Is The Warehouse a bargain?

[Lawso]

What do posters think about WHS these days? The shareprice has been in the doldrums for yonks. Is it ever going to recover?

No news out of the coy lately, not since the rather downbeat report on Christmas trading. What about a new CEO? Presumably they are still hunting while ST holds the fort. What about Oz? Any progress there? Has the new boss achieved anything yet? Will the glory days of $7-$8 a share ever return? Is it time to get out?

Many questions - I have no answers but would be interested in others' - whether expert analysis, info or just hunches.

[Risk]

I think its pretty clear that if WHS does well in oz, the shareprice will recover rapidly.
The question is "if"...and only time will tell.

looking at the chart, the current trend is obviously down, but it looks to have some support at $4.00.

is it time to get out? depends on your timeframe...I got out a while back.

[Mr_p_yu]

No.

[craic]

Napier store has had a big make-over. The trend is to higher quality - better selection. There is an obvious intent to outpace Briscoes in a lot of lines. Service seems to have improved at the checkout and the only problem I find is that the car park is usually full. If the company manages to meet standard set by this store, then it must be a good investment.

[Placebo]

....Napier being the centre of the universe after all;)

They are and will continue to be dominant in NZ retailing. The question is can they make money in Australia. Currently the answer appears to be know. They don't appear to have the right formula. Big questions over the niche they are trying to create and whether (or if) they have an exit strategy. It's been 4 years now and still haemorrhaging in Australia.

It looks undervalued but Aussie is a big risk to them. Currently the only retailer I'd touch is MHI. They don't have carparks.

[Lawso]

Placebo: Is the answer know or don't no? ;)

[MeNoBatty]

They have some real problems in Aussie. Has a bad image and this takes a long time to change. Store locations dont help. Only cheap if you think something positive is going to happen there. That positive could be bailing from Aussie. ST talked about giving it another year or two. I dont think we will see much upside on the stock during that time frame.

NZ pretty solid. Dont think we will see much downside either. Dividends all come from NZ cashflow so if they keep the losses in AUssie to a minimum, WHS will probably stay in the $4 - $4.50 range for some time IMHO.

[Gryffyn]

Don't think it's a bargain but it could be good buying when there is not much else out there which isn't close to fully priced.

Possible contender for my funds if I take profit on RBD or TWR or MHI...

[Oracle]

cantab

I also have doubts about their management and efficiencies.
I visited them (in Porirua) on Easter Monday, to buy "golf products at 50% off)." There were some exclusions, but balls were not, so I bought 4 doz, (topflight xl2000) normally $29.95 for $15.00. At the checkout, the balls were not flagged in the system, for the discount, so were probably intended to be excluded, but were not in the advertising. I got the discount. Could not have been much margin left.

The shop was packed. With the number of "specials" occaisions, competition, etc. the customer gets a bargain, but I cannot see that the shareholder ever will.

[Gryffyn]

Cantab, Oracle - a little negative don't you think? The management team build this company up and have made it NZs leading retailer. Oz has been a drain but operations have shown growth in sales. There was profit cutting this season but the WHS came out of it with market share whereas competitors like Briscoes are looking to change entire tack.

Oz has been a disaster but to slag off management et al is to forget all the growth they have given.

I haven't bought back in yet but am becoming tempted - they have turned around other bad positions before, e.g. the new stock system fiasco.

[Liberty]

Gryffyn, to use an analogy - if you buy WHS at the moment, you are picking on reputation and past results, rather than on form.

[Kookaburra]

I agree with Cantab re state of some Australian stores. It was a similar situation of feeling dirty and lacking class in Bundaberg when I visited there last year. However there is a vibrancy still about the NZ stores which must translate into good cashflow and profits. I am not sure what is so wrong that allows the difference in the Aussie operation. Clearly there are a lot more providers of this type in that market but that must also have been true of Walmart in the US in its early days. I am still (naively?) holding onto the belief that it is only a matter of time to get the land of Oz to start working- it was a big expansion to manage right from the outset.

[Gryffyn]

Perhaps I am too tolerant.

I bought WHS at 3.10 many years ago pre-split and watched the split shares go to $7+ when I sold to buy some property (2002). I bought back in at $5.00 last year and watched them fo to $5.80 before I sold on the way down at $4.50. Gains exceed losses and WHS dominat position in NZ has to count for something.

As they can cut and run on Oz anytime, there are two ways for the shares to appreciate and only ongoing losses in Oz as a negative. I guess it depends on whether you think current price reflects ongoing losses or an expectation of a turn-around.

From the useful posts on this thread it doesn't seem that things in Oz will change soon.

However, the perennial question is where to put money when profiting on other shares. How much upside to WHS is there vs downside.

In the medium to longterm this share could add 33% excl divvies without huge risk - most other options look fully valued at present but I'm keen to hear suggestions of better bets, risk notwithstanding.

[Gryffyn]

Lawso, yes, to use the criketing analogy I am picking on class not recent form.

Haven't bought back in yet although they went up 7c this morning :-( Still p1ssing around...

[belgarion]

If you believe the Mgt can turn Oz around, then the share price will fall NO further and in 12 months time 4.30 will look like a bargain.

If you believe the Mgt can NOT turn Oz around, then the share price will fall further but in 24 months time 4.30 will look like a bargain.

Does this make sense? [}:)]

[Burgerbun]

If ever WHS can make it happen over in Aussie and they start taking say market share from Target, Coles will swat them like flies.

They did the same thing to Toys R Us when they tried to enter Aussie with BIG expansion plans. Coles created a whole new concept just to stop their plans and were quite open about their intentions. They created the kids division to ruin Toys R Us plans....and it worked!


If WHS stick their heads up too far, watch them get swatted.

ATM, it seems like they wont be too worried about the WHS Aussie fly yet.

btw....checked out WHS Aussie website, all links on top of page were not working.

[Gryffyn]

Cantab - ok, your cit more directed at Oz than WHS in general and though I haven't seen any stores there myself enough feedback is coming through to say they have a prob there.

I still think the overall mgmt team at WHS have done a bloody good job over the years and that is why a buy is being considered.

Belg - yes, perfect sense.

[Capitalist]

quote:Originally posted by cantab

Last Thursday at 11.30am I happened to visit the WHS store in Gympie, Qld. What a disgrace! The vinyl floor had lots of dirty streaks and was littered with small bits of dust and rubbish all over the place. That rubbish and dirt had been there a while and I would hate to think when the floor was last vacuumed and washed down. The products looked like they had been thrown onto the shelves rather than carefully arranged and product was also left on the floor where it had fallen. Products were mixed up on the shelves and it was an absolute dog's breakfast. There were plenty of staff in what is a small store so there can be no excuses.



Sounds like WHS Botany Downs!! My purist neighbour drives to the Pakuranga store because of the state of it. Botany is always busy though. I visit about once a fortnight. If I want beautiful store layout and customer service I go to Studio of Tableware [:X]. Agree with Belgarion, although I haven't held WHS stock for some time.

[skinny]

Don't hold & don't intend to because I have a feeling even their NZ operations will not be as solid going forward as most people think - the 2 big supermarket chains in NZ are getting into the hypermarket format which will likley erode retail margins and take market share...

Not enough of a bargain yet !

Skinny & others visited one of the bigger Queensland stores today interested in some of the promotional merchandise. Only to find absolutely no stock of approx 90% of the items still early in the promotional period. Lucky i had to go past it or would have been more brassed off if I had to drive a 60km round trip to find out they must of had f*ck all stock of these items. It is getting to stage where nobody except those that live about two doors away will bother to visit an Australian Warehouse store. So the sooner they cut there losses and close the stores in australia the better. It is definitely not worth them keeping the Queensland stores even IMHO.

[boring]

Hold no shares in WHS and don't intend to over the short term at least.

However, the 1 thing that keeps me thinking about this share is Tindell. I think he has that X-Factor, like M Hill, R Brierley and G Hart. Rare leaders who know their craft and can rise phoenix-like after a knock back. They may get burnt, but they survive and come back stronger. So I think anyone buying this share for long-term would be betting on the return of Tindell, like when G Hart got burnt with Burns Philp, M Hill's shoe fiasco and when Brierley lost control of his own company.

... but then again I could be wrong.

[Binklebonk]

One theory as to why the WHS has done so well in NZ has been the leadership culture which has got the best out of their personnell. In Oz, perhaps the problem is as much about changing the culture, I don't think the WHS way is to send someone into a store waving a stick telling people what to do, it is more about encouragement and support to achieve.:)

[marinesalvor]

Went to the Warehouse at Australia Fair in Surfers during easter - NOTHING has improved in the last 2 years - it is the most dismal shop this side of Warsaw - I can see no fix for the australian op - they need to bite bullet and withdraw

Binklebonk The culture in Australia From top to Bottom Is she'll be right no matter what I do so stuff everbody. Usually to get a car serviced properly takes four visits to the dealership.

[danchop]

the reason nz wharehouse has done so well is that nzers buy on PRICE alone and dont give a stuff about quality

Danchop If aussies could buy NZ quality & quantity with the NZ service level the Warehouse would not have a problem in Australia.

[danchop]

my point is nzers will go to the wharehouse and buy a $19.95 drill use it a couple times until it breaks,cant be stuffed taking it back for credit instead of going somewhere first paying $60-$70 for one that lasts,other people in other countries obviously know **** when they see it

[marinesalvor]

danchop - have you seen what they are selling in Oz?? they are in the 2 dollar shop market - nowhere near the NZ WHS level... that level is happily occupied by Kmart and Target

ps - I have built a number of boats - best rechargeable drills I have ever used were the 29.95 COLT ones from WHS - so dont knock them

[Oracle]

Danchop

A simplistic, inaccurate, generalisation.

[craic]

Sunday, my first visit to that great Australian chain of stores that are going head to head with Repco here, Super Cheap Auto. Bought a cheap trolley jack - it broke an hour later - taking it back today on my way to the Warehouse.

[Halebop]

Remember that it took Warehouse about 15 years in NZ to go from $2 shop'esque proportions to general merchandiser to the masses.

Punters banking on a quick turnaround in Australia are not betting on probabilities. A cultural change and market repositioning does not just "happen" in three years.

If WHS's resolve remains firm, I suspect continung poor fundamentals from the Australian business in terms of ROE/ROA and capex needs for some time to come. Despite being a pessimist on the current share price/value quotient, I still believe it is quite possible to turn a in OZ. Expectations just need to be realistic.

[marinesalvor]

Hale - check out the other threads for why WHS went from crap to gold here - it was the introduction of branded goods - goods that they will NEVER have access to

[Halebop]

quote:Originally posted by marinesalvor

Hale - check out the other threads for why WHS went from crap to gold here - it was the introduction of branded goods - goods that they will NEVER have access to


Hmmm, Never is a long time...

I can also imagine that 15-20 years ago the people running Farmers, LD Nathan, DIC Etc might have thought WHS would NEVER leave the $2.00 category NOR be bigger than them...

The WHS has it's work cut out for them and I wouldn't want to bet on their chances of success in Australia (hence I'm not buying their shares at current prices) but with persistence they can duplicate some of the NZ story over in OZ. Their ultimate size will dictate who is willing to supply to them - as was the case in NZ - and as WOW and CML know only too well.

Big W turned over some A$2.5b in 2003 and K Mart (including Officeworks) and Target combined turned over around A$7.0b. I haven't counted Myer because they are re-re-positing themselves at the higher-middle end of the market. Because of it's relatively small size, Big W probably also has the most to lose - perhaps that's why they have been a little more vocal about WHS OZ's pathetic performance?

Despite the relatively (by NZ standards) large size of WHS OZ they are a drop in the proverbial bucket when compared to their largest Australian competitors. However, in contrast with their inability to turn a profit WHS have managed to increase revenues substantially (Up some 17.5% to $460m). With the vengeful demon of higher interest rates and an Australian retail recession looming ominously on the outback horizon, an opportunity arises for a company able to provide that certain value proposition to cash strapped consumers.

It would however take WHS almost 10 years of 20% growth just to be where WOW are today... Capex Anyone? [B)]. Hmmm, shows the value of MHI's regionally progressive, hub and spoke expansion strategy. That Brisbance based distribution centre does not look like the smartest decision WHS have made.

...just a theory anyway. There are too many variables to apply "never" to this one. Not that long ago Bill Gates didn't think much of the internet or computer games...

Disclosure: I don't own any and they are still too expensive!

[Gryffyn]

Nice analysis HB - sums up my current thinking. Never say never but too much risk involved now.

[marinesalvor]

as a key supplier to WHS NZ on their way up I spent a heap of time with them - look and feel of WHS OZ is totally diff - branded goods suppliers wouldnt touch them with a barge pole - they'd probably go to Crazy Clark first (NEVER)

discl - was interested, after last week in Oz definitely NEVER

[skinny]

The reports from Oz from our roving posters suggests to me that its quite likely the WHS is planning to get out of OZ - why else would they let it run down do much [?]

Those harking back to the early days of WHS should also remember that despite the tacky products stores were always clean, promotion was very aggressive and there was good morale with the staff (I actually worked at one of the 1st WHS stores in NZ in 1986).

Getting out of OZ would be great for the share price short-term but again its the NZ operations I think that are really under threat from the hypermarket formats being developed by the 2 big supermarket chains.

I reckon we'll see a meaningless swing but its not a long-term thing !!!!
(been wanting to use that for a while ;))

[airedale]

Hi Skinny, as Duke Ellington said :"it don't mean a thing if it ain't got that swing"..... and as an old jazz fan, I have been waiting to use that one.

[KW]

I am in Melbourne, Victoria - and in my opinion I wouldnt hold out much hope for a turnaround in the Australian stores for the following reasons:
- none of the stores here are close to the inner city, all are way out in the suburbs, which means that in a city the size of Melbourne most people would have to drive miles to even get to the closest one.
- there are other large chains that are mall based, and therefore much easier to shop at (ie. KMart, Reject Shop, $2 Shop, BigW etc). Each large mall has at least 3-4 discount competitors in it, so there is plenty of ability to "shop around" without having to make the effort to drive out to a stand alone store.
- Because of their remote and standalone locations, the stores dont get any foot traffic, so they are dependent on people making a deliberate effort to go to a store.
- However, their merchandising and advertising cannot communicate sufficient value to make a special effort to visit a store. You dont drive half an hour to save $1 on candles, or to buy tacky garden ornaments!!!
- all the inner city suburbs have local street shopping strips, which contain little owner operated discount stores. These are brilliant to shop at when you need the odd thing or two, dead cheap, and you dont have to "leave home" to shop there. In my street strip alone, there are 5 such discount stores!
- KMart offers a "lowest price guaranteed" so they will meet any competitors' advertised price on a product.

In other words, there is no compelling reason to visit a WHS store here. The stores are inconvenient, wont provide enough of a price discount to warrant the time/petrol, and don't have enough stock variety to offer anything radically different. Consequently I've never been inside one :-) (but I am a frequent Kmart and local store shopper!)

In addition Coles/Woolworths have a massive supply chain and buying power to leverage, and the distribution/logistics capability to do everything cheaper than WHS can. Hoping to outgun the big boys here is always a losing battle - smart Aussie people realise this and sell out - usually to NZers as they are the only ones who don't realise that Australia is a totally different kettle of fish!

On another note, The Reject Shop is due to IPO here shortly, they make a profit off a 100 or so stores, and $163m revenue.

Karyn

[marinesalvor]

exactly Karyn - "no compelling reason to visit" completely diff to WHS in NZ where families visit just for fun and to go through the CDs or toys

KW try and get K Mart to honour that guarantee. It made the TV in Brisbane the way they Shilly shallied, pulled stock of the shelves ETC.

[Burgerbun]

Welcome Karyn.

Some good insights there.




Bongo is strangely absent from this thread[:0][?]
This thread really needs you Bong;)!!!!!!!!

[Capitalist]

quote:Originally posted by skinny

The reports from Oz from our roving posters suggests to me that its quite likely the WHS is planning to get out of OZ - why else would they let it run down do much [?]

Those harking back to the early days of WHS should also remember that despite the tacky products stores were always clean, promotion was very aggressive and there was good morale with the staff (I actually worked at one of the 1st WHS stores in NZ in 1986).

Getting out of OZ would be great for the share price short-term but again its the NZ operations I think that are really under threat from the hypermarket formats being developed by the 2 big supermarket chains.

I reckon we'll see a meaningless swing but its not a long-term thing !!!!
(been wanting to use that for a while ;))



There is such negativity (a contrarian indicator ;)) about WHS that offshore Pension Funds are looking at it. Just looking mind you.

[Gryffyn]

Looking to buy or to off-load?

[Capitalist]

To buy Gryffyn. It's pretty beaten down and looking attractive to some.

Capitalist Please who are the bigger fools

[Oracle]

Karyn

I read this post of yours when you first made it, on the other channel, in December last year. I recognised it for its significance for NZ investors, but it got little response, when I highlighted it here!

A good post, then, & now!

[skinny]

quote:Originally posted by Capitalist


quote:Originally posted by skinny

The reports from Oz from our roving posters suggests to me that its quite likely the WHS is planning to get out of OZ - why else would they let it run down do much [?]

Those harking back to the early days of WHS should also remember that despite the tacky products stores were always clean, promotion was very aggressive and there was good morale with the staff (I actually worked at one of the 1st WHS stores in NZ in 1986).

Getting out of OZ would be great for the share price short-term but again its the NZ operations I think that are really under threat from the hypermarket formats being developed by the 2 big supermarket chains.

I reckon we'll see a meaningless swing but its not a long-term thing !!!!
(been wanting to use that for a while ;))



There is such negativity (a contrarian indicator ;)) about WHS that offshore Pension Funds are looking at it. Just looking mind you.


Mmmmm....well I wouldn't completely rule out a meaningless fling [:X]

[marinesalvor]

always thought those offshore pension fund managers were stupid...

[Capitalist]

You won't find many 401k holders complaining after last year. They sure are dumb--just like all those Armageddon touters here about pension plans. Do a search-- about 2 years ago there was a thread that said something like "the disaster we haven't heard about yet" about pension plans. You ppl seem to forget that dealers work very short term--sometimes by the hour.

[Burgerbun]

:D:D:D Cap

add that pension fund meltdown to

hyper inflation

collapse of financial markets

real estate implosion

gold at $450 by end of 03

Japanese style US deflation

and Freddie Mac demise

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

geeeee, who am I talking about[:p];)

morons[:0]

[skinny]

C9 - at least the so-called morons here can string a sentence or two together and get some picks right !

If you want real morons check out most of the US boards [:o)]

Trolling through them I have gained a real appreciation for why the US income distribution is so wide. Having great fun taking from the lower 95th percentile :D:D

THE KING says Skinny could you give us some US board sites.[?]

REgards THE KING

[belgarion]

C9 ... Id be careful ... just about all those things could come to pass ... crunch time is soon.

[Capitalist]

Heh. Posturing dingbats. I luv u C9 :D;)[8D][:I]

We could have a poll for the Nostradumbass award. I reckon the "USD Disaster", or Japanese style deflation. Remember you and I said it wasn't deflation, bur REFLATION. Remember how I was tarred and feathered? LOL :D

[Capitalist]

quote:Originally posted by ENIGMA

Capitalist Please who are the bigger fools


Ooooh er :D You tell me. Next time listen to your Mother [:p][:X]

[skinny]

[:o)] The biggest fools are stateside [:o)] For a real laugh check out the message board on lucent after the panic selling on Wednesday -one person outraged about the "big green meanie" (Greenspan) had me almost falling off my chair. I picked a few up at the bottom :D

http://finance.yahoo.com/q/mb?s=LU

King - you can change the last symbol to check out other companies. motleyfool.com generally has better quality posts than yahoo.

ps - Belgarion - I like the rather ballsy move of you to put back on the macro view trailer !



Skinny - taking the Greenspan view

[Burgerbun]

quote:Originally posted by belgarion

C9 ... Id be careful ... just about all those things could come to pass ... crunch time is soon.
:D:D:D:D:D:D:D:D

come to pass????

03 is gone

US is looking at 4-5% GDP growth this year.

Japan had 12 years of DEFLATION!!!

Freddie MAC UP $5,000,000,000 US

2003 WAS one of the best years ever....INCLUDING JAPAN! up about 45%



you reckon[?]:D

[Capitalist]

quote:Originally posted by skinny


quote:Originally posted by Capitalist


quote:Originally posted by skinny

The reports from Oz from our roving posters suggests to me that its quite likely the WHS is planning to get out of OZ - why else would they let it run down do much [?]

Those harking back to the early days of WHS should also remember that despite the tacky products stores were always clean, promotion was very aggressive and there was good morale with the staff (I actually worked at one of the 1st WHS stores in NZ in 1986).

Getting out of OZ would be great for the share price short-term but again its the NZ operations I think that are really under threat from the hypermarket formats being developed by the 2 big supermarket chains.

I reckon we'll see a meaningless swing but its not a long-term thing !!!!
(been wanting to use that for a while ;))



There is such negativity (a contrarian indicator ;)) about WHS that offshore Pension Funds are looking at it. Just looking mind you.


Mmmmm....well I wouldn't completely rule out a meaningless fling [:X]


Quite right Skinny...you can have a cigarette now :D:D:D

[Gryffyn]

Has anyone calculated a fair value for WHS if they got out of Oz without any return on investments their, i.e. just gave away oz ops?

[Lawso]

There's not a lot of comfort for us WHS shareholders in the half-year report, received today with the int. div. In Oz there was an operating loss of A$11.4m ('02-03 ist half: A$4.5m op. profit). The new CEO and his team are "systematically working through a process to strengthen merchandising and buying." Smith (chairman) and Tindall say the company remains committed to the Australian market, "with an expectation that The Warehouse Australia can at least break even by July 2006. !!!

An operating loss of A$30-40m in Australia is projected for the full year to August '04, with group NPAT forecast at $60-70m ('02-03: $75.4m).

Why do I hang in there, IAM (I ask myself)?

[Gryffyn]

Ask Bongo - he usually has the best long-term reasons.

Price hasn't suffered today though has it?

With Tindalls committment posted like that at least we can plan on no exit strategy which means it's a case of estimating whether they are turning things around or not.

From the mystery shopper posts on this sitr it seems they have a lot of work to do.

Disc: No WHS

[Gryffyn]

Lawso, are you trying to introduce us to a TLA (three letter acronym) every post?

Hoping ST doesn't blot his record with said intrangience.

[Burgerbun]

yip ask Bong...

its gonna destroy Target, Big W and Kmart.

its gonna compete with WAL

its gonna go to China

itll be on the moon one day[:0], US probe now sourcing suitable site.



:D:D:D
right.

give me a short term thang, not a meaningless din.[:p]

[Lawso]

TLA - yes I might use that OFD, Gryffyn.

[FRED]

C9

Gidday. Good to be on the other side of u again today. Just purchased my first ever. Charts have it turning. Tight stop.

FRED

[Burgerbun]

FRED, I was saying the same thing at $7.50 plus.

Its already lost $1.2b off the market cap since then.

good luck.



where are you expecting it to go, and based on what fundamentals?

TA only?

[FRED]

Not that excited about it. Maybe 10-15% in it. Yer mainly TA . All the same I read they sell half the CD's in the country and are about to start song by song digital downloads at thier stores. Half smart I thought.

FRED

Also try putting some Kiwi staff in the stores.

THE KING says Why bother at all when your loseing so much money just buy the baby company called Briscoes and join the Aussie team now in NZ.[:p]:D[:p]

Regards THE KING

[rosey]

with my reckoning if it passes through the $4.50 mark and holds it will indicate the end of a short term down trend. today it opened at $4.41 and closed at $4.48 on 465000 of volumn
also seems to be more volumn movement in first quater of 04 than last half of 03 so maybe people are buying as they think that it is as cheap as it will get
also +DI has risen over -DI indicator so that is positive for what it is worth
maybe phaedrus could show us a chart to confirm this
cheers
Rosey

[zyreon]

here's a quote from the interim report:
"The decline in operating earnings has arisen from poor trading results in Autralia. Weaker than expected sales growth in Australia together with margin deterioration has resulted in an operating loss of $13.0 million, compared with an operating profit of $5.1 million in the prior comparable period. [here's the ..interesting part:] [u]The primary contributing factor has been executional difficulties [?] in merchandising and marketing</u>."

DISC: WHS @ 4.36 [|)]

[MeNoBatty]

Zyreon, i take that to mean that the merchandisers are buying absolute crap and the marketers a) have no idea how to put a positive spin on the crap and b) have no idea how to tweak the NZ story to Aussie conditions. Therefore i take that comment to be a fairly accurate descirption of their troubles. Did you see the article recently about the $5m of furniture they bought but could not sell in AUssie?

[belgarion]

care to elaborate as to what those 'executional difficulties' might be?

[Halebop]

quote:Originally posted by belgarion

care to elaborate as to what those 'executional difficulties' might be?


In english I think it means they bought stuff they couldn't sell. [}:)]

The problem now is that when they advertise good stock nobody visits the store for one of two reasons Example One they will have far to little of it or Two they have got such a name for cr*p nobody thinks it will be worth looking at. There image is that of a Junk store of the lowest class in Australia.

[Lawso]

Cantab's scathing criticism (19/04/04) of The Warehouse outlet in Gympie, Qsld, and some critical comments by others, prompted me to refer the matter to someone high up in WHS. The main points of the reply are worth passing on:

1. He concedes that standards at some of the 125 Australian stores are "not what they should be". The new m d is addressing "numerous issues including advertising tie-up as mentioned in one of the notes".

2. Gympie is an old-format Solly's store of only 800sq m (new format: 2000-3000sq m) and has not yet been reworked into The Warehouse style. It doesn't even have racking!

3. Despite this, it is one of the company's top like-for-like growth stores, between 10-12% YTD.

4. Various changes and upgrades are now under way and "when the Area Manager was in the store last week the changes were described as "absolutely fantastic". Areas being worked on did at the time look ordinary while stock was going up but the store is trading exceptionally well and these changes will assist in improving the growth even more.

5. The Gympie store is making a contribution to profit. It will be replaced by a new-format store but it is not a priority replacement as there are better gains to be made from opening in other locations.

6. My contact suggests the ST comments might have been different if Cantab and others visited some of the new-format such as MacKay, Bundaberg, Maryborough or Hervey Bay - "fine examples of The Warehouse format".

[u] My comment:</u> Bringing the Oz operations, with 125 stores, up to scratch is obviously a huge job - which must raise questions about the strategy when WHS first went in there.

But the main points, surely, are (i) that management is aware of the problems and doing something about them, and (ii) there is no hint at all of giving it up as a bad job and withdrawing from Oz, which would obviously be hugely expensive and a disastrous admission of failure.

[marinesalvor]

Lawso - they cant do the gowth numbers without stock that the customer wants - and they wont get it (see many other posts)

The main problenm is that The Warehouse name and format is the retail nadir in Oz - its the lowest of the low there - a $2 dollar shop... and that percoption will be hard, if not impossible to change

[airedale]

Hi Lawso, interesting post but I disagree that a withdrawal from OZ would be" disastrous admission of failure". It would certainly be an admission of failure in Oz, but disastrous for the company- no I don't think so.They would probably be saving money,not burning it.
Just regard it as a strategic withdrawal if and when it happens.

[marinesalvor]

they should pull out while they still can

[willy_wonker]

If WHS cant make it work in Aussie, where in the world can they make it work for them? What I mean is, what is the next growth opportunity?

[airedale]

Perhaps being the biggest in NZ is as good as it gets.

[marinesalvor]

their aussie stores remind me of GUM in Moscow - so perhaps Russia??

Lawso ask him about the new format store in Booval Ipswich That opened and traded with stock still having Silly Sollys price tags on the stock for the best part of two years. Shows how old the stock was and this was a new store built from the ground up.

[Halebop]

I personally would be more concerned about the 7.6% increase in revenue versus the 8.9% increase in floor space at the Red Sheds here in NZ.

Hopefully it's just one of those occassional "blips" in a trend but if it signifies something about the size and maturity of their NZ market then this will have a more profound affect on the share price than the losses in Australia. I was especially surprised as it seems they had been at pains to stress their quest for market share in NZ. Was this quest actually driven by a realisation of over investment here in NZ?

The blue sheds are still growing at a pace that the historical hypebole surrounding the share price actually deserves. These increases should soon start to translate into reasonable ROA.

Right from the beginning, even when they were profitable, the Australian stores were always going to be a turnaround. I switched my WHS radar off the moment I heard words to the effect of "They will keep their separate identities for the forseeable future". They may as well have said: "We ordered their new stationary last week". I'm not so wise to have forseen the extent of the losses but it quickly became apparent that Australia would turn into a low yielding and capex hungry child.

Unlike many of the naysayers, I think if given the time they will be able to turn it around. They might never earn a decent return on their investment (when including opportunity costs) but it's quite possible for them to earn a reaonable return on assets. A turnaround typically takes at least 5 years. The reasonable return would probably take a decade. So there might be 3 and 7 years respectively left to run on each.

But who has the patience?

[whatsup]

All this talk about a future for Whs wont happen until the really hard actions are made , as the saying says (hard as it seems) "out with the old and in with the new" until this happens who's kidding who?

[Lawso]

NBR of 7/05/04 reports The Warehouse is building a 10,000sq m store at the new Aiport Retail Park on the western side of the Wellington airport runway. It will be the third biggest W in NZ, behind Whangarei and Tauranga. Will be trading before Xmas. About 10 retail outlets are planned for the centre. Are there any other destination shopping centres in that part of Wgtn, I wonder?

So, while we all agree it will be a long time - couple of years at least - before they get it fixed in Oz (if ever!!), WHS still seems to see plenty of upside and room for growth in li'l ol' NZ.

[Gryffyn]

Despite all the recent volitility in the market, esp around retail shares, WHS seems to be leveling out at 430 or just under.

What would you rather buy now - BGR or WHS?

Gryffyn If you had to choose WHS but would far rather invest elsewhere. Both these pups could grow into very big dogs.

[sharebattler]

The concept The Warehouse has in Australia by my observation is quite different from that in New Zealand. Mostly the stores either under the Warehouse banner or those of the discount chains name they purchased are smaller and do not meet the needs of a lot of shoppers who want a one stop buy everything you want type store. The local Wharehouse branded store recently closed after struggling for 18 months, you certainly could not assume that they would have what you wanted before you got into the store to check.
There is also more competition in this field than in New Zealand so they are just one of the pack.

[wsheridan]

From this weeks Independent:

As The Warehouse spreads through suburbs like a virus, it might time to take stock of what's happening to the Wal-Mart chain, the US cut-price megastore blueprint for the ubiquitous Red Sheds. Described by The San Francisco Chronicle as growing like a rapacious weed across America's small towns, destroying rivals in the process, Wal-Mart's next move is to build aircraft carrier-sized stores for cities. Not in the Los Angeles suburb of Inglewood, though, because council refused permission. Wal-Mart was so sure it could override the decision it spent $US1 million on a referendum to win support from the largely black and Latino residents. They rejected the store by a 2-1 vote. They're starting to wise up to the "corporate colossus" the Chronicle says.

[winner69]

Our friend Karyn posted a link on the other channel to a story about the Reject Shop IPO which made a lot of comment about Thw Warehouse ops in Australia.
http://www.brw.com.au/freearticle.aspx?docId=26510

Nothing really new but interesting to hear competitors views on WHS.

Even though those making the comments are biased they are pretty smart people so it must hurt the real Tindall lovers to read the things that Aussies are thinking.

Just rubbing it in The Warehouse is expecting losses for this financial year of up to $40 million. That is an appalling prospect for shareholders, considering the company has spent more than $120 million on its Australian venture, which opened in 2000 when it bought the Crazy Clint's and Silly Solly's chains (which now carry The Warehouse brand)

And the man from Millers "From my perspective, when your competitor is going to lose $30-40 million, then you're engaged in a very severe price war....... and it is not sustainable in the medium term

This bit offers food for thought and reinforces the ST observers views But where The Reject Shop differs from its rivals, and reaps benefits, is in its range and its merchandising style. Most outlets carry about 7000 lines, compared with at least twice that number at The Warehouse. One of the biggest problems The Warehouse has faced in the past two years has been to overbuy many of its products, such as Christmas-specific stock, that it cannot then shift.

Winner 69 The Reject has quite a different stock range to the other discounters as well. Could be quite an interesting float.

[Prophet]

There is an interesting article in this weeks NBR about why WHS might be going wrong in AUS (talks about the nature of suburban shops in AUS). Perhaps it doesn't add to the body of knowledge already established on this thread but relates to a recent trip by a market researcher so is an interesting perspective

Did anyone read the Bryon Gaynor article a while back that talked of a WHS / WRI / Wesfarmers theory for WHS staying in AUS. Basically, a strategy developed by/for Norgate while at Fonterra but not persued because of Fonterras focus on growth in Asia etc. The concept is to persue a tieup of the three and cater to the rural farming market with one stop convenience. It is suspected that Norgate is now persuing WRI in order to develop this strategy.

ST is a smart player and I find it difficult to believe that he's persisting with AUS without the hope of a big payoff. Of course he could be looking to hock it off to WAL when it arrives in AUS about 3 mins after the AU/US FTA is signed. Sell it to them on the proviso that they don't set up in NZ or that WHS becomes their exclusive NZ agents ie. protecting home turf.

OK thats enough creativity from me for one post.:D

[silu]

On paper this guy sounds very promising with an impressive CV.

Auckland, 18 May 2004 - The Warehouse Group has appointed Ian Morrice as
Managing Director and Chief Executive Officer. Mr Morrice is currently
Managing Director, Commercial for United Kingdom-based B&Q Plc, the number
one DIY retailer in Europe and number three DIY retailer worldwide. For the
year 2003/04 B&Q had turnover of 3.9 billion pounds, pre-tax profit of 372
million pounds and 36,000 employees.

[Placebo]

Don't know how you can draw conclusions about his CV from this Silu, all you can tell from this is he works for a successful company!

B & Q certainly is a leader in the UK in big-box retail, so they've chosen a guy from the right market sector. Beyond that... who knows?

Odd that neither Stuff nor Herald websites are carrying stories on this, would have thought the appointment of the long-awaited replacement for the CE of NZ's biggest retailer would merit a story of some sort!! Come on journos!!

[silu]

Placebo,
I drew my conclusion from the full CV as posted to the NZX. I didn't bother posting the whole thing. I have worked in HR and this was just my initial conclusion. But on the other hand professional HR people did hire John Davy;)[}:)]

[MeNoBatty]

Says he was involved in rebranding at B&Q. Lets hope he applies his knowledge in that area to Australian operations.........

[wsheridan]

You might also like to note the other half of this announcement ..... the Warehouse is losing the gm of the Reds Sheds in NZ - David Wilson.

So on the one hand it gets a new md who doesn't understand Australasian markets while at the same time it loses an existing md who has been holding up the business the past three or so years ..... might be a little bit of a "hold" on the stock.

I wonder is Morrice will get to know any of the PRG people while he is here .... he sounds like the sort of person they need in the UK at the moment .... [:o)];)[:o)];)

[Placebo]

Thanks Silu, fair enough

[winner69]

Change of direction for WHS

New man in charge a DIY big box retailer (B&Q)

and the man in charge in Aust an ex DIY big box retailer (Hardwarehouse)

WHS to take on Bunnings and Mitre 10 in the DIY field next

THE KING says it wont help at all, they can put there what they like if they still cant get it right at TAREE AUS such as THE sign RED but too small while the rest of the shop front is Yellow and still on the wrong side of the street for action, and you dont need to be a brain doctor to work it out.[8D]

Watching from Australia THE KING

[Burgerbun]

K..You used to make sense once...before that visit to Sydney.

Maybe Brother C left some DNA on your operating table...

Messages and Spelling getting more cryptic everyday...

Have you been going to 4BOBs lessons?

.......now wheres that sandwich gone[?]

THE KING says C9 i used like you but its been pointed out that your a POOF so please cross me off your Xmas list and so go talk to some of the other members.[}:)]

THE KING

[Burgerbun]

:D:D:D


1.I used TO like you.....
2.YouRE a poof...
3. and SO? go talk to.....[?]

geeeez Your Majesty...you may have to be relieved of your duties.

PS.Im still gonna buy you some marbles to fill your bag:D at Xmas...of course from the WHS.

[zyreon]

Pulchritude possesses soley cutaneous profundity

WHS would make a good Xmas present :P

[Burgerbun]

Zyreon...dats butifull mun...

can I plagurise dat.[:I];)

more than just a beautiful vessel[:X]

[zyreon]

sure can plagurise it [}:)]

thats how i got it in the first place[:o)].

it's a "polysyllabic profundity proverb"

here's another one:
Entities abiding in vitreous domiciles must forebear catipulting petrous projectiles.
(people who live in glass houses should not throw stones)

and one more:
Temporising hominines are consigned to oblivion.
(those who hesitate are lost)

[the above is what happens when people with too much time on their hands invest for the long term]

[Placebo]

If Morrice has the same effect on WHS as he has had on here, WHS is in big trouble:D

[Lawso]

For C9 and Zyreon only - others can ignore.

A single member of the avian race
Locked in the prehensile digit's firm embrace
The mercantile equivalent achieves
Of two, abroad, amid arboreal leaves.

[Gryffyn]

Placebo - want to back up or substantiate your comment?

[zyreon]

touché

a bird in the hand is indeed worth 2 in the bush

or as sammy from the apprentice might put it: 1 bird in a bush is better than 2 birds in a closer bush (??!)

[Placebo]

Major distraction potential, obviously. Morrice is appointed, this thread goes WAY off beam... Or perhaps it's just the whole post-lunch euphoria, low blood sugar thing. Or the looming prospect of punching out to end another day of the howling, yawning empty void we call "work"....

[Gryffyn]

Ah, I thought you may have had some exposure/insight to him in the UK.

This site is all about distractions.

Work - I remember that...

[Placebo]

Nope, no insight there. Although I think I once bought a power drill from B&Q... Very good it is too, a Bosch hammer drill. Great fun on masonry walls...

[Lawso]

zyreon:

Is that bush as in bush or bush as in Bush? Ah, I get the connection - Bird-brain ;)

[Halebop]

Sorry... more Warehouse silliness:

Tindal's Prayer

Our Warehouse, they art a bargain
Hallowed by thy name
Thy kingdom expanded
They will be done - in Australia
As it is - in New Zealand
Give us this day - our daily bargains
And forgive us our poor merchandising
<s>As we forgive those who shoplift against us</s>
And lead us not into further overseas expansion
But deliver us from Kmart and Big W
Amen

...the things that come to us at 6am in the morning [:X]

[Scooter]

I have just visited the flash updated Napier store, and was very disapointed at the following:

A) Floor format too jumbled, but good space now.
B) Seem to be selling close to expiry items of merchandise, i.e. Cocopop Kapows for $4(discounted), expire Jun 04, Indian Sauces (not discounted)that expire May 04.
C) lack of customers
D) Poor presentation of store
E) General product prices seem to be more expensive than competitors

Come on Warehouse, Where is the bargin in that???

Discl, Hold WHS

[Placebo]

Hey Scooter, wouldn't you be more worried if it HAD been full of people, in the middle of the day in the middle of the week? All those good Napier folk are out gainfully working so they can come spend their hard-earned dosh come the weekend. Wouldn't you say that's a good sign for the local economy?

THE KING says Bad news for you Warehouse holders just read a report that NO broker support in Sydney with 2 large ones with a big SELL notice current so not one instution would touch the stock.:(

For information Tower is in the same boat as WHS.

One statement read; This stock is a foreign listing on the ASX and although the company is large it trades infrequent on the ASX.
Thats the company overview so dont hold your breath for AUS help.

Brokers are pushing Harvy Normans HVN price $A2.74 = $NZ3.15,
WHS $A3.86 = $NZ4.44 [some time back].

Like to be able to say nice things that not how the brokers see it.[8D]

Watching from Australia THE KING.

[bongo66]

THE KING says Bad news for you Warehouse holders just read a report that NO broker support in Sydney with 2 large ones with a big SELL notice current so not one instution would touch the stock.

Seems to me then The King that is a very good reason to buy.:D

Going for broke(rs)Bongo

THE KING says Good to hear you bongo but the story i gave is the facts not fiction there is NO AUS support.[8]

It makes me always wonder who is holding up WHS the truth is the solid KIWI people because its in a town near you, thay buy t6he shares and buy the goods and you love it.:D

Nothing wrong with that only it dose not make money for a true investor.[8D]

Watching from Australia THE KING

[bongo66]

The King, seems to me if brokers in OZ dont follow or know much about a company then any decision to pull away seems to me a bit mis- informed.

Regards, bongo

[Oracle]

There has been a number of seemingly well-informed posts on WHS Aus.
Karen's, The King's and others.

But ignore them Bongo, you know it all. There's no one who can can tell you anything about WHS, or RBD.

[boring]

I visited 3 WHS stores whilst in the Sunshine/Gold Coast just to see for myself how they were doing. If I was an Aussie and only experienced WHS in Oz, I probably wouldn't touch the share either.

The WHS store in Southport was located behind and across street from Australia Fair shoppping centre, so had not much foot traffic. Store format was OK, but not busy because everyone was shopping in the Australia Fair mall.

The WHS store in Maroochydore still had the Silly Solley's signage, you had to drive to get to the store and it was a very tired looking store. Not good, in fact quite woeful.

There was a WHS store in the newish Q SupaCentre in Broadbeach. Fairly good location in an outdoor shopping mall that caters to the locals rather than the Gold Coast tourists. This store was tidy and more typical of our stores here. If all WHS stores were like this, then WHS could have a fighting chance.

Target and K Mart have the advantage of having a department store format, well presented product lines, low prices and always in the premium positions within malls. I liken WHS in Oz to be more like Crazy Clints, Price Attack and other cheap and nasty discounters with limited product lines and low quality goods. That's how it feels anyway and doesn't give me confidence that Australians would warm to this type of shopping.

[sharebattler]

boring, I generally agree with your comments but would add that location need not be a do or die criteria for WHS in Australia, in my post on WHS 13/5/04 I did mention that the local WHS closed but I didn't mention that it is being replaced by the former discount tennant of the store who only left because of a rental dispute with the landlord. The basic difference between the two is that WHS in their product range tried to carry too wide a line for the store size hence they had a limited range of everything whereas the other retailer concentrated on clothing and kitchen items with a limited range in other areas.

[Burgerbun]

quote
The WHS store in Maroochydore still had the Silly Solley's signage, you had to drive to get to the store and it was a very tired looking store. Not good, in fact quite woeful.

UNBELIEVABLE!!!!!!![:0] 4 years!

[clearasmud]

I'm not suprised. They have a hugh job replacing all those old stores.
WHS a buy?...not. Not much bang for your buck.

[marinesalvor]

agree with most recent posters - WHS OZ is dismal, and even a broker cant miss the warning signs

[Lawso]

Surely we have to give WHS more time to get it right in Oz. The directors know all the shortcomings and also the cut-throat tactics of Big W and others to try to freeze WHS out. There is a top man as CEO in Oz and the Scotsman, Morrice, new group CEO, sounds like the goods, but doesn't take over until August. All I'm saying is that I'm hanging in there and anyone with cash available could do worse than buy WHS at these prices. YES, I believe WHS is a bargain.

[marinesalvor]

even a top man in OZ cant address the issues they face - they need to accept its not like NZ over there. Their market in OZ consists of Cambodian refugees...

WHS is dead meat over there - staying there will only result in more destructed shareholder value

very disappointed in WHS

[Gryffyn]

MS - do you see no chance whatsoever to turn around the oz ops? Seems too negative. Surely, with time and focus they can implement a sound opertaion over there.

Lawso they have mucked around so long in Australia they will never rescue the brand they would have to start again. Maybee the whorehouse that might be more popular.

[marinesalvor]

Gryf - I just think they have corrupted the brand there - its hard to imagine who would darken the door of a 2 dollar shop on steroids. In the meantime many dollars go out and precious few (at appallingly low margins) are coming in

[Lawso]

Macqurie Equities supports my belief that we should be patient over WHS. An email newsletter this morning says: "Our retail analyst rates WHS as his best buying stock at current levels and believes the management changes will see a major change in NZ and Australia."

[marinesalvor]

well - yer pays yer monies and yer take yer chance Lawso

[winner69]

Millers Retail discount shops stuffed by the interloper from NZ ... shares drop to 4 year low
http://www.smh.com.au/articles/2004/06/01/1086058852249.html

Go The Warehouse ... nothing like hurting the opposition

[Gryffyn]

Sadly these are not the people that WHS really want to be competing with.

[marinesalvor]

exactly Gryf - its the $2 Shop market - and that will send WHS in OZ broke if they continue to play there

[Gryffyn]

But that said MS, WHS started life that way in many of its early NZ stores but has changed its spots.

That might be what they bought over there but maybe they can evolve there too.

Disc - no WHS but considering...

[marinesalvor]

but as I have said a million times on this thread - WHS changed its spots because of the stock they were able to get - eg branded toys, cds and clothing - they cant get the first 2 in OZ - period.

THE KING says the person who wrote winner`s story must return to the shops mentioned and look again, Millers has 1000 shops ,Warehouse has 94 and Reject was just a Mac/bank play and as the man said CLIPED the investors again an NO threat to the Millers or Warehouse.

Back to mil/ware two different types of shops Ware Aus is a JUNK shop scattered all over Vic,NSW and Qld, as to Millers is every shopping and i mean every shopping centre.

What they shoud have said discounts stores and i mean all of them find it hard to beat the majors so they cry a little but investors are greedy buggers all hope to make the kill it wont happed but they will make a living, the time at the moment is just count your DIV`s.[8D]

Watching from Australia THE KING

[willy_wonker]

WHS will shine again. It is all in the timing.

Not if, but when, if you have the fortitue to hold on tight and ride out the waves.

THE KING says God save Willie for he has spoken.:D[B)]:D

WW not much use if it is 2099

[marinesalvor]

have to disagree with you this time WW - GEN or BLT will fly before then

[winner69]

The Warehouse gets more press in the AFR today being the cause of the Millers problems.

A dude from CSFB quoted .... also warned that the exit costs for Warehouse Group, which has said it will get out of the market if it was still unprofitable in 2006, could be between $100 million and $200 million and the broker suggested the expense would curb any aggressive reduction in its store base.

Go The Warehouse ... stuff the competitors good and proper

[marinesalvor]

I like your optimism W69 - buyt cant see it happening

[willy_wonker]

You guys have no faith.

Dont make me let my dog loose and crap all over Stephen Tindles beach house front lawn. By the way, he spend alot of money building his new beach house. :D

[marinesalvor]

an ironic simile actually WW - a dog is the correct term

I suggest WHS do a strategic withdrawal out of OZ - bite the bullet

THE KING says W69 to be fair in Oz Warehouse would NOT be noticed by Mr Average even though its a house hold name in NZ. There are other Co`s that use similar names so dont hold your Oz breath because its the KIWI`s that pay to stay in AUSTRALIA.[8D]:D[8D]

Watching from Ausrralia THE KING

[marinesalvor]

and you hit the nail on the head your majesty... the ave NZ invester thinks that WHS is as important in OZ as it is here and cant understand that WHS is a fleabite over there

[Happy]

I am with WW holding onto my WHS, though it is a pretty sad looking state of affairs. Long term WHS is a good stock. But I do wish that AUS would make its wacc or downscale. I understand that not all areas are losing $s but NSW is particularly bad.

[marinesalvor]

QLD is worse than NSW happy - am embarrassed to see those stores and have them seen as NZ flagships

[zyreon]

so, did they actually think when they made the move to australia? what were their projections?

(as WB says, if the company can not achieve a higher return on ret.earn than it's shareholders could, then it must return that money to its' share holders in form of dividends or share buy-back)

[marinesalvor]

Zyrean - I dont believe they did any substantive research into the dynamics of the OZ market... they thought it was just like NZ and that those silly dimestore thy bought were a cheap way in

there was a reason they were cheap to buy...

[Dimebag]

From the article: Said of the WHS by MRL, regarding the recent discounting activity:


"I have never, ever, in my retail experience seen anything like that except with someone going out of business."

Mr Perlstein said the price war was unsustainable and expected Warehouse's newly appointed chief executive Ian Morrice to change strategy to survive.

Warehouse paid more than $100 million for 115 Crazy Clints and Silly Solly stores four years ago. However, it has missed its sales targets and now expects to make a loss of about $40 million for the 12 months to July. It has been forced to heavily discount prices to sell leftover stock.

WHS will not succeed in Australia. The probability of it succeeding is about as high as the $2 shop toppling the WHS's dominance in NZ. It just isn't going to happen.

It amuses me as to how long people can delude themselves about the real facts, and be so subjective in their analysis. WHS supporters will readily agree that the WHS in NZ has a dominant position that is sustainable and will not be toppled, yet try to insist that similar such dominant, entrenched, and well financed competitors in Australia will fall victim to a weak new entrant.

But that is the great thing about the market. Self delusion will not make you money. The market is a great cross-check on one's rationality, and the quality of ones thinking.

If you dogmatically think you are always right, yet consistently lose money, it may be time to consider listening to others opinions.

With Bongo, as Oracle mentions, never before have I seen somebody so close-minded about the facts, and so steadfast in their beliefs, and so susceptible to long-term self-delusion. But ultimately this must show up eventually in one's results.

The reason the analysts in Australia are rating WHS a sell is because they are more impartial. NZers have for a long time had an unjustified love-affair with WHS, and have been prepared to pay lavish prices for a somewhat average company.

Even now, I can't believe people are saying WHS stock is a bargain. It is more reasonably priced now, but to me it is clear it is anything but cheap. You don't need to look further than simple comparibles of other listed retailers in Australia to see that.

In my view, WHS is likely to continue to disappoint the steadfast punters.

Dimebag
(None held)

[Gryffyn]

Thanks DB - that's one of the better summaries I've seen about why WHS won't turn things around.

If only we could get a senior WHS person to comment...

[Risk]

quote:Originally posted by Dimebag

WHS will not succeed in Australia.... [/br]

that is very subjective...
It may turn out to be true, but unless you have an infallible crystal ball (or insider knowledge) then it is just another opinion.

The WHS does not have to topple its competition in Australia in order to succeed. They just need to make consistent profits, which IS possible with good management decisions, money and time.

In the same way, the $2 shop here in NZ is not going out of business just because they are not the size of the warehouse...

disc: not a WHS holder, but I think that WHS success in Australia is not outside the bounds of possibility.

[donner]

Yes Risk I agree.

Just what is your benchmark of success Dimebag?

Clearly something has to give. It is unsustainable. To the competitors as well.

I cannot believe that every store in OZ is a loss maker for WHS and every store profit makers for the competition.

I would expect a rationlization on both sides at some stage from which WHS can start booking profits and growth.

[Gryffyn]

The beauty of this debate is that ultimately everyone can put their money where their mouth is.

Does anyone know much about shorting in NZ? Can you do it with Access Brokerage?

[Risk]

the time to short WHS was when it broke the long term up trend 2 years ago at around $7. ;)

My understanding is that shorting in NZ is not allowed...but there are ways around it.

[Halebop]

quote:Originally posted by Gryffyn

The beauty of this debate is that ultimately everyone can put their money where their mouth is.

Does anyone know much about shorting in NZ? Can you do it with Access Brokerage?

..and the sad thing is people will forget the opportunity cost of holding so long to be proved right when the price eventually recovers. The price doesn't actually need to go down to prove a poor investment.

I still believe WHS is overpriced but perhaps some of its now ill deserved growth mystique supports the share price?

[Gryffyn]

Spot on HB - every day ya gotta ask, if I had cash in the bank would I buy some of this, why, and how long am I expecting to hold it to realise the why.

Sometimes you sell to protect value and sometimes because there are better opportunities.

[Happy]

DB on your analysis WHS would sky rocket once it closed down Oz, ie the value of NZ is probably in total around $7-8 but aus -$2-3 at present, this of course can't work forever.

All retail formats are either killer apps or slow grinds, the 3 chains from NZ that have succeeded well recently in Aus Michael Hill, Pumpkin Patch and Kathmandu have in turn found the going pretty tough in other international markets.

I admit visiting the WHS store in Bendigo of all places last year while in Melbourne for the World Cup and it wasn't that bad. The problem I saw was that without paralell importing it is hard to get cheaper goods than incumbents so you have to get good targetted product and brand loyalty, which takes a long time.

[winner69]

quote:Originally posted by Happy

DB on your analysis WHS would sky rocket once it closed down Oz, ie the value of NZ is probably in total around $7-8 but aus -$2-3 at present, this of course can't work forever.



Right on mate - the day Tindall says he is walking away from Aust is the day to buy.

Only then will the full value of the NZ operations be appreciated.

Just waiting for that day

[Blinkey]

An old acquaintance once said that Labour was good for business - and hes sooooo right.

Dr Cullen has just doubled the value of WHS shares with his budget.

Where does one think all the extra money is going to be spent.???

Yes - some will go to the TAB and Lotto and McDonalds (but thats going outta fashion)and the breweries (or more correctly up agains the wall in the loo), but much of it will go over the tills at the warehouse.

Time to buy and hold me thinks

[Thaum]

quote:Right on mate - the day Tindall says he is walking away from Aust is the day to buy.

...and in the first minute after the announcement, or more likely through insiders the week beforehand, the price goes up 20%. I took a bite last month for this reason, I think the likelihood of success in Aussie is low, but the core NZ business is going from strength to strength. The risk is how much money they throw at Oz; its a bonus if it works there, but I'd be happy to see them bite the bullet tomorrow and walk.

[belgarion]

Report: Wal-Mart growth often subsidized by taxpayers (http://www.starhq.com/html/localnews/0604/060304WalMart.html)

Perhaps WHS should receive the same?

THE KING says the main story in the Weekend Australia paper was about Warehouse rather not a much talked about subject here in AUS, thinking this would be good and please to hear another point of view I read with glee.:)

Much to my dismay it did not point out any thing different than the usual dribble we all ready have on this thread, But it did put the boot into Millers stores saying Warehouse was undercuting the entire discount industry here in AUS just to survive but also could bring down other chain stores with it, like working on a thin margin of less than 2.3% also pointed out because of the way its done in NZ increased the size of floor space to match NZ other store pointed out there was not enough bis to stand the new floor plates so something got to give, so it ended up by saying Warhouse will be out of AUS by 2006.:D:D

THE END. THE KING

[belgarion]

.... out by 2006? Not if others (e.g. Millers) fail first. ;)

THE KING says Millers will not fail a turnover of near 700 million 1000 stores [small size with 1 or 2 staff.] and a head start on Warehouse with 400 million 94 stores[ with heaps of staff.] all ware is doing is upsetting the apple cart for NO avail.:D

Soon be OUT anyway, meanwhile watching M Hill at work he somehow is packing the stores i watch they hold a free raffle out front of store give some small prize and the people flock into the very small store you got to see it to beleive it.:D

Its how you do it that counts.

Watching from Australia THE KING

[Risk]

is the warehouse holding any aussie barbies outside their stores yet?
...a little innovation goes a long way.

[mikescott]

Next announcement from Warehouse it be 'Miller it be buying Warehouse'?

[zyreon]

minder the directors be having their options expire OOTM that be bad for them {perhaps even a lesson}

http://www.nzherald.co.nz/business/businessstorydisplay.cfm?storyID=3571361&thesection=business&thesubsection=retail&thesecondsubsection=general&thetickercode=WHS

maybe that shall provide them with an incentive to be more effective etc [ hmm interesting price they had for the options! $7]

http://www.engrish.com/image/engrish/beecareful.jpg

[whatsup]

Has anyone else noticed that WHS is slowly slipping down now to 4-25ish?

[Halebop]

The price is not doing anything to pique my interest. If you said $3.25 I might be sniffing around.

[Dimebag]

Its the classic price action you would expect from a company that is widely perceived as being cheap but in fact isn't.

It can't go very far up or done in those circumstances can it?

THE KING notes a steady down ward price trend and not much to hold a higher price with a Yld. 3.3% something the Yld to rise as the price falls its on its way to a larger fall the $3 mark is possible with the AUS story hanging over it head its a game man to buy at these price`s.:(

With Yld below bank int, Ware is a SELL product.[8D]

Watching from Australia WEL 28th June THE KING

[lambton]

Hi THE KING

Cannot disagree a yield below bank rate suggests run as fast as you can. However sometimes when the herd is grazing safely elsewhere it can be rewarding to try the best grass near where the most danger lies - under the trees where the lions love to slumber. What I mean is in a down turn (and we may yet see one) Warehouse tends to grow market share. I would love to see this share hit hard by whatever from left field sooner than later - then would buy hard out hoping not to get eating while doing so.

[Halebop]

On a brighter note it seems retail sales are still strong, despite picks by various experts (and not so experts such as myself) that a decline is in the offing.

Be really interesting to see what an impact the interest rate hikes are now having.

'course, as a contrarian, I hate good news! [}:)]

[Gryffyn]

Mnnn- I read that retail sales were not as strong as expected.

[Capitalist]

Core sales were only down 0.8%-- and that was almost entirely due to supermarkets and grocery, so I don't think we can ring the "bring out ya dead" bell just yet ;)

[winner69]

quote:Originally posted by Capitalist

Core sales were only down 0.8%-- and that was almost entirely due to supermarkets and grocery, so I don't think we can ring the "bring out ya dead" bell just yet ;)


Total sales for April

--- down 0.3% on a seasonally adjusted basis
--- trend series up 0.6%
--- up 9.3% on April last year


I'd say things are booming, in spite of what statisticians say when they start seasonally adjusting stuff and all that. Just look at that graph i linked a few months ago - it's still going up .. up .. up

Read what you want to into any figures - like the latest CPI figure in the USA. Monthly increase of 0.6% ...isn't that an annualised 7.2% rate and everybody thinks alls well

[Happy]

Nice work Winner, shows that people skim releases too often.

THE KING says thanks for the stats dribble on sales at the end of the day it whats in the investors hand call CASH and at the moment Ware div in your hand is below the terrible bank rate so a price fall is to come any time now and the next div handout.[8D]

Look at BGR div rate now above 5% something what would you BUY first unless locked into Ware at a very high price.:D

Watching from Australia WEL 28 June THE KING

[Happy]

The King - if it is hi yield income you want in the short term of course WHS is not going to come up trumps.

Even BGR is too low why don't you look instead at one of the property trusts, 8-9% there is pretty easy plus typically 1-3% pa cap gain.

THE KING says Happy if i wanted to be in a P/trust i would not be bother to talk on this thread, But you must have income but the cream is when your shares climb thats what we like.:D

The div Yld is the barometer to buy or sell so if the Company dose not move price wise income becomes the need in Wares case it is to LOW to the general market[banks]BGR is above and with a chance of capital gain.[8D][8D]

Watching from Australia WEL 28 June THE KING

[Burgerbun]

King...you still think BGR PE is below 10

theres no hope for you man:D

You guys said it was a bargain at $1.53.
C9 DID suggest MHI, but you and WW were much too in love

[Gryffyn]

WHS
29/06/2004
GENERAL

REL: 0907 HRS The Warehouse Group Limited

GENERAL: WHS: Change in reporting quarterly sales

29th June, 2004

Change in reporting quarterly sales

The Board of Directors of The Warehouse Group Limited ("the company") has
determined that in future, the second and fourth quarter sales releases will
be incorporated in the interim and preliminary full year announcements. The
company will continue to separately report its first and third quarter sales
to the market.

Previously the company made four quarterly sales releases as well as the
interim and preliminary full year announcements.

In making this change, Keith R Smith Chairman of The Warehouse Group Limited
said, "Because the company releases its interim and preliminary annual
results within five to six weeks of the second and fourth quarter, the Board
considered that it was in the best interest of shareholders to combine the
sales and earnings result."

"As second quarter sales contains the important Christmas trading period, an
announcement on sales alone without reference to profitability could result
in misinterpretation by the market. Directors considered that it was
sensible to combine the sales and earnings release in order that the market
understood how sales translated into earnings."

The company recognises its obligations to the financial markets under
continuous disclosure and will comment on prospective earnings if analysts'
consensus forecasts of earnings vary from company forecasts by more than 10%.

The company confirms earlier earnings guidance that it is tracking towards
the low end of the $60m to $70m NPAT range provided to the market on 27th
February 2004. Earnings guidance is provided subject to there being no
changes in the present business, competitive and economic climate in New
Zealand and Australia.

The preliminary full year results for the financial year ended 1 August 2004
will be made on Friday 10th September 2004.
End CA:00101958 For:WHS Type:GENERAL Time:2004-06-29:09:07:10

[Gryffyn]

Still not looking good is it? Low end !!!

Disc: None

[marinesalvor]

ok - anyone really impressed by this announcement - a similar trick to changing balance dates etc...

[Risk]

sounds like they're trying to delay bad news.

[Scooter]

Titanic

[Gryffyn]

Makes sense but there certainly was no goos-spin put on it.

[madmike]

quote:Originally posted by marinesalvor

ok - anyone really impressed by this announcement - a similar trick to changing balance dates etc...


this is not good...it does not conform with continuous disclosure. to disclose according to market expectation ie
"(the company) will comment on prospective earnings if analysts'
consensus forecasts of earnings vary from company forecasts by more than 10%."
is just not good enough.
why is it up to the whs board to determine that a 10% variance is the deciding factor...why not 9% or 5%!!??? what is the cost of a market disclosure anyway???

the implication....
margins are tightening up severely. with aust. bleeding i guess NPAT to be less than 62m

[marinesalvor]

its really not good overall

its ostrich type reporting - and yes Madmike - I would be interested to have a legal idea vs continuous disclosure

[Halebop]

WHS chart looks weak to me. Can any of our TA's post on resistance levels and the big picture?

[Gryffyn]

It seems to be testing new lows for support as the non-good news continues.

Not great news on the retail front coming may push it below $4 soon methinks. Then it will be getting very tempting.

THE KING says its been a time comming but the chocks are out and on the slipway this mean the Div yeild is on the rise a big drop to get it to 5.5%.

Watching from Paraparaumu still NO compute. THE KING

[silu]

I had a few WHS until today. Sold out as $4.20 was broken too easily. I am sure that this stock won't go anywhere soon. I initially invested because I had the hunch that they are going to do something dramatically with their OZ operations. I can't see anything at this front happening right now and made the decision to sell.

[truedragon]

sounds like good dicipline to me silu.
I should do the same with my RBD..

[Gryffyn]

TD - esp as they have surged to mid 120's

Silu - good move imho, that money will work harder for you somewhere else till the picture is clearer at WHS

[silu]

quote:Originally posted by truedragon

sounds like good dicipline to me silu.
I should do the same with my RBD..


It took me years and many mistakes [B)] to create a discipline and to realise that emotions should be detached from investing. If I am wrong I should admit it and not have pride messing up my decisions[}:)]

[marinesalvor]

well done Silu...
I have always wanted WHS shares - but I think its a falling knife, I love WHS NZ, but OZ is a millstone that will drown them
So am buying elsewhere instead

[Gryffyn]

Door opens to more migrants
06 July 2004
By COLIN ESPINER

The Government is raising the cap on the number of new migrants allowed into the country and has instructed the Immigration Service to approve more applications as the labour and skills shortage continues to bite.


Six months after the introduction of tough regulations that require migrants to demonstrate university-standard English and to lodge "expressions of interest" for residency, the number of migrants wanting to move to New Zealand has declined sharply.

Now the Government is set to lower the "pass mark" for migrants and will launch a marketing campaign aimed at skilled migrants who speak good English and who it considers will settle into the community.

National is calling the collapse in skilled migration in particular a disaster, saying it is a serious threat to New Zealand's economy.

Immigration Service figures show that total applications for residency fell from a peak of 4500 last July to 2699 in December, when the new policy was announced.

In January applications fell to 2031 and to 1828 for February, before stabilising at about 2200 in March and April. Applications from some Asian countries have halved since the English language requirements were introduced.

National's immigration spokesman Wayne Mapp said Immigration Service figures since May indicated numbers had dropped further. In the past three months 1198 people had lodged an expression of interest in migrating to New Zealand under the skilled migrant category, Mr Mapp said.

"That's out of a maximum annual quota of 28,000. Clearly the Government's new immigration system isn't working. The change has been symbolic and has done serious damage to our image overseas," he said.

"Unless we take a realistic view, there is no chance of attracting sufficient numbers of skilled migrants. The disgraceful state of our immigration policy is harming our ability to attract high-quality migrants."

Immigration Minister Paul Swain said the Government was focusing on quality, not quantity. He put the decline down to a reduction in the average family size of applicants, the lapsing of "lower-quality applications" when the new scheme came in last December, and improved detection of fraudulent applications.

New Zealand would accept up to 50,000 migrants in the year ending June 2005, Mr Swain said - up from 45,000 at present.

In the year just ended, New Zealand approved 39,000 residency applications.

Mr Swain signalled the service would lower the benchmark for acceptance. "Given New Zealand's tight labour market and demand both for and from skilled workers, the Immigration Service will be aiming to approve applications to the upper end of the range."

Immigration was a balancing act between stimulating the economy and recognising New Zealand's ability to absorb new migrants, he said.

Under New Zealand's new points system, applications are assessed against a range of requirements and ranked.

The service had a benchmark in January of 190 points for acceptance but this has been lowered to 150. As the pass mark dropped and the marketing strategy kicked in the number of applications from migrants was expected to rise, Mr Swain said.

Since the beginning of the year, 6684 expressions of interest had been received. About 3800 had been accepted, covering 9216 people. About 1200 invitations to apply had been sent and 183 applications approved, he said.

[Gryffyn]

If more eventuate, it will be good for WHS and retail in general.

[marinesalvor]

and good for Labour's vote as most new immigrants appreciate the governements largesse

[Gryffyn]

Another good point - although National seem to now be attacking Lab for not letting in enough so they will hardly be able to complain. Methinks DB will have to open the tap on immigration to fund some of his policies if he gets in but of course that wouldn't sit with Winston. Bit off topic mnow.

WHS may be worth looking at at aroudn $4 but still waiting for the first bit of good news.

[Gryffyn]

WHS
06/07/2004
RELINT

REL: 0850 HRS The Warehouse Group Limited

RELINT: WHS: Disclosure of Directors and Officers Relevant Interests

DISCLOSURE NOTICE
Disclosure of Directors and Officers Relevant Interests
(Section 19T, Securities Markets Act 1988)

A. Disclosure obligation (tick box to note which disclosure obligation
applies)

Ongoing disclosure

B. Preliminary
1. Name Luke Bunt
2. NZX company code of issuer WHS
Name of issuer The Warehouse Group Limited
3. Name of related body corporate (if applicable)
4. Position you hold in the issuer Chief Financial Officer
5. Date of this disclosure notice 6-Jul-04

C. Nature of relevant interest (Relevant Interest 5)
6. Name of registered holder(s) of security (as required by regulation 6A(b)
or regulation 7(b)) The Warehouse Management Trustees Co Ltd
7. Class and type of security (as required by regulation 6B or regulation 8)
Ordinary shares
8. Nature of relevant interest in security (as required by regulation 6A (a)
or regulation 7(a)) Trustee, Non-beneficial interest

E. Transaction (for ongoing disclosure)
10. Date of last disclosure (as required by regulation 13) 3 May
04
11. Date(s) of acquisition(s) or disposal(s) (as required by regulation 9)
Various dates up to and incl 30 June 2004
12. Number of transactions (as required by regulation 12(2), if applicable)
Various
13. Nature or type of transaction (as required by regulation 11(1)(a))
Off-market transfer of shares to / from team members under the staff share
schemes administered by the Trustee of The Warehouse
14. Consideration (as required by regulation 10) Range $1.30 -
$4.89
15. Number of securities held prior, set out by class and type (as required
by regulation 8) 2,937,645
16. Number of securities subject to acquisition or disposal (as required by
regulation 11(1)(b)) 306,939

F. Extent of relevant interest
17. Number of securities held now, set out by class and type (as required by
regulation 6B or regulation 8) 2,630,706
End CA:00102273 For:WHS Type:RELINT Time:2004-07-06:08:50:40

[whatsup]

Wheres WHS headed???? sub $4.00?

[marinesalvor]

cant see any other direction....

[Lawso]

Still sliding. Looks like closing at 410. Must surely be a BUY at around $4. What do others think?

[Placebo]

Check the WHS Chart thread...

[Lawso]

Thanks, P. Hadn't realised good old Phaedrus had started this. We owe him, as usual.

[quartzpurple]

Gryffyn
Do you want to elaborate why you posted the announcement?

Lawso No Definately not a buy at $4.00 I have personally seen the mess in Australia.

[skinny]

I reckon its not cheap enough yet - I'm a buyer at around $3.60 - or a p/e under 15. See the FA debate on this channel the last time the WHS got to around the $4 mark (in Jan this year) for further elaboration...

It will be quite interesting to see what happens as it approaches $4. The last time it sparked a rally up to $5, this time perhaps the punters will be a bit more wary?

[Gryffyn]

QP - just a heads up in case anyone hadn't seen the reason for that vol of shares.

[belgarion]

Belgarion has begun his pyramid ;)

[Long Strangle]

Now living in Australia & have to say the WHS is in big trouble over here. I feel that they will struggle to compete in the long term. Be careful with this one. For what it's worth. LS.

[Halebop]

I'm with you Skinny. I'd consider WHS at low to mid $3's. NZ less their debt should be worth well more than this but Australia is most likely worth well less than zero right now. I'd want a margin of error for my risk.

It will be interesting to see the next results. Australia might prove a useful smokescreen (for scavengers and WHS management alike). We all know it's numbers will be bad anyway. The real story will be how NZ is holding up. With the Australian operations looking bad for them any whiff of NZ weakness will be punished. Lots of fun whatever the oucome!

[clearasmud]

No suprise at all to be reading this:
6/7/04
Star performer was Fletcher Building, which surged 2.4 per cent, 11c, to 469 - its highest level in nearly seven years. There were rumours of an imminent acquisition but the company would not confirm.

Market leader Telecom was also also a supporting influence with a 4c gain to 587 - just three cents off a 16 month high. Turnover was solid at $43 million as was the market's due to the long weekend in the United States.

On the other side of the ledger, Contact Energy fell 17c to 578. It gave up some of its recent gains on nervousness about how the bidding will go for control. There is speculation bids close tomorrow for Edison Mission's 51 per cent stake, which might spark a full takeover.

The Warehouse slumped 6c to 411 - its lowest point in over four years. Goldman Sachs JBWere broker Murray Rutherford said the company's recent briefing on cashflows had failed to allay analysts concerns.

"It showed what everyone knew - that Australia is quite demanding of capital. Clearly the market is not even giving them the benefit of the value of the New Zealand operation, which is far in excess of where the current share price is."

Last week, The Warehouse restated that its full year earnings would be at the lower end of a downwardly revised forecast

[Gryffyn]

However:

"...giving them the benefit of the value of the New Zealand operation, which is far in excess of where the current share price is."

is encouraging. For risk takers only though at this point.

[marinesalvor]

well - I guess even risk takers need a better understanding of how much WHS OZ is sucking out of the otherwise good NZ operation

[zyreon]

WHS is the only share in my growth/longer term portfolio that is languishing in the red (all others have rised swimmingly). And I know the reason why, which is significant to everyone out there: "I don't know the specific reasoning behind the purchase" (i.e. all the other purchases were made on the basis of strong and valid reasoning)

but then again maybe mr market is trying to fool me ;)

[Gryffyn]

The question is why have you kept it so long during its downward trek?

THE KING says he did his bit yesterday and spent $100 on a small portable radio /CD it all helps. :D

Across from Ware is BGR new store riseing out of the ground as opposition in Paraparaumu. [8D]

Regards THE KING

[Lawso]

I'm doing my bit, too, Your Majesty. Needed a new frying pan. Went to a fancy kitchen store in Ponce-onby yesterday. Prices for a medium-sized pan were from $149 to over $300. They came from France, Germany etc. So went to the Warehouse and bought a perfectly satisfactory one, made in China, for $12.99.
Incidentally, the Newmarket store was packed, on a Tuesday afternoon!
King: Here in Mt Wellington there is a Briscoes, plus Rebel Sports & Harvey Norman, in the same small shopping centre as WHS. They don't seem to have hurt WHS, which was there first. In fact, I think they all help each other by stimulating shopper numbers.

[zyreon]

my 2 invisbible chinese friends tell me not to sell yet, their names are:
Wei Ting
and
Ho Ping

[Gryffyn]

Z. :-) I think you need new invisible friends.

[Placebo]

King and Lawso, I don't think anyone would disagree that WHS is a powerful and well-run operation in NZ, the problem is the albatross around its neck in the shape of the Aussie venture. The news is bad and getting worse (profit downgrades are never welcome!) and according to Mr Tindall we still have 2 years to wait before they decide whether or not to exit. I also expect the down trend to continue.

Perhaps another factor weighing on them is the number of new retail stocks now available... MHI, Pumpkin Patch, BRG all look better retail sector coys in which to park your money.

[foodee]

Observations by Cantab & Enigma have confirm the oz status.
WHS won't be a bargin until this bleeding stops, and if does not stop...........[xx(]

what a mess1

[Lawso]

Cantab- Your comments on the scandalous mismanagement at the Gympie store have been passed on to someone high up in the WHS pecking order. It will be interesting to see if there is any reaction, by way of a clean floor!

[Lawso]

That's something positive anyway, cantab. I'll be doing a steak in my $12.99 frypan tonight.

[bongo66]

You would be foolish to sell if you bought at higher than current prices but it is also likely it may not be wise to buy at the moment. If WHS OZ continues to bleed the way it has there will be a small loss or small profit for 2005 full year and that will obviously be a time to buy if you want to participate in the WHS recovery if they cut OZ loose.

If they are able to convert enough stores and get logistics and the "WHS model" (as it exists in NZ)going right then I guess now could be a good opportunity.

Im not selling.

B

[zac]

Hi Bongo; I see you have added FPA to your portfolio. You obviously have not been a recipient of a F&P 'lemon' (never buy the early version of a new model - they use their customers to test durability). I trust you will be putting management under close scrutiny.

[bongo66]

Hi Zac, I think their products are ****e too but it looks to me that they may have a few more good years before they are found out.

I mean, where are their front loading washers-they are far better than top loaders; use less water ,power, soap and are gentle on clothes.

I do like their dish draws though and those alone will spin out profits in the US market.

Its only a small investment-$20000.00- and it is up by around 10% so far. It only came on my horizon when i traded a large chunk short term, I did some research and decided to go long-term.

Gentle Annie, bah humbug, Bongo

[Gryffyn]

Bongo - that is the worst logic I've ever heard. If you think the price might drop or even stay the same then sell is the best move. The money is already lost and just hanging onto the share does nothing to change that. If your statement is correct then why did you finally sell out of RBD with such losses?

Not trying to bag you but your statement makes no sense unless you add that you see a defiite or iminent upswing to the price, otherwise opportunity cost alone is killing your investment.

[Gryffyn]

Clarification Bongo, my comment is in relation to your post about not selling WHS - not FPA which was a good buy.

[bongo66]

quote:Originally posted by Gryffyn

Bongo - that is the worst logic I've ever heard. If you think the price might drop or even stay the same then sell is the best move. The money is already lost and just hanging onto the share does nothing to change that. If your statement is correct then why did you finally sell out of RBD with such losses?

Not trying to bag you but your statement makes no sense unless you add that you see a defiite or iminent upswing to the price, otherwise opportunity cost alone is killing your investment.



You would sell at a loss and put the proceeds into something else that may do the same? I see no logic in that.

I dont sell because of falling share prices, if I did I would become a full time trader. I sold RBD because of a CONTINUING mis-management of the company-after Id seen the SP go down to 62 cents and back up again. The WHS did make a mistake in OZ. They have signalled an OZ contingency plan if things dont improve and im happy with that.Im not buying right now but can see the posibility of the SP going much lower...:D

Their model in NZ works and im positive it would work in OZ if they had everything in place-obviously they dont.:(

B

[Bullet]

Hi Bongo, I work for an Aussie based company who supply to all the majors over there. We do not believe that The Warehouse can succeed in the Australian market in any way. We sell some product to them but they are far too small and Australians unlike Kiwis have a choice of shops that are nice to walk around and have very very competitive pricing. The Discount Variety Group is the closest competion to The Warehouse in Australia and they run a far better operation than THW Aussie. They have done a great job in NZ but Aussie is a totally different story!

[belgarion]

Belgarion is old enough to remember the first Warehouses ... they were much like the rundown, hicklity-picklity units people are decribing in Oz. Its more about products and pricing methinks ... But are Ockers spoiled already? Could be.

[Lawso]

I'm 100% with Bongo on this one and definitely don't agree with Gryff. I first bought WHS four years ago @ 570 and subsequently bought more at 629 and 727. WHS was riding high and no one - well, not us mug punters - foresaw the Oz disaster.

Why would I sell now at just over $4? Only reason to sell at such a loss would be to get some tax losses and that's not my style. Opportunity cost? Yes, but that's all in the game and more than offset by the gains in all my other significant holdings.

I can't see the price going much lower, though I've taken on board the consensus on this thread that buying more at the moment would not be a great idea. But before long - say 1-2 yrs - they will either come right in Oz or walk away from it. Either outcome will be good for the share price. Meanwhile, NZ operations will keep WHS profitable.

So I'm Holding (The batsman's Willey;)

[Gryffyn]

Lawso, I also think they will come right but consensus is for 6-12 months min. Even money in the bank does better.

WHS has been great for me - I bought back at pre-split days at 3.10 (effective 1.65) and sold mid $7 to buy some property. Bought back at $5 over a year ago, held it all the way to 5.80 and then watched it fall. Sold for a loss at 4.50 and it was only sentiment that made me keep it that long when it was falling. My mistake. Look how much more I could have lost if I'd held till today and how much more you and Bongo could lose in the next year if it drifts lower!!! WHS is still hurting me in the 5 picks that SEC is running.

Number one rule is not to lose capital. I'd rather wait till the good news is in, the corner turned etc than buy (or hold) now hoping that it is the bottom.

Want a parallel - look at the RBD thread and all the long term hope that cost Bongo a mint there.

The share market is full of shares with better p/e, better yield and no operations that are bleeding cash right now. Park money there if you want low risk and wait for proof of recovery before risking hard earned capital.

WHS will recover but how much are you prepared to lose/forgoe in the meantime while humming the same mantra?

Rant over. Best of luck to you both. We can all be winners on the sharemarket but I'm not putting any bets on WHS for some time.

[TheBossMan]

My average is definitely more than the current price. Instead of looking at the opportunity cost of capital for the next 12 months or so, I've used WHS as collateral for margin lending and borrowing 70%.

Paper losses from WHS are offset from other gains. Of course, I could sell WHS and hope to buy at a lower price later, but having invested in WHS for quite sometime now, I want to ride the ride. It's all part of the learning...

[bongo66]

Want a parallel - look at the RBD thread and all the long term hope that cost Bongo a mint there.

Only cost me a few grand-if you can use the imputation credits(And i can:D) im ahead there. And ,if you include my previous holdings in RBD ive come out way on top overall.[8D]

NB,the WHS holding is a very small part of my entire portfolig o-less than 50k- so its not a huge worry. WHS holding is down around 35%...:(

B[:X]

[trendy]

You poor WHS holders should follow the trends and use stops...got to have iron discipline in this game. Sentiment to a company means naught to me, only the trends.... Will happily trade in and out of the same company if the trends are right.

My 6 month trading return to date stands at 50%.

[Halebop]

The ever rational Phaedrus has amply demonstrated the technical indicators for WHS during the past year or so. I'm not a TA's @rse but even I can read Pheadrus' charts. Depending on your time frame there has been key or several key sell indicators.

I took a different tack and relied upon fundamental techniques but these told me to steer clear too.

Here are some fundamental indicators: These numbers are Owner Earnings since 1999. They have been reached using the following formula: Net Profit After Tax, Add back in Goodwill Amortisation and Depreciation, Deduct total investing cashflows. I don't normally use the total investing cashflows figure but WHS' property development and investment activites create enough noise that I think the macro cashflow numbers show a more accurate picture. Plus I'm lazy and just couldn't be bothered taking out some of the small lines.

1999 +52.801m
2000 +65.347m
2001 +30.670m (Excludes -$95.005m acquisition of Yellow Sheds)
2002 +71.490m
2003 +36.850m

During this same period dividends have been about -$247m and debt has increased from $34m (20% of equity) to $263m (76% of equity). Significant increases in Stock levels are not demonstrated by the investing cashflows (Inventories less Payables have grown from $64.6m in '99 to $201.4m in '03). The expansion of WHS' stock lines in NZ has been a positive for the business but none the less has consistantly competed for cashflow with Australia.

So from 1999 to 2003 the business has generated:

+257m in owner earnings
...but spent a further:
-247m in Dividends
-95m to buy the Australian operation
-137m on increased stock levels (a small portion of this will be doubled up in the Australian purchase)

But the net: +257-247-95-137=(-$222m) gets us pretty close to the increase in total debt levels. (from 34m to 263m or -$229m increase)

The conclusion: WHS have shown themselves to be susceptable to modern theories of capital management and been happy to borrow their dividends as a consequence. Some of you may remember TEL followed a similar expansive yet dividend paying strategy for several years? Gravity, as we have seen, always has a way of making itself known.

Owner earnings are a great number to look at because they give a clearer indication of the company's cash generating capability. Ultimately, I want sustainable cash flow so I can go out and buy things like coffee and brioche, houses, underwear etc. As such, I'd value owner earnings higher than standard profit and loss figures. However, was last years $37m or so really worth $1,260m? (When the price edged up to $6 this was actually $1,830m?!). Even at the prior years $72m profit there was a hell of a lot of blue sky priced in.

The only assumption I can make is that the market is pricing in a significant improvement from Australia or New Zealand (although my gut says the price will fall further). The easiest short-termism would be to bite the bullet and lose a couple of hundred million shutting up shop in Australia. Management are prepared to forge on for the time being. Will it deliver?

[Stock Man]

quote:Originally posted by bongo66

You would be foolish to sell if you bought at higher than current prices but it is also likely it may not be wise to buy at the moment.
Im not selling.

B


Hi Bongo, I guess it depends on your objectives, goals, timeframes etc. Sometimes it is best to 'get out' and take a small loss. This surely is better than watching a $4.50 investment go to $4, then $3.80, then $3.50 etc. And, as always, you can always 'get back in' again...

Cheers

[Gryffyn]

Bongo - glad you didn't lose much with RBD. Not sure what you mean about imp credits though - we all get those with divvies - nothing to do with loss of share price value.

The impression you gave on that thread was of continually accumulating before the price dived.

Long term investing does not mean you have to keep a share that is significantly underperforming the market. Ride out the dips by all means but I'd heartily suggest a stop-loss approach in future.