers. Neither side will say who made the first approach.
“I’m good at building the front end of websites. The Warehouse has expertise in sourcing product,” Mr Bradley told NBR.
In 2011, Mr Bradley sold his final 25% stake in Idea HQ (the holding company for daily deal site GrabOne and Trade Me rival Sella) to APN in a deal worth between $NZ4.18 million and $NZ12.26 million depending on 12-month earn-outs (yet to be reported by APN).
In March this year, Mr Bradley’s new company, Shop HQ, launched Pet.co.nz – the first in an envisaged series of sites in specialising in a single fast-moving consumer goods (fmcg) category.
Did the Shop HQ founder sell from a position of weakness or strength.
He wouldn’t comment on the site’s revenue, but said it now has 15,000 members “and you become a member by buying something”.
He judged the number a success, enough to justify settiing up a second warehouse across the Tasman, where within two months an Australian version of Pet.co.nz will be launched.
Mr Bradley sees Shop HQ continuing to launch category-specific sites under its 50% Warehouse ownership.
While Mr Bradley earlier intimated he wanted to keep control of Shop HQ for an extended period, he tells NBR he was attracted to the Warehouse by the moves it had made over the past six months, including its $33 million purchase of online retailer Torpedo 7 in March, and its $65 million takeover of Noel Leeming last December.
UPDATE: Warehouse CEO Mark Powell tells NBR ONLINE that Shop HQ will operate independently, and continue to launch "category killer" sites, such as Pets.co.nz.
Earlier today, NBR ONLINE revealed The Warehouse has taken a 50% stake in Shop IQ, the latest startup by GrabOne, Finda and Sella founder Shane Bradley.
"It will definitely remain separate, as will Torpedo 7," Mr Powell says. "People have to realise The Warehouse the brand personality is quite different from The Warehouse the company." Online pure-plays had to be handled differently from The Warehouse and Warehouse Stationery with their "multichannel" strategy.
Mr Powell rejects NBR's assertion his company was on a buying spree, but adds "We'll look at areas where we can be number one or two in any vertical."
Many shareholders will be curious about what percentage of The Warehouse's sales come from online.
Mr Powell refuses to comment on this point, however, and his company provides no breakout data in its financial reports. Sensitivity over competitors getting access to online sales data trumps The Warehouse's desire for transparencey.
In 2011, the company told NBR its online sales were equivalent to those of one large bricks-and-mortar Warehouse store. Its 2012 annual report says online sales were up 63% last year, excluding Torpedo 7.