Is The Warehouse a bargain?

[trendy]

WHS is certainly starting to look to traders "where every one gets a bargain" today - almost sub $4.00 Must add WHS to watchlist bottom can't be to far away, maybe b4 the end of this year. :D

THE KING says you got to take your hat of to thr loyal KIWI`s who keep the support up to Ware with a good turnover this morn and holding above $4 as if they did not want it to fall below the bench mark. :D

Regards THE KING

[Halebop]

Further to my rant on Owner Earnings and Technicals, here is the trend line for Return on Equity. I've used the End of Year shareholders funds figure for calculating ROE rather than average shareholders funds.

Reported profits and ROE %:

1999 +54.053m (31.78%)
2000 +70.053m (39.07%)
2001 +60.753m (23.43%)
2002 +82.206m (26.06%)
2003 +75.399m (21.75%)

Owner Earnings and ROE %:

1999 +52.801m (31.05%)
2000 +65.347m (36.45%)
2001 +30.670m (11.83%)
2002 +71.490m (22.66%)
2003 +36.850m (10.63%)

And return on assets - perhaps a more useful barometer because of the increased debt levels (from 20% of equity to 76% of equity).

Reported Profits as % of Assets

1999 15.63%
2000 18.71%
2001 9.61%
2002 12.50%
2003 9.68%

Owner Earnings as % of Assets

1999 15.27%
2000 17.45%
2001 4.85%
2002 10.87%
2003 4.73%

The trends on these numbers don't prove anything but they certainly aren't flattering either.

...and a useless fact. When the shareprice peaked at $7.90 in 2002 this valued the company at about 33.7 times owner earnings. When the price fell to a low of $3.89 a couple of months ago, this represented a Historical Owner Earnings Multiple of 32.3, about 96% of it's relative peak value in 2002.

I'll be happy to be wrong as I have no money involved either way but I suspect those who think the Warehouse is now at a relative discount might be dissapointed.

[donner]

I have been reading the ABNAmro report on the WHS. It is a very good report I must say and full marks to the author. Admittedly I have only read the Oz section so far.

Two major points of issue regarding the WHS situation were overlooked.

One is the fact that a very large percentage of WHS is held by one man. Over fifty I think. It goes then, that were a rival (WOW or Foodlands) to look to expand in NZ it may be to their advantage to secure a cornerstone holding in WHS rather than start from scratch. Remember Kmart? In return they could offer greater Au market penetration, buying power, removal of competition, increased firepower against its nearest rival and new sites.

To be fair the report did go in to some detail on tie ups with rivals but failed to point out that the cap structure would make this quite an attractive proposition rather than just one of several.

The other is that now WRI has gone to new owners it is logical that a tie up with WHS coudl be on the cards. Should that happen then the previous scenario becomes more likely than not to my mind.

Its easy to be critical but the report was a very good one, so I don't wish to detract from it. In fact I would urge people like Bongo to have a good look at it.

[Dimebag]

Clearly, when valuing a company, we are looking at estimating and valuing the total future flows we can expect the company to generate.

DCF approaches can be used, but often a PE multiple approach is used as a relatively quick and accurate proxy yardstick. What is often not given enough emphaisis is that implicit in the use of PE ratio approach is the assumption that the earnings streams to be valued are perpetuities.

Not all earnings or loss streams are in the nature of a perpetuity. In particular, the losses currently being incurred in Australia, (which are being absorbed and offset by NZ profitability) will not be of perpetual duration.

Either the company will turn Australia around, or the operation will be discontinued. Overwhelmingly, my opinion is that they will have to discontinue the business as I don't believe they will ever earn adequate returns on invested capital in thie market. Infact, I don't even think they will turn a profit.

So the question becomes, how long will WHS's management persist with false hopes and dreams, and ultimately how much will this ill-founded optimism cost shareholders.

WHS is worth:

Value of the NZ operations - estimated PV of interim value to be destroyed in Australia.

The NZ operations are probably worth about 18-20x earnings. To value the Australian losses is somewhat more difficult. Offhand I think WHS NZ is making around $100m pa so NZ is worth $1.8b-$2.0b. (I don't have exact figures on hand - please correct me if I'm wrong).

How much will it cost to close Australia down? What is the value of the interim losses? This is ultimately the question to be asked and arguably more information is required.

But even if we assume it will cost $200m to discontinue, and they lose another $100m before they finally decided to pull the plug, the WHS liability is probably no more than say $300m.

So WHS is probably worth around about NZ$1.5b which suggests they are slightly underpriced at current levels. However, one should remember this fully values the business (would probably price WHS for about a 10%pa return after tax). If you want more than this, obviously you would be prepared to pay less than this.

I wouldn't buy without a view of say 5 years though. But if you do you will probably double your money within that period.

Dimebag (none held)

[mikescott]

Falling share price has been driven by downgrades in recent weeks from several brokers. Australian operations need further write-downs to clear stock and NZ is under pressure from customers' fatigue of buying generally c r a p goods at c r a p prices. No big hurry to buy this dog. [xx(]

[belgarion]

Donner, DB ... quality thoughts.

For my part I'm expecting quite a vicious market re-action to further 'not so good' news. Market darlings like WHS that have almost halved in value in the last 18 months will not have many small or medium holders supporting the share price unless the certs are stuffed in the bottom draw. Many will be Id guess. Longer term holders won't be keen to buy large parcels unless there is more certainty than there is a present.

By certaincy I mean a clear strategy with reagrds Oz. In or out? If out, people like DB will do the maths and support a price level (but at a lower PE than at present Id guess). If in, then volitility will be the name of the game until the proposition becomes clearer. Retailing in Oz is a far tougher proposition than in NZ and the market, from logistics to politics to legalese, is quite different too. I don't think WHS, like many other NZ companies, really understood these differences before they went in.

So, where too? Im looking for either a) WHS bailing in Oz or b) a softening in the retail market sector in Oz to allow WHS to establish a better footing. (The softening may come from one or more Oz competitors going out the back door.) There is a small chance of a third option, a take-over-merger. If so, it'll be messy but ultimately profitable (30%?).

I hold a small few as the start of my pyrimid. The shape of my pyrimid is basically tall and thin, i.e. Im not buying lots and Im buying a few across a wide range. (Unlike TRH, where my pyrimid base was wide and fat, I can't see the govt, or any other big player, coming to the rescue except at bargain basement prices.) If prices get really silly, then a new pyrimid will be in order (I don't expect this though. WHS is too well covered.)

Bought 4.10 ... next buy sub $4.00 ...

BTW .. DB, PE 18-20 can't really be justified to calculate 'value' in the Oz context. In NZ, sure, as our smaller, unsophisticated retail market allows 'new-concept' retailers to grow quickly and with little cash. Not so in Oz. If one uses something more 'realistic' for the sector e.g. 12-15 then things don't look quite so good.

Warehouse Just opened another branch in Forest Lake suburb of Brisbane is this another million a year down the tubes. You would think they would fix the problem before opening new greenfields stores. Crazy Clarks opened a new store at aproximately the same time just about next door.

[belgarion]

Geez ENIGMA, I was hoping you'd come after me like you did on the TRH thread ;) Now I feel I should sell and drop my pyrimid in it's tracks. :)

Seriously tho, Thanks E, will be there next week and so will lunch nearby ;))

edited: will be there in 5 weeks.

Belgarion Very nice Thai resteraunt in Forest lake not far from Warehouse.

[Gryffyn]

Warehouse Australia exit costed at $200m

12.07.2004
By IRENE CHAPPLE
The Warehouse would face a bill of around $200 million if it decided to quit its troubled Australian arm, analysts say.

But the retailer remains defiant, committing itself to Australia until 2006, when it will reassess its viability in the highly competitive market.

The Warehouse paid A$105 million in 2000 for the budget chains Silly Solly's and Clints Crazy Bargains. But this year the investment is expected to clock up an underlying loss of $30 million to $40 million.

An ABN Amro report this month analyses five theoretical scenarios for The Warehouse: a successful turnaround; linking with an Australian partner; downsizing; selling as a going concern; or liquidation.

The report said The Warehouse had underestimated the market and failed to deliver a clear brand offering.

Among other improvements, it needed to convince Australian shoppers of its worth by making its product offering compelling and its catalogues memorable.

The report calculated the "worst-case scenario" - liquidation in Australia - to cost between $400 million and $500 million, equating to $1.31 to $1.64 on a per share basis.

The report said such an exit would be clean but costly and unlikely given competitors such as Woolworths Australia had expressed interest in The Warehouse's assets.

Other analysts say if The Warehouse did decide to quit the market it would most likely do it through asset sales, knocking between $180 million and $250 million off the company's balance sheet. The mid-point of estimates is around the $200 million figure.

Forsyth Barr analyst Jeremy Simpson said the company could move its operations to Queensland, where its distribution centre opened in September last year.

"That would mean less exposure to redundancies and leases and it wouldn't have such a stock problem, because they could ship it back to Queensland."

But another analyst believed scaling down was not a realistic option. The more likely scenarios, he said, were exiting, trading out or finding a joint partner.

The Warehouse finance chief, Luke Bunt, said leaving Australia "is not an option we are considering".

By 2006, said Bunt, "if [the Australian arm] is in profit the options are narrowed to continuation and if it is not in profit the [options] are wider than that but include continuation".

The market has attributed negative value to the Australian arm for months.

[Gryffyn]

WHS talking staying so it's going to continue to drain on funds...

Cantab if it is in trouble in the very low socio-economic areas of Ipswich,Kingston & Woodridge how is it going to be such a success in an area where $500000.00 house prices are not that uncommon.

[Placebo]

From ForBarr's weekly summary:


quote:MHI is a solid long-term
growth story with a proven formula. WHS is cheap at these levels with
it oversold on Australian concerns and the lackluster performance by
management in NZ. The risk remains that it could stay cheap for a
while until sentiment improves. In the past the stock price has moved
very quickly in either direction on a change in sentiment. We think the
next one will be a positive move given the level of uncertainty already
captured in the share price - however the timing is uncertain.

Well either everyone here is a dull-edged pessimist or ForBarr are pi**ing into the wind. Take your pick. They seem to think WHS is a bargain waiting for sentiment to catch up... It is still one of the ForBarr's recommended "buy" stocks.

[Gryffyn]

Depends how pig-headed mght are about Oz. If they continue to pursue it and it costs then price will stay depressed but if Oz picks up or they announce curtailment then it could be all go.

[Halebop]

Well I'm generally down on WHS in terms of value but I actually think Australia could be turned around. It will just cost a lot of capex and more losses. I think the market's patience wouldn't handle it.

Negotiating an equal Joint Venture with an existing player would seem a pragmatic way of solving procurement problems, saving face and restoring some value in Australia. My preferred choice would actually be one of smaller grocery players (particulalrly ALDI) but I suspect results would take too long down this path - even if a JV partner were interested.

Woolworths looks like it might have blinked in the face of a renewed competitive streak from Coles. Perhaps they are an easier touch right now. Their interest in the former Fosters pubs appears almost an unseemly scramble. Or maybe they are just out of practice in the acquisition game?

[bongo66]

WHS in Milford now selling a larger range of foodstuffs and they are all in one area of the store as opposed to the usual scattering.

Big brands: vegemite, sanitarium-peanut butter, cereals, other non-perishables expanded. Other brands Ive never heard of.

Who has seen the Whangerei store? I understand they have a big food section.

Ill be buying more when the SP gets lower. The timing is a hard one to pick though.

200M, ihhchhhhh!!! Bongo

Cantab The Inala residents will not bother to go to Forest Lake to shop at ware house as Inala has one of the best shopping areas in Brisbane. A test by a politician priced a trolley of basic grocieries in Woolworths Forest Lake then the same trolley load on the same day in Woolworths Inala was approximately 15% cheaper. Forest Lake has a reputation as one of the most expensive shopping areas in Brisbane.

[Dimebag]

Bongo

Your tenacity and loyalty to your chosen stocks is truely unique and admirable.

It only makes me wonder how much money you would have made if you had chosen to align yourself with truely quality stocks, rather than mediocre stocks like WHS and RBD.

Dimebag

[whatsup]

One aspect that has been overlooked in Aust(but doesnt seem to have had any effect in NZ though) is the name of the company "The Warehouse" when compared to names of the competition of Target,KMart Woollies, Big W and the like those stores dont project a garbage/bottom end image by name but by association of a purely descriptive name like that MAY put customers off even shopping at the Warehouse as even the bottom end customers/shoppers in Aust dont like to be seen as bottom end, in NZ for some reason it doesnt seem to matter, views anyone!!!!

[Halebop]

Hi Whatsup

I think once a brand is established the name becomes irrelevent - you quickly forget the literal meaning of the words. When I think of brands I either think of my personal experiences with them:

Warehouse: Crappy display, untidy merchandising, imported crud, cheap prices but rarely value for money - and this in "successful" New Zealand!
Smith & Caughey: Average/Good display, tidy merchandising, a mix of qualities and a mix of value trades.
Arano Juice: Mmmmm, sweet nectar of the gods. A feel good bargain.

or if I haven't had a dealing with a particular brand I conjure images or feelings from their marketing / branding, which is I guess what they hope for. (un)Fortunately, I retain this stuff poorly as I watch little TV except movies/DVDs and ignore most print ads. I think many people are inclined to actually give something new a chance when there are few impediments (changing your bank for example can present a bit more of a mental/attitudinal challenge though...)

I wonder how many value impediments Warehouse create in Australia? They create enough here in NZ to dissuade me from making many purchase decisions. From observations some have made here on Sharetrader they seem to break basic rules of retail. I've worked in retail, consulted to retail/service retail companies and franchisors and owned my own retail store. One thing you quickly learn (or go bust) - retail is detail. It is the sum total of doing 200 things 1% better, not a single killer application, that determines your success. My bet is that Morale will be low in Australia. It's hard to build (or turn around) a winning team on losing systems.

Warehouse keep blaming merchandising which is true. But this is not restricted to just procurement. Merchandising runs through every level of a retail company - from Finance to Supply Chain to Sweeping Floors. What brand is the warehouse when they can't keep their stores tidy or their stock of gnomes full and straight on the shelves?

[Gryffyn]

Used to matter here in NZ but as the quality and range of stock increased, incl brand names, average Kiwis got over the snob thing and decided price indeed ruled. These days there is a whole hos of things that I would go to WHS for first as you know they import the same crap as other people but often sell it for less.

It took many years here though.

[Halebop]

I'd have to say though Gryffyn WHS is not the main reason for improved quality and range - I would credit the bulk of this to economic restructuring. The WHS model thrives on lower quality and limited choice. This is how they establish price leadership and gain their margins and economies of scale.

Their simple returns process brilliantly helps manage the quality aspects though. Have you noticed how easy it is to return an item to WHS? There is never a quibble. Just show you bought it from them and you get a refund. No great fuss or any forms to fill in. If they can't still sell it WHS then turns around to the supplier and say "OK - we had $5,675.06 cents of your stuff returned to us during the year. Our account with you starts this year at -$5,675.06".

It quickly focuses the supplier on basic quality issues and costs WHS little to manage (unlike the stupid insurance style "claims" systems that some retailers and distributors operate).

However, go into the Warehouse for a specific item and despite a large aggregate amount of stock and shelving you will often only find one or two different brands or models. More often than not, the brand is one you would not immediately identify with the word "quality". If you know something about the item you are buying, you can normally recognise the corners that have been cut to achieve the price. Many people just pays their moneys and takes their risks.

There is no magic formula for delivering specific levels of price, service and product quality. It simply costs more to introduce more factors. Most people don't spend time calculating the costs and benefits of a $3.99 purchase. WHS relies upon this to dissuade you from going to a different store and picking up a similar but better item for $5.99.

[Benlamnz]

a yeild story is starting to happen here.

[Prophet]

Steady on. 3.6% net div yld is not something for income investors to live on especially when they take into account the risk of AUS pressure on profitablity and hence div payout. Compare WHS with TEL which has a similar div yld paid quarterly and with an increasing div policy and I know where I'd put my money; and thats ignoring other better ylding bluechips like SKC, FBU and CEN all of which have better corporate stories.

I think its quite possible that WHS has a lot further to fall before it becomes attractive.

[clearasmud]

Wonder where the next support is after $4 is breeched?

[foodee]

Ya Prophet
TEL div yield forecast for 2005 10+% gross. Picked up more today.:)

cheers

[zyreon]

WHS.... You're fired

no point holding a languishing laggard

[Prophet]

Right on Foodee. Love TEL or hate them its a story that makes good reading at the moment.

[mikescott]

quote:Originally posted by foodee

Ya Prophet
TEL div yield forecast for 2005 10+% gross. Picked up more today.:)

cheers


Dangerous buying shares on inaccurate information.

Dividend mean forecast for 2005 is 14.5 cps. So yield of 3.625% net or 5.4% gross at $4.00.

[johna]

Yes, but he's talking about TEL and your figures are for WHS!

[easy money]

rns is paying around 15% gross if anyone is interested

[stephen]

Mmm. Did you see the RNS thread? I'm not interested at all...

[Lawso]

WHS up 2c on Wednesday, 1c on Thursday, 5c so far today. Has it hit bottom? Is this a BUY signal? Opinions welcome.

[Prophet]

...3 days don't make a trend in my books. If you're a day trader then you might form a different opinion.

[KJ]

PE around 20-Directors committed to at least another 2 yrs in Aussi-in a downtrend.
Why would you thimk of buying?

[marinesalvor]

a brave buy - I see no sign of turnaround in OZ and massive price competition in NZ - Kmart is starting to do well in East Auckland too

[foodee]

Tried to find one of Phadreus charts on the thread, but none to see.
I think the support line is just above 4.00. Could be a significant slide if this is broken. Any TA guru to comment.

[Burgerbun]

more telling is that Bongo is still commenting on RBD but nowhere to be seen here;)

[Gryffyn]

Look up a few pages C9 - you'll see his staunch support and some reasons to never sell no matter how bad a share is going.

[Phaedrus]

For the life of me, I can't work out what sustains the keen interest some of you have in this stock. Here is WHS making new 4 year lows, in an accelerating downtrend, with a falling On Balance Volume which is also making new lows, and you are looking for buy signals!
Since giving an obvious Sell signal 2 years ago, WHS has offered but a single trading opportunity - the trendline break trade in the latter half of 2003. This exception aside, WHS has been in a series of accelerating downtrends for two years.
I have plotted a 120 day Triangular moving average here which correlates quite well with the trendline break signals. Note that current price action is well below this.
Enough already! Give up!!!!!

http://home.ripway.com/2003-11/39768/WHS3002.gif

[foodee]

Phadreus
That was what I was trying to say but you say it so succinctly!!

disc: have never held WHS

[Burgerbun]

No need ....its a *LONG TERM THANG*

:D:D:D:D:D:D:D:D:D:D:D:D:D:D

C9 was warning of overvalued WHS in the $7s long ago.....and boy was he told where to go.

Over $1,200,000,000 off market cap and shareholders since the Aussie foray.......DISASTER!!!!!!!!!!!!!!!!!!

BTW...Bong and Stolwykk told me Cullen would save this company:D:D:D


who cares about long term things on the NZX???????[xx(]

[duncan macgregor]

This is a lesson we should all pay attention to. Never ever fall in love with a company. we can all make mistakes, learn the lesson and get out. The foolish ones are the people that never learn to move on and defend the position, even make excuses for the company.
The peculiar thing about it all is the number of posts defending losing companies, to the number of posts about winners. In other words if you want to back a winner not much information on the site but plenty on a loser. The tall poppy syndrome is alive and well ,rabbit on about losers and ignore whats winning. I have had my share of mistakes but this never was one of them my stop loss would have saved me ages ago. cheers macdunk

[foodee]

Macdunk

quote:by Macdunk
The peculair thing............
This is a common observation. It is how human nature reacts and cope with suffering, misery, pain, loses, grief etc - by airing and talking about it. Unending examples are on TV(which I hardly watch), newspaper and other media. Tragedies and sad stories make good reading and when everything is sorted the story usually ends something like this ...they live happyly ever after. Good and happy things are usually boring and uneventful.
Gees I am becoming a cynic, although I do suffer in silence sometimes;).
cheers and go the ABs

[trendy]

The advantages of TA over FA :D are so clearly displayed in WHS.

[Burgerbun]

Not true....a PE of 20 with Aussie bleeding is obvious enough, and thats after the shareprice has nearly halved from highs and profit guidance is at lower end of lower forecast.

FA enough

[Gryffyn]

See Greek Tragedy by Phaedrus for an adjunct to this thread.

[pierre]

So, it's time to sell WHS and bravely take my loss of $1.20 per share?:(

Is CEN the place to park the proceeds for a quick(ish) recovery?

Au revoir

[Halebop]

Hi Pierre,

It is brave to take a loss - the long term investing mantra seems so rational and cementing a paper loss feels like an admission of defeat. Nobody knows what the price of WHS will be in 6 months or 6 years time but it is not clearly giving any Technical or Fundnamental buy indicators at the moment and to many is still giving sell indicators.

However, if your money is better allocated somewhere else then the rational thing is to put it somewhere else, loss or not. I can't comment on CEN but there are many alternative candidates out there.

Every one of us is different in terms of personality, risk tolerance, time frames and cash flow needs so advice that fits one person does not mean it fits another. CEN might be good for you and bad for me. Whatever you do, be mindful of some of the comments here from both the Technical Analysts and Fundamental Analysts but remember also that we can be wrong too (or right for the wrong reason which is the same but more palatable in the results!). So consider what others have to say but usually you just need to take your own advice...

[zyreon]

Pierre, another take on it is to think this way:

You no longer have your initial investment.

All you have is your WHS shares worth X amount.

The objective is: to increase the value... right?

SO then the question is, will you increase the value faster by leaving it where it is... or can you increase the value faster by investing else where?

[Phaedrus]

There is really only one question you need to answer Pierre - is WHS, in your opinion, the most promising NZ stock at the moment?

It is all but impossible to be totally objective about a stock once you have taken a position in it. That is why you should decide on your strategy and set stop loss levels etc before you buy.

You could trick yourself by asking the following question - "If I was given $X,000 right now, what stock would I buy?". That's the one you should be holding!

[small fish]

Hi pierre,
I bought warehouse after its first problems with australia were announced. I got in at $4.10 and was stoked when brokers said it was oversold and watched it go to about $6.00. I was guttted as I watched it slide back to where it started as it made up a about 20% of my portfolio. It was a weight of my mind when I sold a couple of months ago.

The way I see it you could pick up an easy 50 cents to a dollar on contact but even if the AGL bid isnt the greatest you are still in a better company than the warehouse with better prospects in the short term. The warehouse won't be going anywhere fast so you can buy them back later on even if it costs you 10 - 20 cents more and you will probably still be on the winning side of the equation. I j

[Oracle]

WHS is certainly not for me.

But we are all different!

As one of our WHS men, & guru's says..."Give me a long term thing, not a meaningless swing". .. whatever that means!

THE KING says amazing here the number of comments from people who Dont own ,wont buy or have nothing to do with Ware but buckets of advice about AUS but never been there and whatever. :D

But the price holds and turnover is reasonable for the Co and Ware takes a lot of Knocks but meanwhile the Paraparaumu store has a loverly time every Day. :)

Regards THE KING

[lucky]

Personally I think the NZ operation is great, stores always busy and car parks full, more growth ahead for sure and a possitive decision about Oz could see this share price haed north again without warning.
Non held

[Gryffyn]

It could Lucky but mgmt have publically committed to Oz for another 2 years so most expect the current sideways to downwars pressure.

[pierre]

Thanks for all the comments folks. I've made my decision and WHS is disappearing from my Share Warehouse on Monday.

Like many of you I think the Oz probs will take time to fix (just like the Oz rugby team) and the NZ operation wont produce sufficient to compensate in the meantime. Not if their (lack of) service levels over here continue as they are.

I'm afraid that the cheap(ish) prices no longer offset the p***ssed off feeling I get from a) trying to find stuff among the shambles and b) waiting in those interminable queues for some disinterested, gum chewing child to take my money.

And as for Warehouse Stationery - words fail me! Stationary is about the speed of most of the staff (if you can find one) and an IQ of around 60 appears to be an ideal qualification if you want to work there.

Apart from that of course it's a wonderful business - I just wont own any of it.

[clearasmud]

You can always buy back Pierre

[Lawso]

WHS up again today to 410 - fourth straight day of gains, tho very small ones. Anyway, I've noted the various comments on this thread and have sold half of my WHS and put the money into CanWest. I figure I can keep an eye on WHS and maybe get back in when there are signs of real recovery. Meanwhile the
money will do more for me in CanWest - fingers crossed!

[Gryffyn]

Good luck with Canwest Lawso - I've got a small stake there too.

[winner69]

Note Big W sales had an outstanding sales result for the year. with sales growing very strongly at 9.8% in the fourth quarter. They also noted the very competitive market

How have WHS performed then?

Still waiting for the announcement WHS will quit Aust

Martha Stewarts shares rocket up 40% when the judge sends her to jail .... WHS shares will do the same when they finally escape from the mess they have got themselves into

[donner]

Too expensive Winner. I think you will see a hybrid of merger, quit and sell. Depending on what state you are talking about.

[Gryffyn]

2 years to wait I think winner.

[marinesalvor]

I dont see what has changed with WHS - its still a basketcase with either 2 years of 200m to go to even get a go/nogo on its future

I'd like to ask all the current buyers.. "What has changed with WHS this week?"

I expect the only thing that has changed is the degree of rationalisation in the heads of the buyers

[whatsup]

Tell me something?, If and when WHS pulls out from Aust it incurrs a large loss (in its accounts) on its decission to close down ,say $200million (stock & lease committments, redundancys etc) and another $100 + mil from its goodwill(written off) paid to Silly Sollies and Crazy Clints in the first place 3 odd years ago ,which will produce a huge accounting loss when brought to book(publish),Under US law when a company has such a loss it cant pay a dividend until that loss is/has been worked through its accounts. Q) does the same apply here in NZ & Aust, 2) Does all of that loss have to be written off against NZ profits before any dividend can be paid/resumed?

[lucky]

The only thing that has changed with WHS this week is it,s shareprice...What more do you want ????? what are you here for ???? nothing goes down forever.

[marinesalvor]

hehehehe lucky - wow - a 8c increase on a $4 share - Buffett would be proud

Afraid I am in the game for better and bigger

[Lawso]

quote: nothing goes down forever

As a longtime holder of RMG, SPE and GEN, Lucky, all I can say is I wish you were right [B)]

[thereslifeafter87]

The goodwill write-off is a capital loss I think, so will not count for tax purposes, and will not be written off against taxable profits. I think.
Thus WHS should be able to pay an imputed dividend.
They are definitely able to pay a dividend, the question is whether or not it will be imputed.


quote:Originally posted by whatsup

Tell me something?, If and when WHS pulls out from Aust it incurrs a large loss (in its accounts) on its decission to close down ,say $200million (stock & lease committments, redundancys etc) and another $100 + mil from its goodwill(written off) paid to Silly Sollies and Crazy Clints in the first place 3 odd years ago ,which will produce a huge accounting loss when brought to book(publish),Under US law when a company has such a loss it cant pay a dividend until that loss is/has been worked through its accounts. Q) does the same apply here in NZ & Aust, 2) Does all of that loss have to be written off against NZ profits before any dividend can be paid/resumed?

[Contrarian]

Gidday
Are Walmart going to buy WHS?

[MeNoBatty]

quote:Originally posted by Contrarian

Gidday
Are Walmart going to buy WHS?


Nice rumor to start!;)

[Burgerbun]

..and still a starving bongo waits...





nah...WHS will enter China before WAL takes them over[:p]:D:D:D

[clearasmud]

Why on Earth would WAL want to buy WHS???

[winner69]

quote:Originally posted by thereslifeafter87

The goodwill write-off is a capital loss I think, so will not count for tax purposes, and will not be written off against taxable profits. I think.
Thus WHS should be able to pay an imputed dividend.
They are definitely able to pay a dividend, the question is whether or not it will be imputed.


quote:Originally posted by whatsup

Tell me something?, If and when WHS pulls out from Aust it incurrs a large loss (in its accounts) on its decission to close down ,say $200million (stock & lease committments, redundancys etc) and another $100 + mil from its goodwill(written off) paid to Silly Sollies and Crazy Clints in the first place 3 odd years ago ,which will produce a huge accounting loss when brought to book(publish),Under US law when a company has such a loss it cant pay a dividend until that loss is/has been worked through its accounts. Q) does the same apply here in NZ & Aust, 2) Does all of that loss have to be written off against NZ profits before any dividend can be paid/resumed?



Writeoffs, even though some are non cash, still go against P&L and would cause a huge loss for WHS

Even wondered why Baycorp didn't pay a dividend last year when they wrote zillions off .........

[donner]

WHS's NZ grocery plans are looking like they may be put under some heat with this ann. from Aldi.

http://www.smh.com.au/articles/2004/07/20/1090089155707.html

[marinesalvor]

Aldi are aggressive players - I occasionally went to my local in UK, though they were never first choice like Tesco or safeway

[Lawso]

quote from Prophet

quote: 3 days don't make a trend in my books

How about six days?

[Scooter]

I would expect better sales from Bay of Plenty area due to floods. I would expect WHS will be doing booming sales

[lucky]

hehehehe lucky - wow - a 8c increase on a $4 share - Buffett would be proud

Afraid I am in the game for better and bigger
--------------------------------------------------
How about 16c marinesalor

[marinesalvor]

superb

[Lawso]

Let's hear it from some of the techies and all those WHS knockers. Is this the start of a trend or what?

Lawso Dead cat bounce

[duncan macgregor]

Lawso,you dont need to have a knowledge of ta to pick this share will not go far until the Aussie problem gets sorted. All the best macdunk

[Shamrock]

Lawso,

For an uptrend, you need to have had a higher high after a higher low.

WHS has just risen off its lowest low - so from here, it's next low must be higher than the previous, then price action must rise above today's price. Only then could you correctly say that WHS was in an uptrend.

Macdunk, agreed, but charts are simply a reflection of that assessment.

[skinny]

I still maintain the view that the WHS is not necessarily a good buy over the longer term even if they sell off their loss making Oz operations. I have it on good authority that Progressive Enterprises and Foodstuffs are looking at setting up hypermarket formats to compete with a range of WHS product types.

The entry of Aldi and possibly Costco will only hasten this strategic shift.

http://www.stuff.co.nz/stuff/0,2106,2977801a13,00.html

When it happens IMO the cosy +10% margins the WHS has enjoyed in NZ will be a thing of the past....great for the consumer, but for the WHS holder [xx(]

[marinesalvor]

wise comments skinny

in the meantime I take my hat off to people bravely trading WHS - well done, its just not for me

[Lawso]

Whatever the knockers and the techies say, I'm in no doubt that a rerating of WHS is under way. Up 8c today to 427, the 7th straight day of modest increases and a rise of about 8% since early last week. I don't believe a dead cat keeps on bouncing for 7 days, Enigma!

A few days ago one broker spoke to me about improved body language coming out of Australia - whatever that means - and today Macquarie Equities advise that their Head of Research ranks WHS as his top pick for the next 12 months.

Of course there's one obvious reason why WHS keeps on rising. It's because I sold half of my holding last week ;). Happy to be still holding a few.

[Longtack]

Yes it has broken through its short term trend, boinged off its $4.00 support,MACD and DMI are positive - one for the TA traders. Now how about some vol from those who believe the brokers - not me though[xx(]!

[Gryffyn]

Good news for you Lawso and Bongo. Maybe time to sell the other half?

[Placebo]

Hold and hope lads, that's the spirit! [:p]

[bongo66]

quote:Originally posted by Placebo

Hold and hope lads, that's the spirit! [:p]


Yep Placebo, you are the false remedy to my problem for it were you you would have sold my holding last week at 4 bucks:D

Im not placing my money on the ruelette wheel that is Mr Market one week to take it off the next-it dont make sense.

B[:X]

[miner]

Hope = Toast.[xx(]

[Gryffyn]

But to the extend the analogy Bongo, leaving money on the roulette wheel indefinitely means you will eventually lose it all as the odds are against you - hence SKC :-)

Good luck.

[bongo66]

The WHS is a business and like all businesses they will eventually encounter problems. Most businesses find their way out.

Im not about to go pulling my money out of a business when it encounters problems-im not a trader(yet!)- I dont do it with my biz i dont do it with the ones im invested in via the stockmarket. Its as simple as that.

RBD is a diff story. I left that because of continued mis-management.

I would argue Griff that keeping my money on the "wheel" is the safer bet as a spin of that same wheel on another company could have me in the same or even a worse position.

B

[Placebo]

Sorry bong :(. As Corp Jones would have said: "They don't like it up 'em, Mr Mainwaring!!" :)


quote:Im not placing my money on the ruelette wheel that is Mr Market one week to take it off the next-it dont make sense.

Actually I agree with this sentiment. But if I had seen my investment of over $7 per share plummet to near $4 I'm not sure what my response would have been. Hopefully I would've read the tealeaves well enough to have exited sooner. Faced with that sort of loss, if I hadn't sold by now, I think that holding and hoping would be the only strategy left... Thankfully I've not been in that position yet.

[k1w1]

Bong, cheer yourself up , have a look at the brave investors in RMG ,
and the maniacs holding options...hope they can swim !

Disclosure: Holding RMG options

[Gryffyn]

As I said Bongo - good luck. I hope you are right and that the problems are just a blip. I do still believe that you could protect more of your wealth by reevaluating investments and other opportunities more often - not trading, just managing investments. Afterall you must have decided at some point that SKC, WHS and FPA were worthy recipient sof your hard earned dosh. Things change and the same process you made when you bought them could be done every so often and it might well result in movements from to other shares.

[marinesalvor]

well done to those riding this up, I still dont see any improvement in WHS OZ... so thats why I have bought in - have always liked the NZ business, but am wary of increased levels of price competition coming to the market

[pierre]

Bon soir

Hmmmm - one has to be very careful evaluating the many and varied opinions in this channel.

Sold my WHS and of course the price is now some 24cents higher. But still happier having my money out of it while they have Oz to contend with. Just should have exited sooner.

...And surely there must be plenty of others like me who are sick to death of the crap stock, crap presentation, crap service and not necessarily bargain prices in NZ. Perhaps this might affect the biz someday - or will most just continue to accept it?

I know none of the customers in my business would stand for even half of it!

[bongo66]

Its only a small holding...and the SP is going down. So what.

My other 2 companies, FPA and SKC are going well up in SP. So what. I aint selling those either.

It dont mean a thing, that market swing, Bongo

[clearasmud]

Bongo,
You originally bgt FPA for a quick trade Now yu appear to have fallen in love with the stock!
Its fuuly priced NOW

[bongo66]

I did a quick trade with a large position in FPA and left a few behind. It looks to be a keeper long-term though, so ill hold.

B

[donner]

A word of advice Bongo, if I may.

Never feel you have to justify yourself to others in this forum.

When you are investing in anything, even if you do pay too much for it in the beginning, you will find that quality remains long after the price and the hughbris[:p][8D] has been forgotten.

[coge]

Clearasmud, would you be so good as to explain how is FPA fully priced ?

[clearasmud]

Bongo- Yea a large exposure to FPA would be silly
Donner-You're assuming FPA is guaranteed to go up because its 'quality'
Coge- At forward PE of 16 IMO FPA is fully priced.Appliance manufacture is a tough game and all the news from FPA lately has been good...

Clearasmud F & P Appliances Getting a lot of bad publicity on Brisbane radio

[Gryffyn]

Because of ... ?

GRYFFYN Poor quality & poor service

[Jim]

WHS is slowly inching up and up

[Contrarian]

Gidday
The price is hitting the 100 dma at the perpendicular.Look for yourself, 6 month chart.

[Seti]

quote:Originally posted by ENIGMA

GRYFFYN Poor quality & poor service


Whilst not wanting to hijack this thread I must rebutt any such negative comments regarding FPA as it comprises more than 50% of my portfolio.
Yes they have had some minor engineering problems with one phase of dishdrawers but the overall quality, design and reliability remains a benchmark in the industry. Observe some of the following posts from Eopinion.

The best washer around!
by ormerlin, Jun 01 '03
Pros: Energy efficient, fast spin speed, top load, stainless tub, intuitive controls, plus many more!
Cons: Nothing notable.
The reviewer who said you will become a spokesperson for the company couldn't be any more true. I am seriously looking at other appliances from Fisher & Paykel, because of my great service from my new washer.

so far, so good
by dsonyay, Mar 11 '04
Pros: QUIET! Efficient. Well engineered. Cleans well.
Cons: Huh? I can't think of anything.

We are very happy with this excellent washer
by emode, Apr 17 '04
Pros: What we wish we purchased last time, and the time before that.
Cons: None - great job F&P!

A technical review of the inside of this washer.
by GLGOFFIN, Dec 13 '03
Pros
This washer is technically in a class by itself
Cons
Not a one, if anything probably not priced high enough.
The Bottom Line
No other washer is worth considering, it has no technical peer.
…I paid $625 for this washer...it is worth twice the money. Other "domestic" manufacturers will continue to put fancy control panels on technically obsolete products...these people put an excellent control panel on an excellent, excellent washer.
Not to wear out an old saying but, literally, one day all washers will be built this way.

Load weighed 3.5 pounds lighter with the GWL11
by greatwasher, Jan 05 '04
Pros: Very Smart machine, cleans great, Quiet, cycle flexibility, barely moist clothes after spin, Price
Cons: Difficult to find in stock. Everyone was sold out after Christmas.

[Placebo]

Seti I don't want to burst your bubble but speaking as a consumer we have a F&P dishwasher and a washing machine, both purchased about 6 years ago. The dishwasher has broken down twice, now the door is bust. Also the washing machine body is rusting through.

Now I am old enough to remember the "good old days" and these things used to last a helluva lot longer. In my book decent whiteware should be lasting at least 10 years. This stuff ain't. You may say I'm a one-off grizzler but I know of others with similar experiences.

This is one patriotic Kiwi consumer who will be turning his back on F&P next time he makes a whiteware purchase (in the not too distant future, I might add!).

[Halebop]

Apologies for interrupting the FPA thread [:p]

WHS is around $4.42 at time of writing - up a gratifying 10% in a very short space of time. Some have hinted this indicates a long awaited turn around. However, without any new intelligence the fundamentals are unchanged and the price reflects a PE of around 22 based on a profit estimate of $62m.

I'd be interested to see a TA's view and chart. I'm picking $4.50 would be a more significant price. The current price seems within it's more recent trading range.

[Seti]

Placebo, anymore disparaging remarks about my beloved FPA and I'll send Prince Charles round with a coffee enema. LOL.:D

But seriously though, dishwasher breakdowns are an industry-wide issue, still mainly due to lack of maintenance by the consumer from drain blockage, element fouling etc. However it hardly seems to be affecting demand for the premium dishdrawers as evident by the recent expansions to the plant in Dunedin.

As far as the rusting washer goes I would contact F&P to see what they can do. It would strike me as unusual for a 6yr old stainless washer to present an oxidisation problem, unless the tub was leaking in which case you would have had a wet floor.

Aside from these matters it would appear F&P have no more quality control issues than any other reputable appliance manufacturer. And it's innovation is still the yardstick by which the other players measure themselves.

Cheers.

Cheers

[Placebo]

Thank you Mr Paykel :D:D

[whatsup]

WHS whatsup!!! Buyer $4.45 Seller $ 4.50 ? I thaught that this share was almost dead and buried so to speak!!!!.

[Halebop]

quote:Originally posted by whatsup

WHS whatsup!!! Buyer $4.45 Seller $ 4.50 ? I thaught that this share was almost dead and buried so to speak!!!!.


I wouldn't touch it. The fundamentals and long term chart speak for themselves. Short term anything can happen, as we saw when they went from $8 to $4 to $6 to $4 again.

[Sideshow Bob]

I am with Pierre - sold up some (not all) of my WHS in favour of CEN recently. The wrong choice given the last couple of weeks, however think longer term, a better investment.

WHS - Woof

[belgarion]

Well, well :) ... Im laughing anyways ... but selling at first (or second sign) of weakness;)

[Capitalist]

I agree Belg. There is a lot of irrational pessimism surrounding this stock. It's hard for it to keep momentum at the moment though.

THE KING says Well Bel you never give up, like the song it said nothing as WELL.. :(

[Lawso]

WHS up 9c today to 450. Is this a breakout? Is this a BUY signal? In the absence of any company news, what do the experts say?

[madmike]

quote:Originally posted by Lawso

WHS up 9c today to 450. Is this a breakout? Is this a BUY signal? In the absence of any company news, what do the experts say?


lawso.......key indicator for this stock is retail sales figure....strong figure out today....

lawso...if the nzd strengthened significantly against the aud...which way do you think the whs shareprice would go????

[Lawso]

1. Obviously an ever-stronger Kiwi means cheaper imports or fatter margins on imports or both - good for WHS and other retailers.

2. With the kiwi around 91c v. AUD, it's already bad news if anyone wants to cash in some Oz investments and bring the money back here.
Equally, any profits from Oz businesses will be worth less when brought back to NZ, though I guess with WHS the money flow is more likely to be in the other direction. I'd hate to see the kiwi strengthen even more, but no doubt it will, thanks to Dr Bonkers - er Bollard.

To answer your question, I don't think any currency movements will affect the shareprice nearly as much as good/weak trading results here and esp. in Oz.

What a long-winded reply. Sorry.

Lawso wait until it gets to the stage that the Kiwi equals more than $1.20 Austalian before Muldoon and Roger Douglas messed with the dollar

[Halebop]

I think $4.50 is a technical breakout at least on the shorter term charts. I wouldn't like to bet it proves a new longer term uptrend. We all know the well lamented story on the longer term chart! WHS has stubbornly resisted dropping below $4.00 but the current price could still be part of the sideways crab it's been following for a little while.

Some fundamental indicators such as the value of the dollar and continued strength of employment data bode well for the NZ operations while lessening the impact of the Australian losses. A few plugs from brokers has probably helped the share price recently too.

I still see superior value elsewhere though and too many negatives too outweigh the merits. Happy to be proved wrong and good luck to holders.

Disclosure: Nil.

[Gryffyn]

Good summary Halebop. Anyone who bought as it approached $4 would be happy. Maybe it's turned a corner but maybe again Oz will drag it back - still too early to tell for the longer term.

[Lawso]

Thanks for that, Halebop. Remarkably perceptive, if I might say so, for a "reclusive long-period comet" (Bill Bryson, Â Short History of Nearly Everything, p.20) ;)

[Placebo]

The comment on retail sales figures has focussed on the non-food retailers, but funnily enough the largest increase in sales came in food, particularly takeaway food (up 25 percent). Says a lot about the local culture but surely a good thing if you are in (or considering) RBD.

While WHS, BGR and PRG all struggle with margins/positioning/troublesome offshore operations, MHI just goes from strength to strength. Up 54 pct this year and still climbing. Go Mike!

[rosey]

has some thing happened fundamentally or are there no better stocks
good on those that got in at $4.00 you were game considering the mood at the time
cheers

http://img.villagephotos.com/p/2004-5/715178/WHS001.gif

[Halebop]

quote:Originally posted by Lawso

Thanks for that, Halebop. Remarkably perceptive, if I might say so, for a "reclusive long-period comet" (Bill Bryson, Â Short History of Nearly Everything, p.20) ;)


:D

[bongo66]

Well, if any of you traders have been watching this one, it has been up and down between 4 bucks and the mid highish 4 buck range several times over the last recent while.

Im sure some of you have have.

B

[belgarion]

The flat track between 4 and 4.50 between March and Aug on rosey's graph is interesting (as is any flat-track) ... either ...

a) this is 'fair' value
b) a larger seller is getting out at a price over time
c) a larger buyer is soaking up at a price over time

I suspect 'c' because that's what I do when I really like something and I like playing with 'out-of-favour' stocks ... Belgarion thinks playing along too might be an idea ...

There! Ive started the rumour ... time to buy. :D

[Gryffyn]

So Belg are you saying you're in and at what price. Please don't tell us months later when the direction is confirmed as per TWR. Genuine disclosures please.

[belgarion]

Gryf ...

Re TWR ... Suggest you go back to the beginning of the TWR thread(s) to see how long Ive been in TWR ... I've been quiet on the TWR thread recently as I feel I don't have much to add and 'gloating' is unseemly (unless its to rub minder's nose in it). Many of the recent TWR posts add nothing except to gloat. Also, I might not be posting as I'd feel guilty about commenting on TWR if I was selling ... which I might be ... ;)

With regards WHS, I've already posted that that I begun a pyrimid as WHS slipped towards 4 dollars. Now I'm beginning to think that the shape of my pyrimid is wrong ... too tall and thin. I will be changing it. I have alotted a sum that I am prepared to invest at each price accross a range. Ive only spent about 5% of it so far. The top of my pyrimid will pick up more between 4.50 and 4.00, buying on the dips. If the price falls below $4.00 then I will buy larger parcels. If it starts going above 4.50 then I'll probably turn my attentions elsewhere and sit on what I have. I am currently in profit with WHS but carry a tight stop-loss.

Enough for you Gryf?

Please do go back and look at the TWR threads. And the TRH ones too. If you do, you will see just how closely I have been following TWR and before that TRH. Also, see the AMP one where I started buying and was ridiculed for doing so. See also the TEL thread for my buy signals. With regards some of my other holds, primarily defensive, e.g. MHI, SCT, GPG, and CNZ, and TEL to an extent, they are just too boring or too well covered to be commented upon much. Others, e.g. FRE, have been bought on recommendation and are stocks that I know little about and so can't really comment much until something happens that makes me take an interest. Some are situation/macro plays, e.g. AFF, where it was just a question of 'when' given the PPCS and RHD fiasco. Others, e.g. CTL, are so thinly traded that I'll hardly comment at all while Im buying. Sometimes, Gryf, it is well worth going back quite some time in a thread ... you'll be suprised who you'll find commenting. There's a couple of posters on this site I keep an eye on. If they are taking an interest, then it'll be for a good reason.

Being a contrarian investor, or bottom feeder if you like, isn't easy but Ive found it far more rewarding that buying 'good' companies that everyone knows about. I prefer companies that are either 'out of the limelight' or 'sorely beaten' down. Supporting the underdogs? Maybe.

[Gryffyn]

No worries Belg - hope your WHS matches TWR performance. I'm still on the WHS sidelines - mainly cause most dosh is allocated already.

I also like buying good companies that have fallen and are in turn around. What do you think of BGR?

[belgarion]

BGR is not amoungst my watchlist at present ... should it be?

Damn you Gryf ... I better take a look now ;)

[zac]

An interesting comparison with WHS in Oz - what are they doing that WHS cannot do?

The Reject Shop upgrades profit
August 18, 2004 - 5:19PM

The Reject Shop, which listed on the Australian Stock Exchange on June 1, 2004, has issued a profit upgrade for the next 12 months after outperforming its 2003/04 prospectus forecast.
Reject Shop, which posted a $5.6 million net profit for the year ended June 30, 2004, beat the previous year's net profit by 21 per cent and overtook the prospectus forecast of $5 million.
The discount variety store's operational targets for the next 12 months include adding nine new stores to its current total of 103 including replacing some of its "Everything $2" stores with The Reject Shop and adding a new level of management.
Managing director Barry Saunders said the result was underpinned by strong comparable store sales growth of 6.1 per cent with total sales lifting 10.4 per cent to $180.6 million.
He said the Gold Coast store, its first venture into Queensland, performed above expectations providing a sound platform for expansion in the state. Mr Saunders said The Reject Shop would add a new level of management to significantly strengthen merchandising. "This investment is set to deliver sales momentum into financial year 2006 and beyond, enabling us to improve the store product mix and profitability," he said.
"We are also committed to developing our management information systems, building on the investment in our data warehouse to better assist our decision making." He said, like other players in the retail sector, the company benefited from the government family grants in June but said the business had been gaining momentum in the previous quarter. "There has been consistent improvement in all aspects of the business," Mr Saunders said.
"I can see us in the current year making further progress and serving some trading areas better."
He said The Reject Shop was looking for around four per cent comparable store growth over the next 12 months. Its shares reached a new high of $2.38 before closing steady at $2.33 on Wednesday

[Gryffyn]

Heh heh heh.

[Gryffyn]

It may not trade in enough volume for you Belg but I think it's a good punt.

[Lawso]

The share price has been pretty strong lately - as high as 465 - on the run-up to the coming annual result announcement. Some say that the "body language coming out of Australia" (whatever that means) is positive and that a good result could see the s p nudging $5. Others (like me) will not be able to resist the opportunity to cut and run at the current price, believing I can put the funds to better use elsewhere.
What do Belgarion and others say?

[k1w1]

Belg, what posters do you reckon are worth keeping an eye on ?

[MPC]

Me

[Burgerbun]

himself if youre unemployed and have nothing else to do in your life.

[Gryffyn]

Warehouse earnings tipped to slide 19pc

08.09.2004
By TINA MORRISON
The Warehouse Group, NZ's biggest retailer, will probably post a 19 per cent slide in full-year earnings as losses widen at its Australian unit.

Net income in the 12 months ended July 31 fell to $60.8 million from $75.4 million a year earlier, according to the median estimate of seven analysts surveyed by Bloomberg. In June, The Warehouse said profit would be at the low end of its $60 million to $70 million forecast.

The Warehouse is trying to underpin sales in NZ, which account for three-quarters of revenue, while stemming losses in Australia that led the company to twice cut profit forecasts last year.

Earlier this year, it said losses in Australia might be as much as A$40 million ($42.8 million).

"Most people are looking for any comment they can provide regarding the outlook, particularly in Australia," said Rickey Ward of Tyndall Investment Managers in Auckland, which holds Warehouse shares. "The company has telegraphed where the result is going to be."

Warehouse shares have fallen 13 per cent this year, lagging an 11 per cent gain in the NZX's benchmark stock index.

Investors want to know when The Warehouse expects its Australian operation to break even, Ward said.

The company blamed poor products and promotions for missing sales targets in Australia, forcing it to slash prices to sell leftover stock.

In May, Warehouse founder Stephen Tindall said he expected an improvement in Australia by Christmas, the busiest period for retailers, after it hired new buyers to source a better range of products.

The Warehouse crossed the Ditch in 2000, paying A$118 million for a chain of 115 discount retail stores.

Estimates for Warehouse earnings range from $59.4 million to $63 million. The company is scheduled to release earnings on Friday.

THE KING says we will all know Friday when the Cat gets out of the BAG.. [8]

[belgarion]

Have plenty of cash and are ready to play ... I just hope the market over-reacts big time ... hopefully lots of small holders will bail if the news is less than positive ... Oh Im an evil man. [}:)]

[Lawso]

Happy to say I bailed out last week @ 463. It would have to go waaaay down before I'd buy in again.

[winner69]

Be alright with WHS today?

Profits at lower end of expectations will be OK and some good words about progress in Australia will set the market alight.

Everyone looking for good news and any inkling (even if you have to read between the lines) could see Gryffyn getting his wish that WHS will rocket ahead of SKC

That pommie bloke in charge sounded a reasonable sort of fella

[marinesalvor]

cant see it rocketing off - surely there are better targets out there than a still limping WHS??

[winner69]

Have to say pretty shocking

Price deflation and rising cost percentages bad mixture and margins badly affected

Outlook? A statement that environment for sales is difficult in NZ and some sectors not as durable as others and the market remains competitive and promotionally driven not good

The 10am webcast could be good for a laugh ... but have a look at the presentation first

[TheBossMan]

Profits down 19%

[Gryffyn]

No statement yet about oz. Rumours are that costco might be moving there as well!

[marinesalvor]

gee did I say limping??

seems like the whole foot has been shot off - sadly self inflicted

THE KING says AUS loss $6 Million which they put on there Credit Card Debt up 5%, 41.5% to 46.6%, But THE KING wants to see how the market reacts first, and watch the webcast at 10.00 am nz time today at there site.. [8D]

[Gryffyn]

quote:Originally posted by winner69

Be alright with WHS today?

Profits at lower end of expectations will be OK and some good words about progress in Australia will set the market alight.

Everyone looking for good news and any inkling (even if you have to read between the lines) could see Gryffyn getting his wish that WHS will rocket ahead of SKC

That pommie bloke in charge sounded a reasonable sort of fella


Not picking a quick turn-around. Still on side-lines till this one settles. Long term I think WHS is better bet but scared of both at the moment.

[Gryffyn]

Market opens and down she goes. Will it get back down to $4 mark?

[Lawso]

Currently down 21 to 422.

On 27/5 I posted that Macquarie Equities' retail analyst rated WHS as his best buying stock at current levels. And on 22/7 I reported that Macq Eq head of research ranked WHS as his top pick for the next 12 months. Yeah right.

Price was then 427.

THE KING says on the Webcast where the CEO was singing "Smoke gets in his Eyes" admited he did not whot to do in AUS AS TO A FIX BUT HOPED FOR SOME CONSOLIDATION or things mite work out in the next couple of years.. [^]

But he did admit that K Mart & Briscoe`s where hurting them in NZ and hoped they would GO some where else and play.. [:p]

The share price has gone down but the Yld is far to low for the risk in place put your money somewhere else and watch the Tread Mill Warehouse from a distance.. :(

[belgarion]

I can only assume that anyone buying WHS is doing so on the basis that they beleive WHS will cast WHS-OZ adrift very soon. I.e. WHS will be valued on it NZ operation alone.

If you believe, as I do, that WHS are going to tough it out in OZ, then buying at current levels is going to lock up money for quite some time.

Thus @ 4.30 odd ...

WHS undervalued if they dumb WHS-OZ

WHS overvalued if they keep WHS-OZ

... what a delemma ... why take the risk buying now?

[marinesalvor]

I am staggered its bounced back up... will we see bigger sellers in the afternoon? eg Australians?

[winner69]

Agree Belg though NZ margins are really under pressure and high capex going forward isn't really generating much extra returns.

And the Oz foray has stuffed the balance sheet.

Intent to say in OZ - hard to say but they spent $14m capex on yellow shaeds but today's presentation has $30M estimated capital for 05 - for new support office and store fit outs.

A new support office? what next - seems permanent to me

THE KING says someone hear is not telling the truth in NZ a 4 page report, in AUS a 25 page report tell differant story more or less but 2 points NTA 103.7 cents and a mention AUS loss 36 million but basic the same story.. [^]

With NTA 103.7 and share price $4.32 a big ask, also there are not many AUS share holders it is all KIWI.. [8D]

[marinesalvor]

thanks your majesty

can only see WHS going in one direction now

[huds]

Looks like all you holders are in for the long haul..

DJ NZ Warehouse's Tindall Says Won't Pull Out Of Australia<WHS.NZ>

WELLINGTON (Dow Jones)--There is no possibility that discount retailer The Warehouse
Group Ltd. (WHS.NZ) will pull out of its loss-making Australian operation, the company's
founder and board member Stephen Tindall said Friday.
Speaking after New Zealand's largest retailer reported a 18.9% fall in full-year net
profit to NZ$61.2 million, partly because of a A$32.2 million loss by its Australian arm,
Tindall said he felt the business had "turned the corner."
Asked if abandoning Australia's Yellow Sheds was an option, Tindall told Dow Jones
Newswires: "I don't think that's a possibility anymore."

[Placebo]

That sounds like the classic football club chairman... "I have full confidence in the manager", while inside the manager is clearing his desk...

[Longtack]

If they keep doing what they've always done they'll get the same result.
So what are they going to do? Ask Michael Hill for starters I hope.;)

[Capitalist]

quote:Originally posted by belgarion

Have plenty of cash and are ready to play ... I just hope the market over-reacts big time ... hopefully lots of small holders will bail if the news is less than positive ... Oh Im an evil man. [}:)]


The sheeple seldom fail to disappoint :D


NZ's Warehouse predicts 34 pct rise in '05 profit

WELLINGTON, Sept 10 (Reuters) - New Zealand's largest listed retailer The Warehouse Ltd. (NZSE: WHS) on Friday forecast a 34 percent rise in net profit for the fiscal 2005 year.

The Warehouse, whose Australian expansion has so far failed to generate profits, earlier posted a 19 percent fall in net profit of NZ$61.2 million ($39.7 million) for the year to July 31, in line with analysts' expectations and company guidance.

In slides released with its result, The Warehouse said the consensus earnings forecast for the 2005 year was NZ$82 million.

[Placebo]

Clutching at straws. They've turned an $11m loss in Aust into a $32m loss. They are haemorrhaging.

New MD hits the deck 1 Oct. Best thing he can do is cut the strings to Aust and consolidate back in NZ.

THE KING says as SEC noted the other day in UK when the Broker went Bust how the investment market in NZ lacks any type of Depth and he was going to trade else where this Warehouse situation is the Good example of wrong money in a wrong company but it its a KIWI so we must stick togeather NO reason just stick togeather.. [^]

Whats the price NOW.. ??? :(

[Gryffyn]

I've heard of the king's English but the above defeats me. Any chance of a translation with punctation king?

THE KING says for you Gryffyn I will translate for you only:-

The Warehouse Shares are to Bloody dear for there yly and your a
Bloody DILL if you BUY..[|)]

[Cooper]

Jeez Forsyth Barr are recommending these as a buy... not in my opinion. If I was a holder I'd sell now before the realisation hits that 1) they ain't going to recover those margins in a hurry , 2) They're committed to a money losing Aus operation, without an escape plan and 3)They have no more room for a large amount of growth.

[belgarion]

Cap,

If the slides are right then buying when we see a evidence of a "real" return to profit growth would be the thing to do. There is sufficient volume for me to "fill my socks" when I want too. Until then ... No point. (BTW $84 still wouldn't justify the current price in my book. A Retailer with a PE Ratio of 20? Only in NZ!)

[skinny]

Amazing resilience in the WHS share price if nothing else!

I was surprised to see it bounce up from $4 and now gob smacked it hasn't crashed back below. Incredible too that even on this forum the punters believe the WHS would be a good buy *if only* they cast adrift their Oz operations. Why???? Excluding the OZ results EPS would have been around 30c or a current p/e of around 14 - OK but not cheap. In addition, their NZ margins are under pressure from increasing competition, labour and energy costs (which I don't see going away soon) AND there is a real risk that sales take a hit next year if the economy slows down as some expect [xx(]

All up I don't see how buying the WHS even for its NZ ops is sensible at todays price levels.

disc: I'm a buyer at around 3.30 ;)

[Halebop]

Agreed Skinny.

There are still some long term positives like their gradual creep into grocery here in NZ but these are outweighed by bunch of investment imperatives that just aren't being met.

On a different tack it's about time they came out and said Australia was for the long haul. You just can't operate a business on a "maybe in 2 years time" basis. This is demoralising for your team and forces your managers to think tactically rather than strategically. It simply required wholesale closure/selloff or a firm line in the sand. WHS would struggle to support it's continued "growth" valuation without the Yellow sheds anyway as there seems only modest or capex intensive growth to be bought in NZ.

WHS NZ is a reasonable quality business but it's about time some of the zealots and accolytes woke up to the concept of relative value. They are still too expensive.

[Sideshow Bob]

With the NZ Dollar heading towards 0.95c against the Ozzie, that $32.2M AUD loss gets better all the time..... :D

Then again, will effectively get less for it when they bail from their Australian operations [:P];)


Sideshow

[Major von Tempsky]

Is the Warehouse a bargain?
Try looking at the gross yield in the newspaper.
4.98%
I'd say they're outrageously expensive.
Try Cap Props or Cen instead.

[belgarion]

Skinny, I'd go with 3.30 ... [}:)]

Waiting 2 years for it to go better ... Only for very long terms players with very deep pockets who are playing very long .... i.e. lots of dosh to place and can't play small ...

WHS is not, given their most recent result, even a medium term play ... sad but true.

[winner69]

Agree Belg

You must have read that presentation on the results - I have never seen such a depressing series of slides

Hardly any positives at all ... in the Red Sheds or the Blue Sheds. let alone the fiasco in Australia.

That presentation showed a full year result - anybody who shows any optimism should break out the last 6 months performance ... that really is spooky

If the shareprice was cheap OK invest in a turnaround story and reap the rewards ... but a turnaround is already priced in.

[whiteheron]

Thank goodness i bailed out earlier !!!!

It will be a long haul until WHS makes any recovery of any consequence and why buy them when there are many better opportunities available ???

Could have been an excellent company except for Australia and the price/advertising war with Briscoes

THE KING says whiteheron what better opportunities available are you refering too , Please name it.. [^]

[winner69]

MAnagement didn't seem to make much of it in NZ but included in the ASX release were details of 4th quarter sales

Red Sheds up 7.3% - same store 4.2%
Stationery down 5.6% with same stores down a whooping 17.3%
Australia down 6.3% - same stores down 7.5%

Hardly call that positive momentum

Even a slight sales increase in the Red Sheds doesn't ensure increased profit - after all even the Red Sheds made less last year than the year before

THE KING says in AUSTRALIA papers gave the old Ware a bit of a knock but over hear the compare Ware with millers & The Reject Shops Companys where they dont have a kind word for any of THEM.. [V]

Today further bad News on TV they told us of a new Big USA company is going to start up Retail in Queensland shortly just what you KIWI`s want to HEAR .. [^]

[Gryffyn]

Kind of why I'm pinning my modest allocation of retail sector money into BGR as best chance for short-medium term recovery growth.

Disc: BGR and would buy WHS sub $4.

THE KING says Gryffyn your right this is the way THE KING looks at the position:-

1. Ware = Cum 4 cents@ share approx $4.35.
2. BGR = Cum 2.75 cents@ share approx $1.36

3 $4.35 > $1.36 = 3 @ 2.75c = 8.25c,BGR.. to 4 cents Ware..

Its in the Bank Book that counts.. [^]

[winner69]

The hype of the full year announcement is over and the reality of a pretty horrible result is starting to show in the shareprice.

Hard to find much positive even in the presentation they did today

With those extremely weak 4th quarter sales no wonder the price is down to 420 ... and more weakness likely


Even at 420 huge amounts of future expectations built into the price - even the free cash flow has been negative for 2 years in a row and with capex est to be $100M over the next 2 years this trend likely to continue

And ROIC down to 12% means WHS not creating much economic profit and currently with a market cap at 3.6 times book value heaps of future economic profit built in.

All I can think what is holding the price up is patriotic kiwis who want to remain invested in this great kiwi company at any cost

[winner69]

Fascinating slide is page 36 - Yellow Sheds Positioning

http://stocknessmonster.com/news-item?S=WHS&E=ASX&N=342196

Obviously trying to differentiate themselves by taking the middle ground

Not being a 1000sqm bargain variety store like Crazy Prices, Milllers, Reject Shop or being 5-5000sqm discount department store like Target, Big W and Kmart BUT being a 3000sqm BUT being a 3000sqm something in between (probably a destination bargain warehouse)

The competitive advantage of the smaller stores is said to be price and excitment while the competitive advantage of the likes of Kmart is range, service, amenities, guarantees, laybys, and branded merchandise.

Doesn't seem to be much competitive advantage at being in the middle by yourself - except maybe destination. And reading what Karyn from Aust has said a few times people just won't go out of their way to get to yellow shed when all the others are in shopping malls or high streets.

You would also have to wonder about the economies of scale relative to both sets of competitors - and probably this is why operating margins are negative.

Interesting and seeing they seem hell bent on making a success of Aust this market positioning (creating an unique market position for themselves) needs to work

I haave my doubts - any other views out there - esp from retail experts

[skinny]

Heh, there is a bright side to all this.
The NZFOX for the WHS starts trading December 2004 - I know which side I'll be on if the share price is anything around today's levels [:p][:0]

[dirty]

what is it going to take to turn these stores around and do the nz mangers have the balls to put arocket up how ever is responsible in aussie and what time frame will it be over only with these answers would i be buying into again ps owned shares from the day of the float

[winner69]

When the likes of The Warehouse keep on harping on about 'price deflation' the first thing that comes to mind how wonderful it is for the consumer. Cheaper and cheaper products and all that.

But when WHS appear to set their selling prices on a mark up basis a mixture of deflationary product price trends and rising payroll and property related costs trigger an unprecedented operating profit squeeze. Price deflation wreaks havoc with the income statement of these sort of companies because product price deflation translates into fewer gross margin dollars to pay for the higher operating expenses such as payroll, electricity, advertising etc (these are going up as stated by WHS).

The only way to overcome this and increase profits is to sell heaps more product. As the Red Sheds 2nd half operating profit was less than the year before I assume that they are not selling enough heaps more.

The price deflation has come about from lower import costs and unprecendented competition but give WHS their due the gross margin percentage in the Red Sheds appears to have has gone up slightly, but not greatly - says to me the lower prices they are paying for products is being passed on, and they are not keeping any of this for themselves.

Just do a few quick sums to convince yourselves of the impact of these two forces. Base case on a 33% gross margin and 23% expenses to sales ratio you make a 10% operating margin. Lower selling prices by 10%, maitain the 33% gross margin, with a 5% increase in expenses and that 10% operating margin falls to just over 6% - and one needs to sell about 15% more stuff to make the same dollars of operating profit.

And as said above WHS is not achieving that at the moment - operating profits were down in all concepts in the second half of the year.

Not really a margin problem they have - real problem is not selling enough stuff or not keeping some of the reduced buying prices for themselves. And that is because of competition so the problem WHS is experiencing must also be hurting the likes of Briscoes as well.

OK posssibly growing market share but in the process destroying shareholder wealth. Maybe they will one day reap the rewards of this extra market share but not in the immediate future as a real concern is WHS state that this proce deflation will continue well into next year.

And by then the spending boom might be over.

[belgarion]

W69 ... I think that those following the US situation are pretty much convinced that serious inflation is on the cards and USD devaluation is their route out of the US's troubles ... If US inflation hits and the USD falls then only economists will win ... be prepared.

[Burgerbun]

quote:Originally posted by belgarion

W69 ... I think that those following the US situation are pretty much convinced that serious inflation is on the cards and USD devaluation is their route out of the US's troubles ... If US inflation hits and the USD falls then only economists will win ... be prepared.




and I thought we were talking about the WHS not the US.

you have a serious US problem there Belg, get a check up dude[xx(]

[Benlamnz]

What are people's views on the slow but sure foray into groceries? I wonder if they can crave up a niche and compete with pak & Save and Countdown as a real alternative grocer. Bought some tuna, bread, cereal, jam, noodles, the new Schick shaver, tiolet papaer etc, and when i got home suddenly I can actually live on what's available from Wharehouse now, save the fresh bits and milk! Those parallel import must give them a margin edge over Pak & Save etc, for example the tuna I bought is make by Wattie Heinz for the Thai market, cost 99c, and surly must cost them a fraction of the cost. The downside is, true to form, when its gone, its gone. there's no continuity with those one off shipments, so its hard to built customer brand loyalty (though i think it would be sad to be a loyal customer of Tasty Jim cornfrakes or nestle waffles from Rio De Janinero.)

[Placebo]

Ha! You got done over on the new Schick shaver. Were giving em away free at the railway station in Welly today... (although only one blade cartridge, I shudder to think what they cost!). So what's the verdict? A case of 2 blades good: 4 blades better?

I doubt the warehouse will ever set up supply lines to handle and distribute goods with a short shelf life (less than a month or so). But most grocery lines they will be fine with.

[winner69]

Amazing HLG improved gross margins 5% points beccause of the strong NZ $. Many other NZ retailers showing improving margins - can't wait to see what PPL report tomorrow.

Coles proud of their improved margins in Target etc and today Colarado in Oz reporting huge profit increase driven from the strong dollar.

Yet those masterful retailers called The Warehouse give the benefits of being able to buy cheaper to the consumer, and don't keep a penny to themselves.

No wonder that even the Red Sheds made less profit in H2 this year compared to the same period the previous year ... less $'s of profit on increased sales from more stores and more footprint.

And not a squeal from WHS shareholders who should have seen the Red Sheds have up to $50M or more on the bottom line than what they achieved. And thats just from the Red Sheds.

Problems in Australia but in real terms bigger problems in NZ

What they made in NZ is not good enough ... your dividend reflects that ... it should have been significant higher.

Will anybody squeal at the AGM? Doubt it because the focus and the excuses will be on Australia

But doesn't it piss you off when your dividend should have been higher ... all gone to the consumers pockets and not into shareholders bank

[Longtack]

winner69 Posted - 23/09/2004 : 8:24:57 PM
--------------------------------------------------------------------------------
But doesn't it piss you off when your dividend should have been higher ... all gone to the consumers pockets and not into shareholders bank.

Is Stephen Tindall trying his hand at social engineering too? I like the concept - but then I'm not a shareholder.[:o)]