Retail Stocks

[LaserEyeKiwi]

Instead of having the same conversation over multiple different stock threads, thought it worth creating a catch all discussion area for macro events on the entire NZ retail industry.

So Omicron has now arrived, what’s everyone’s thoughts on the length and severity of the impact on NZ retailers?

It is early days, so we likely wont see the widespread staffing and local logistics issues show up for a another few weeks, so sometime around mid-February perhaps is when things start getting seriously disrupted.

Seen mention of 24 days required isolation for household contacts of positive Omicron cases. That would likely lead to widespread staff shortages across all of retail one would imagine, as well as the logistics supply chains for retail (which would mean more impact for those businesses with high stock turnover rates).

I think it will be a rough Feb/March, but if the overseas experience is anything to go by (hard to say for sure as they are still in it), hopefully by April omicron will be past the peak and staffing/logistics issues subside.

[alokdhir]

Mark Lister ...Guru of Craigs ...has labeled Retail along with hospitality and tourism as worse sectors of 2022 ...so maybe party is over fully

[Rawz]

Mark Lister ...Guru of Craigs ...has labeled Retail along with hospitality and tourism as worse sectors of 2022 ...so maybe party is over fully

I agree.. can’t see much value unlike 2021. Seem fully priced or downside risk even.

[nztx]

I agree.. can’t see much value unlike 2021. Seem fully priced or downside risk even.


Agree with that too

[percy]

Mark Lister ...Guru of Craigs ...has labeled Retail along with hospitality and tourism as worse sectors of 2022 ...so maybe party is over fully

From a recent Keith Woodford article.
"For the last 12-month period to September 2021, New Zealand ran a record deficit on its external current account with the rest of the world of $15.9 billion. This is in part because earnings from export services, largely tourism and the education of foreigners, have crashed. Conversely imports have ballooned to record levels.

This deficit has been financed by capital flows from overseas. At some stage the rest of the world is likely to question the economic sustainability of New Zealand. If that occurs then the exchange rate will crash.

If the exchange rate crashes, then that will be very bad for most New Zealanders. The exception will be for those New Zealanders who produce products for export.

A significant decline in the exchange rate may be what is needed to convince New Zealanders that export industries lie at the heart of our national well-being."

So I agree with Mark Lister's comments ,as well as Woodford's,and think a lower NZ$ add to retailers' challenges.

[Waltzing]

down at 62 in 9 2019.

on that basis of these expectations under 60 could come up but that would fuel more inflation expectations.

[Muse]

Ultimately pricing power will be key for the retailer that performs the best this year, in my view. Interesting basket of companies, in no order:

* HLG: good & conservative mgmt w/ glassons a strong brand in AU. Trans-tasman exposure & young customer demographic. Margins under pressure in recent years, up to 3 store openings in AU in FY22. Opening trade & peacocking?
* BGR: strong management & ongoing margin expansion. NZ only, 2 brands w/ distinct channels. Arguably done the best on logistics and stock. But nesting done & dusted?
* KMD: two pistons firing on different cycles. Outdoor spend leveraged to domestic & international travel - yet to open, but that will fire when it does, but is also why much more depressed than other comps. Rip Curl going well.
* MHJ: beauty of a turnaround. Only retailer posting 2h growth.
* WHS: diversified w/ loss making markets platform. Performed better than many would have believed.

What's the court's view on who has the best pricing power during this bout of inflation?

[emearg]

What I'm reading is there may be good buying opportunities for folks with medium to long term outlooks.

I remember in 2008 pondering if I should buy more Briscoes. They were around 87 cents if memory serves me right. I didn't. Pity that given the dividends over all those years, and the capital gain over the last few years. I bought some more in 2020. No regrets there. Maybe 2022 is the time to buy a few more given retail may well fall out of favour? I can't think of an operator who has their interests more aligned with mine than Rod Duke. Nor can I think of a more consistent performer over the decades than him. Maybe I'm just a Rod Duke fan boy?

[winner69]

Don't forget that only 13% of KMD sales, 20% of MHJ and 60% of HLG sales are in NZ so thinking about the NZ retail scene/climate and applying it to what might happen those three isn't really good thinking - they may have already had the gloom and doom stage (globally) expected to happen here.

The discussion (so far) is totally relevant to WHS and BGR

Anyway HLG< MHJ and KMD performance in NZ over the years is pretty useless - no or at best little growth and unattractive as an investment.

[Biscuit]

HLG the only retailer I hold, have had them for more than a decade and have no plans to sell. Whatever happens they will come through in good shape and pay a good dividend along the way IMO.

[bull....]

agree it will be a tougher year for retail stocks

[LaserEyeKiwi]

Rather muted reaction so far today, with most retail off only 1%-1.5%

[Waltzing]

it will probably be a wee bit of an up and down market for the rest of the year. Traders market this year.

next support level for WHS looks to be about 3.20.

[RTM]

What I'm reading is there may be good buying opportunities for folks with medium to long term outlooks.

I remember in 2008 pondering if I should buy more Briscoes. They were around 87 cents if memory serves me right. I didn't. Pity that given the dividends over all those years, and the capital gain over the last few years. I bought some more in 2020. No regrets there. Maybe 2022 is the time to buy a few more given retail may well fall out of favour? I can't think of an operator who has their interests more aligned with mine than Rod Duke. Nor can I think of a more consistent performer over the decades than him. Maybe I'm just a Rod Duke fan boy?

How old is Rod Duke ? How long will he continue ?

[Sideshow Bob]

How old is Rod Duke ? How long will he continue ?

About 70 or 71, based on this article.

To retire or not to retire: Rod Duke on succession planning (newsroom.co.nz) (https://www.newsroom.co.nz/to-retire-or-not-to-retire-rod-duke-on-succession-planning)

[LaserEyeKiwi]

Rather muted reaction so far today, with most retail off only 1%-1.5%

Spoke too soon - retail getting hammered now,

Even Turners (sort of a retail name I suppose) had the self off.

[LaserEyeKiwi]

KPG reporting a 9.6 year on year increase in retail spending for December across its Auckland and Hamilton malls:


Kiwi Property today reported the December 2021 sales for its mixed-use shopping centres, announcing a 9.6% increase on the prior comparable period [Note 1].

‘Mini-majors’ [Note 2] delivered a particularly strong increase in total sales, recording a 35.1% year-on-year uplift, led by recently opened retailers such JD Sports and Culture Kings. Sales across the ‘majors’ category were also up 6.1% in December, underpinned by supermarkets and the ongoing recovery of cinemas.

Sylvia Park was Kiwi Property’s top performing asset in December, achieving sales growth of 11.7%, with the centre’s level one expansion and new athleisure precinct helping drive a 47.7% increase in ‘mini-major’ sales. Kiwi Property’s other key mixed-use shopping centres, LynnMall and Te Awa The Base, also recorded robust sales growth of 7.3% and 4.5% respectively in the final month of 2021.

Linda Trainer, Kiwi Property GM Asset Management said: “Lockdowns had a significant impact on New Zealand’s retail sector in 2021, so it’s pleasing that many of our tenants ended the year on a high-note. The overall growth in sales across our mixed-use shopping centres during December is an encouraging sign heading into 2022, despite the presence of COVID-19.”

ENDS

Notes
1. Sales information is based on data obtained from third parties or estimated by Kiwi Property where this data is unavailable. Sales information has not been independently verified. Mixed-use shopping centres comprise Sylvia Park, LynnMall, Te Awa (The Base) excluding large format retail. Northlands, The Plaza and Centre Place are excluded for consistency with Kiwi Property’s FY21 annual and FY22 interim reporting treatment.
2. Mini majors include stores over 400 square metres in size, excluding anchor tenants, such as supermarkets, department stores and cinemas, which fall under the majors category.

[LaserEyeKiwi]

Weekly update:
13468

should I add Turners & NZ auto to this?

[Beagle]

Weekly update:
13468

should I add Turners & NZ auto to this?

If you want too but its worth noting that Turners makes the majority of its money from its finance division...more than from selling cars !

[percy]

If you want too but its worth noting that Turners makes the majority of its money from its finance division...more than from selling cars !

You must ask yourself,which comes first the chicken or the egg.?

[Beagle]

You must ask yourself,which comes first the chicken or the egg.?

LOL fair comment mate.

[Waltzing]

Retail prices expected to surge in the coming months... time to quickly stock up? Off to Brisc? T7? the beach , the lake the back yard the only safe places to be?

off to M10? Bunnings?

https://www.stuff.co.nz/business/127637747/more-than-half-of-retailers-expect-to-increase-prices-by-75-per-cent-over-the-next-three-months

[Habits]

Retail prices expected to surge in the coming months... time to quickly stock up? Off to Brisc? T7? the beach , the lake the back yard the only safe places to be?

off to M10? Bunnings?

https://www.stuff.co.nz/business/127637747/more-than-half-of-retailers-expect-to-increase-prices-by-75-per-cent-over-the-next-three-months


Costs have increased and selling price rises are justified. I do not think prices should be raised, just because they can. There is a marketing angle that retailers are not extorting consumers

[Beagle]

Might bring forward some high quality new Michelin tyres for my car. Can possibly sneak through to the front end of winter with the current tyres before they hit the 1.5mm minimum tread wear indicator but they're likely to cost a lot more in 4-5 months time. Thanks for the link Waltzing

[percy]

Might bring forward some high quality new Michelin tyres for my car. Can possibly sneak through to the front end of winter with the current tyres before they hit the 1.5mm minimum tread wear indicator but they're likely to cost a lot more in 4-5 months time. Thanks for the link Waltzing

Best to buy a spare set, as they will be a lot more expensive in a couple of years time........................lol.

[Waltzing]

"Michelin tyres for my car."

oh gosh thats got us thinking!!! oops

perhaps whip down and buy some spares now...good idea!!!

[winner69]

Probably be some surprisingly good updates from BGR and HLG in next week or two

[Habits]

"More than half of retailers expect to increase prices by 7.5 per cent over the next three months


oh gosh thats got us thinking!!! oops"


I was looking forward to 2022 to see the end of covid and economic swings. Inflation has and is becoming a factor again. Well at least the govt knows what to do to get us out of this .... oops

[winner69]

"More than half of retailers expect to increase prices by 7.5 per cent over the next three months


That'll help the top line sales number ...and for the astute retailers the bottom line

[Habits]

That'll help the top line sales number ...and for the astute retailers the bottom line

The dollar only stretches so far... The beneficiaries and pensioners will need some more money from the govt. Taxes will be going up next.... cgt ruled out, land tax and wealth tax anyone?

[777]

The dollar only stretches so far... The beneficiaries and pensioners will need some more money from the govt. Taxes will be going up next.... cgt ruled out, land tax and wealth tax anyone?

Would a wealth tax not encourage an evacuation across the Tasman?

[LaserEyeKiwi]

Would a wealth tax not encourage an evacuation across the Tasman?

Doubt it - it would have to be a big wealth tax to make NZ worse than australias taxes on investors (remember Australia already have a capital gains tax on shares & property etc, plus also stamp duty tax on top of that)

[777]

Doubt it - it would have to be a big wealth tax to make NZ worse than australias taxes on investors (remember Australia already have a capital gains tax on shares & property etc, plus also stamp duty tax on top of that)

But a wealth tax will be an annual tax whereas a capital gains is only on a transactional basis.
What the greens suggested was excessive, even if it was halved. And it was suggested that it would be at your marginal tax rate.

[Waltzing]

The wealthy have the option to move assets off shore into SWIZLAND and away from interviews from the IRD conducting stewardship Doom's day book statistical gathering operations.

But these people dont really make up the big retail stats in NZ except in the likes of Boats, Cars, Furniture, Wine, Paintings and high end personal purchases.

Ski boats in the 300-400 Grand range and 20 of those we sold last year. These people arnt actually the high end wealthy just ordinary folk who have come into money as the economy has grown, some with very flat Kiwi vocals.

But none of these grand purchases would have been in the listed retail stocks bin warehouses or rag trade racks.

Dont see the list stocks as the place where the wealthy shop for goodies.

[Habits]

[QUOTE=Waltzing;939037]IRD conducting stewardship Doom's day book statistical gathering operations.[QUOTE]

The stuff of nightmares

[LaserEyeKiwi]

The wealthy have the option to move assets off shore into SWIZLAND and away from interviews from the IRD conducting stewardship Doom's day book statistical gathering operations.

But these people dont really make up the big retail stats in NZ except in the likes of Boats, Cars, Furniture, Wine, Paintings and high end personal purchases.

Ski boats in the 300-400 Grand range and 20 of those we sold last year. These people arnt actually the high end wealthy just ordinary folk who have come into money as the economy has grown, some with very flat Kiwi vocals.

But none of these grand purchases would have been in the listed retail stocks bin warehouses or rag trade racks.

Dont see the list stocks as the place where the wealthy shop for goodies.

Does that fall into automative or durables/recreational goods category?

[Waltzing]

Ski boats are in ? stat cat ? winner might know..

[LaserEyeKiwi]

13473Good news from KB

[Waltzing]

yes LEK it was a good day... well so much for waiting to buy some bargains.....spent the whole day blade testing for europe... borders opening soon... might one heck of a ski season after all....

[LaserEyeKiwi]

Weekly update (added TRA, and also KPG which is sort of retail adjacent - and also year to date figures)

13478

[Rawz]

Weekly update (added TRA, and also KPG which is sort of retail adjacent - and also year to date figures)

13478
A sole diamond among rocks

[winner69]

Infometrics in an release “ HOUSEHOLD RESILIENCE FLAGGING AS OMICRON HITS” -



“The resilience of household spending continues to be a key factor underpinning New Zealand’s good economic performance throughout COVID-19 and contributes to a robust outlook,” says Infometrics Chief Forecaster Gareth Kiernan. “But the tailwinds that have supported strong spending outcomes throughout 2020 and 2021 are dying out, and consumers will be less able to drive economic growth to the same extent during the next two years.”

Household budgets are being squeezed by rising prices across the board, with inflation of almost 6%pa running well ahead of wage growth, at 3.8%pa. A 30% surge in petrol prices is particularly noteworthy, while price increases for other essentials, such as food and rent, have accelerated as well. With mortgage rates set to finish this year more than two percentage points higher than they were 18 months ago, and the official cash rate set to reach 2.75% in 2023, mortgage repayments are also rapidly increasing.

[winner69]

Some might be interested in these numbers .... part of an unfinished exercise (paid work) to assess (in due course) the impacts of covid on retail spend in NZ

Shows the last available 2 year change in selected retailer's sales from pre-covid

Bench market is NZ Retail sales of 16.5% - remember over 2 years so about 8% pa is average

Quite interesting

rawz - diamonds in demand as much paper clips

[Beagle]

https://www.msn.com/en-nz/news/world/russia-wins-china-s-backing-in-nato-showdown-over-ukraine/ar-AATu1e4?ocid=msedgntp

This will embolden Putin. Watch out for an invasion of Ukraine later this month and $120 Oil and 91 Octane petrol at over $3 a liter (98 Octane already $3.08 in Auckland yesterday) and diesel at well north of $2 a liter, (affecting all sorts of other commodities due to increased transport and shipping charges).

Consumers will also face much higher interest rates this year and be more inclined to stay home with the Omricon risk.

Interesting times we live in.

[Waltzing]

Limited shelling one thing, full invasion would pit europe into war footing and markets would crash..

Cash reserves right now are a good thing.

[winner69]

Limited shelling one thing, full invasion would pit europe into war footing and markets would crash..

Cash reserves right now are a good thing.

Didn’t you predict this about a year ago

[Waltzing]

Cash reserves are always a good thing this last decade as one or more sectors is usually hit by something...

https://www.stuff.co.nz/national/health/coronavirus/127686793/selfisolation-will-cause-tragedy-in-christchurch-hospitality-sector

in the end whats more dangerous to a market private sector fraud or over funded and ever expanding public sector incompetence..


13481

[Waltzing]

WET Day perfect for shopping people... M10, T7 ect .. Garden supplies to white water adventures..

Help fire up the GDP. Sir Ian is flying out never to be seen again... But dont worry most of you are stuck here in Paradise and might as well enjoy it...

Shop people Shop....

If Mr B is not looking for boats then perhaps that E Bike....

[Beagle]

Shop people Shop....
If Mr B is not looking for boats then perhaps that E Bike....
https://www.youtube.com/watch?v=LLLyAyKmbeY

The hound has been very, very busy sniffing really hard and digging around all summer long. Very, very hard to get good quality late model launches at a fair price. Just today I have found a seller of a late model, well equipped one of these but they are a very deep hole in the water in terms of cost and cost to run.
Anyone interested in going halves ?...I am all ears, please PM me. $375K each and about $20K each per annum to run + fuel.
No better boat has ever been built for that sort of money in my opinion, although I am sure some fuel cheating yacht owners like RTM will disagree lol

[Waltzing]

well worth the money on a square meter basis and oceans are your oyster...

[Habits]

https://www.youtube.com/watch?v=LLLyAyKmbeY

The hound has been very, very busy sniffing really hard and digging around all summer long. Very, very hard to get good quality late model launches at a fair price. Just today I have found a seller of a late model, well equipped one of these but they are a very deep hole in the water in terms of cost and cost to run.
Anyone interested in going halves ?...I am all ears, please PM me. $375K each and about $20K each per annum to run + fuel.
No better boat has ever been built for that sort of money in my opinion, although I am sure some fuel cheating yacht owners like RTM will disagree lol

No thanx beagle but good luck. Jetski will do us. Happy boating.

[Waltzing]

"Jetski "

scares the Trout. In the first lock down several lakes suddenly had wildlife floating out in the places here boats would usually be dominating the water way.

It really showed that man and his boats have destroyed the wild lifes lives. Now they are back to floating about the creeks and shallows.

[Habits]

"Jetski "


Great versatile invention... I love watching shark tank reruns and seeing the innovations

[Shareguy]

https://www.youtube.com/watch?v=LLLyAyKmbeY

The hound has been very, very busy sniffing really hard and digging around all summer long. Very, very hard to get good quality late model launches at a fair price. Just today I have found a seller of a late model, well equipped one of these but they are a very deep hole in the water in terms of cost and cost to run.
Anyone interested in going halves ?...I am all ears, please PM me. $375K each and about $20K each per annum to run + fuel.
No better boat has ever been built for that sort of money in my opinion, although I am sure some fuel cheating yacht owners like RTM will disagree lol.

The Riv is a great boat for the money. Purchased a 43 just before Xmas . Love it….

[Beagle]

.

The Riv is a great boat for the money. Purchased a 43 just before Xmas . Love it….

Good for you mate. 43's are a lovely wide beam boat with heaps of room. Awesome bit of kit. Enjoy !!

[Muse]

https://www.youtube.com/watch?v=LLLyAyKmbeY

The hound has been very, very busy sniffing really hard and digging around all summer long. Very, very hard to get good quality late model launches at a fair price. Just today I have found a seller of a late model, well equipped one of these but they are a very deep hole in the water in terms of cost and cost to run.
Anyone interested in going halves ?...I am all ears, please PM me. $375K each and about $20K each per annum to run + fuel.
No better boat has ever been built for that sort of money in my opinion, although I am sure some fuel cheating yacht owners like RTM will disagree lol

I’ll go halves with you Beagle. You’ll love flying down and then driving to fiordland to use it. Get some monster crays in ya

[Waltzing]

well with boosters only lasting 15 weeks that means for retail is to keep pumping we need the population to get booster number 4 when?

now they tell you to get boosted but since the booster is not the OMI vaccine this is Plan Z. Cause they dont have plan C. Plan B is the booster plan but it only lasts 15 weeks (transmission).

Not enough to power retail sales for long....

Its the OMI vaccine you need after all....

Buy up large into retail?

A hamilton city councillor tonight who was a government supporter openly now stating the opposite in conversations.

They are really worried it appears about their retail and central business district.

The comment from the elected hamilton women was "Worst ever Government we have ever had to work with".

Dont forget to buy your Rat Tat Tat tests at a chemist near you... ect ect... and last not least good luck.



Rod Jackson: Omicron outbreak - our time to vaccinate is running out - NZ Herald (https://www.nzherald.co.nz/nz/rod-jackson-omicron-outbreak-our-time-to-vaccinate-is-running-out/LESRTJN7KDQSHNRTVCIZM7VP7I/)

[causecelebre]

https://www.youtube.com/watch?v=LLLyAyKmbeY

The hound has been very, very busy sniffing really hard and digging around all summer long. Very, very hard to get good quality late model launches at a fair price. Just today I have found a seller of a late model, well equipped one of these but they are a very deep hole in the water in terms of cost and cost to run.
Anyone interested in going halves ?...I am all ears, please PM me. $375K each and about $20K each per annum to run + fuel.
No better boat has ever been built for that sort of money in my opinion, although I am sure some fuel cheating yacht owners like RTM will disagree lol

I live by the general tenet: "If it flys, f*$ks or floats it too expensive" ;)

[LaserEyeKiwi]

What’s the saying?

The 2nd happiest day in a man’s life is the day he buys a boat.

The happiest day in a man’s life is the day he sells that boat.

[Beagle]

BOAT is famously known as an acronym for Bring on another thousand. The less well known acronym's you only learn through experience are Bring on another ten thousand and Bring on another trauma.

In between the best days of buying and selling and all the drama's and cost there lies interspersed quite a significant number of really satisfying days spent with family and friends or simply relaxing with your partner. or even fishing on your own or with one or two good mates. In those quieter moments, anchored in some calm beautiful remote bay somewhere far away, sipping one's drinks in the golden sunset hour the realization hits you that investment is a process of building security but at its core is simply "deferred consumption" and consumption of resources cannot be deferred indefinitely and resources cannot be taken with you when you go, (despite many attempts by the Egyptians to do exactly that).

Anyway...back to the subject Retail. I am looking forward to HLG's trading update with a little trepidation if I am honest. Currently running a half sized position so I can only be half right or half wrong lol

[Rawz]

$20k p.a. running costs. Beagle would get absolute min 10% return p.a. on the $375k purchase price.

The $57k p.a. is several business class, 5 star 1 week stays in Fiji every year with Mrs Beagle. Pretty good alternative

Boat no good! But I am not a boat person

[LaserEyeKiwi]

BOAT is famously known as an acronym for Bring on another thousand. The less well known acronym's you only learn through experience are Bring on another ten thousand and Bring on another trauma.

In between the best days of buying and selling and all the drama's and cost there lies interspersed quite a significant number of really satisfying days spent with family and friends or simply relaxing with your partner. or even fishing on your own or with one or two good mates. In those quieter moments, anchored in some calm beautiful remote bay somewhere far away, sipping one's drinks in the golden sunset hour the realization hits you that investment is a process of building security but at its core is simply "deferred consumption" and consumption of resources cannot be deferred indefinitely and resources cannot be taken with you when you go, (despite many attempts by the Egyptians to do exactly that).

Anyway...back to the subject Retail. I am looking forward to HLG's trading update with a little trepidation if I am honest. Currently running a half sized position so I can only be half right or half wrong lol

Ha ha nice acronyms! I completely agree that a boat no doubt can lead to great happiness, and is an entirely appropriate purchase for many, especially if one can afford it and the upkeep. In fact I am a little surprised that living on boats (either normal ones or specifically designed houseboats) hasn’t become more common in our stupid housing market - surely its far cheaper than buying a house or apartment in Auckland or Wellington.

[Beagle]

Ha ha nice acronyms! I completely agree that a boat no doubt can lead to great happiness, and is an entirely appropriate purchase for many, especially if one can afford it and the upkeep. In fact I am a little surprised that living on boats (either normal ones or specifically designed houseboats) hasn’t become more common in our stupid housing market - surely its far cheaper than buying a house or apartment in Auckland or Wellington.

Interesting you mention that. I was looking at marina opportunities yesterday and noted that Hobsonville marina allows liveaboards for just $7 per person per day. (Utilities are charged separately but its pretty cheap to heat a boat compared to a house), so a couple saving for a house could live for just $98 per week. Staying aboard one's boat in a marina can be a nice social time too, there's often community BBQ's in summer. According to those I have talked to who have done it, winter is not nearly as much fun. Boats are also a good place to escape too when you've had a big argument with your partner...ask me how I know lol

[LaserEyeKiwi]

Interesting you mention that. I was looking at marina opportunities yesterday and noted that Hobsonville marina allows liveaboards for just $7 per person per day. (Utilities are charged separately but its pretty cheap to heat a boat compared to a house), so a couple saving for a house could live for just $98 per week. Staying aboard one's boat in a marina can be a nice social time too, there's often community BBQ's in summer. According to those I have talked to who have done it, winter is not nearly as much fun. Boats are also a good place to escape too when you've had a big argument with your partner...ask me how I know lol

Interesting.

I see it might have in fact started to happen - here is a couple who built a houseboat in Auckland:

13496

https://www.sharetrader.co.nz/blob:https://www.sharetrader.co.nz/e69861ec-a056-4a04-9f41-a2af8418fe90
https://www.youtube.com/watch?v=6HRom2j0WBs

[Waltzing]

CNBC this morning some pro investor houses predicting inflation to ease into year end.

Rebound to retail in 2023.

[LaserEyeKiwi]

https://www.stats.govt.nz/information-releases/electronic-card-transactions-january-2022

Jan retail card spending up 3%

13506

https://www.sharetrader.co.nz/blob:https://www.sharetrader.co.nz/ababfab9-1756-4958-90ed-60939da31aad

[winner69]

CNBC this morning some pro investor houses predicting inflation to ease into year end.

Rebound to retail in 2023.

waltzing - surely you don't watch the cheerleaders on CNBC ...even worse taking in what they say

bad for your health

[nztx]

$1.20 p/hr increase to Minimum Wage on 1 April 2022 announced today I believe :)


What gets added on the bottom tier comes with expectation of adding further increments
further up the hierachy - does it not ? :)

Will this help, or simply get swallowed into the deepening gap between price rises
interest rises, higher fuel costs and outgoings and income ? ;)

Or simply break the back of further struggling businesses and result in further job attrition ? ;)

Once again on the back of this another Minister not taking in MBIE advice of such increases :)


Is a 6% increase in Minimum Wages also not an Inflationary initiative to add on to the earlier ? ;)

What extra Goods & Services have in real terms been added to the goldfish bowl out of this sort
of inflationary wage increase ? :)

[winner69]

Nztx -- min wage good for retail stocks

Wood said the increase would have a stimulatory effect on the economy because workers would spend the money on buying things, which would help support businesses.

[nztx]

Nztx -- min wage good for retail stocks

Wood said the increase would have a stimulatory effect on the economy because workers would spend the money on buying things, which would help support businesses.


Until outfits can no longer afford to pay for Govt's incompetence affecting their customer & trading
patterns - then what ?

Add soon an extra 1.4% levy on for 6 months 'I must recover from the previous job' - did I use
all of the 10 days sick pay ? and all sorts of other weird & wonderful x days allowances
added in the past 2 & whatever Govt terms ;)

Quite a list of these 'excuses for officially & legally being absent, aren't there ? ;)

I feel sorry for employers & retailers being inflicted with the yards and yards of Bullcrap
as they have over the past 6-8 years, endured Covid, Lockdowns, etc etc and it's
not all over yet, in fact far from it ;)

What is the 'Business Mortality' rate under this Govt's terms ?
How many have succumbed ? closed down, or are now no longer ? ;)


Just for the record - increased spending at the other end of the scale - would this not
push more fiat bucks around instead, rather than 50c here and there ?

For every Dollar increase in the bottom tier - those earners are effectively worse off in real terms
once the Taxman's brickbat slugs them at highest marginal rate for what presumably is
intended as fiscal catch up ? ;)

Everything comes with a Co$t too - what extra sales or saving elsewhere is needed
to shell out the extra $1.20 p/hr - if it doesn't generate extra productivity ? ;)

Or a further free lunch bestowed by Labour for Nada, Zilch in return ?

A bit like the Covid-19 Wage Subsidies - what real gains were produced out of the $96 Bills
artificially produced / borrowed- that we can see present today (aside from mammoth price, house,
fuel, interest, Cost of Living increases starting to morph themselves across the land :)

[Rawz]

What % of the population is on minimum wage anyway. I wouldn’t have thought much?

[nztx]

What % of the population is on minimum wage anyway. I wouldn’t have thought much?


The % grows with the flow on effect into levels above having matching expectation, does it not ? ;)

Can't have the lower tiers being paid more than the ones in next tier - can we :)

[Beagle]

Minimum wage increase has set the benchmark for future wage claims for others and help embed a wage and cost fueled inflationary environment that will prove incredibly difficult to moderate. Fair enough for workers on the minimum wage but they better not complain when their Maccs' and KFC feeds go up.

[Waltzing]

"cheerleaders on CNBC "

is there even one source in NZ ?

i remember JOE K calling the Sub Prime spread...

[Muse]

The % grows with the flow on effect into levels above having matching expectation, does it not ? ;)

Can't have the lower tiers being paid more than the ones in next tier - can we :)

dead right nztx - maintaining relativities matter!

[Habits]

Minimum wage increase has set the benchmark for future wage claims for others and help embed a wage and cost fueled inflationary environment that will prove incredibly difficult to moderate. Fair enough for workers on the minimum wage but they better not complain when their Maccs' and KFC feeds go up.

Struggling to pay for the basics of fuel and groceries, interviewed stuffing in a premium burgr (am joking about the last bit)

[clearasmud]

It could be argued it is irresponsible to push up wages wholesale like that in a commodity shortage environment.
It could be very hard to put the inflation genie back in the bottle.

[LaserEyeKiwi]

Weekly update:

13508

[nztx]

It could be argued it is irresponsible to push up wages wholesale like that in a commodity shortage environment.
It could be very hard to put the inflation genie back in the bottle.


In eyes of some, it's NEVER irresponsible when it's other people's coin that is being
dealt out .. Labour and the Greens are rather good at that sort of thing ;)

When it's time to be held accountable they're nowhere to be seen :)

[Waltzing]

" held accountable they're nowhere to be seen"

Sunday Socialists...

[LaserEyeKiwi]

Not a great week:

13527

[Muse]

Not a great week:

13527

Interesting - thanks for doing LEK

[nztx]

Indeed - the coming week possibly may be no better either IMO

[LaserEyeKiwi]

Indeed - the coming week possibly may be no better either IMO

We’ll be maybe approaching peak testing capacity sometime next week as cases at least double/triple again in the next 7 days. Its expected but will still spook some investors no doubt who haven’t already sold out of retail names.

Likely we will also start to see some retail chains struggling with staffing issues (too many in isolation) and having too close stores temporarily.

[LaserEyeKiwi]

Am awaiting with morbid fascination how quickly the tent city in front of parliament starts to turn into a triage center for Darwin’s finest. Wouldn’t want to have a retail store open in Wellington CBD currently.

[Rawz]

Am awaiting with morbid fascination how quickly the tent city in front of parliament starts to turn into a triage center for Darwin’s finest. Wouldn’t want to have a retail store open in Wellington CBD currently.

Yes its going to be quite ironic when they all get omicron..

I have expressed my views on the HLG thread earlier today and actually I started rumblings prior to Christmas about how the NZX retailers are in for a couple of years of struggle. I suspect the last post you do for the year will be 6/6 clean sweep of red. Not even the diamond amongst the rocks, MHJ, will be in the green i reckon.

Number 7 (TRA) is going to have to switch over to financial category soon if not now. Oxford finance is now and going forward going to be the big money earner for them. But I suppose its a chicken and egg thing with them. Cant sell finance without sell the car first. Or is it the other way round? Cant sell the car without first getting the money sorted?

[Beagle]

Am awaiting with morbid fascination how quickly the tent city in front of parliament starts to turn into a triage center for Darwin’s finest. Wouldn’t want to have a retail store open in Wellington CBD currently.

Yeap, lots of our "finest rocket scientists" including some from on here are down there wandering around with impunity thinking because its in the open air they are safe.

[Waltzing]

Queenstown business community has basically laid out the problem. Staff have to isolate, come back to work get closed contacted and then are back in the HUT.

QT looked empty on the news anyway.

Things like this never play out like in a war game.

Basically the GVT play book is out of pages...

[nztx]

Queenstown business community has basically laid out the problem. Staff have to isolate, come back to work get closed contacted and then are back in the HUT.

QT looked empty on the news anyway.

Things like this never play out like in a war game.

Basically the GVT play book is out of pages...


The whole district probably deserves more of Robo's magic Resurgence Support - backdated 3 months as well

Something Labour are only just waking up to .. again :)

Perhaps news of how many jobs are about to disappear might wake Robo up a bit faster ? ;)

[LaserEyeKiwi]

Queenstown business community has basically laid out the problem. Staff have to isolate, come back to work get closed contacted and then are back in the HUT.

QT looked empty on the news anyway.

Things like this never play out like in a war game.

Basically the GVT play book is out of pages...

There is no way around this unless isolation requirements are dropped for close contacts (which would undoubtedly lead to a massive spike in Omicron cases, which would lead to a corresponding massive spike in hospital admissions in 7-14 days time, followed by an inevitable spike in hospital deaths from both CV and non-CV patients who cant receive adequate care due to overloaded hospitals).

Staff shortages is exactly what happened in Australia during the start of their widespread Omicron outbreak. Everyone paying attention to what happened in OZ knew their would be a period where temporary widespread staff shortages would be happening.

This is the alternative to lockdowns that everyone wanted after all (Queenstown businesses most of all somewhat ironically)

[Waltzing]

Private enterprise needs to be trusted to get the job done...doesnt seem to be an NZ kiwi thing.

QT needs to be free to decide for themselves what best for them.

Whole country seems to be one big GVT department..

next variant is on the way and its a real hum dinger..

Retail needs to be free to run itself in the FOG of war

[Rawz]

Retail no good eh Waltz. Big struggle for a couple of years

[Waltzing]

The big boys like BRISC and HLG will be fine but its small town hospo and tourism that seems now to be on the front line and they dont have deep pockets.

When you see they are still at their dance lessons masked up...That shows you the public wont give up if you give them the tools to keep doing what they like to do.

They arnt leaving the dance floor.

[LaserEyeKiwi]

Private enterprise needs to be trusted to get the job done...doesnt seem to be an NZ kiwi thing.

QT needs to be free to decide for themselves what best for them.

Whole country seems to be one big GVT department..

next variant is on the way and its a real hum dinger..

Retail needs to be free to run itself in the FOG of war

”retail needs to be free to run itself in the fog of war”

Isn’t that what is happening right now? There is no restraint on trade happening at all now, there are no lockdowns - its purely the vast majority of the public not wanting to visit retail locations due to a raging pandemic that is leaving stores empty.

Seems like retailers would actually PREFER a level three lockdown right now where they got a juicy wage subsidy while they continued to serve people online and via click&collect.

Don’t get me wrong, I have sympathy for retailers & hospitality suffering, and agree a government support payment for business during this next couple of months would be appropriate.

However I find insufferable all these businesses that were complaining about being unable to open retail stores while they suckled on the taxpayer’s teet - complaining now of the lack of free taxpayer cash after getting exactly what they wanted (no lockdowns & “learn to live with the virus”).

I have no idea what these people expected to happen when the public finally had to “learn to live with the virus”. This is New Zealand’s first widespread Covid outbreak, so it makes sense we would act similarly to how the rest of the world did when they experienced it in early 2020. ie: widespread fear of catching it, and slowly over a few months our brains get used to it and most people will start acting like normal again with their retail habits (except for the very at risk groups).

[Waltzing]

Taylor summed it up best ....

Its a total joke ..

[Rawz]

Agree 100% LEK

[LaserEyeKiwi]

Some good reading in here:

https://www.stats.govt.nz/information-releases/household-income-and-housing-cost-statistics-year-ended-june-2021


Key factsIn the year ended June 2021 (compared with the year ended June 2020), the key measures of household incomes and housing costs showed:


average annual household income (gross) increased from $105,701 to $110,451 (up 4.5 percent)
average annual household disposable income (after tax and transfer payments) increased from $84,648 to $88,454 (up 4.5 percent)
average annual household equivalised disposable income (after tax and transfer payments) increased from $47,727 to $50,164 (up 5.1 percent)
average weekly housing costs increased 2.5 percent from $340.00 to $348.60
total mortgage payments were unchanged
for those paying rent, the average weekly spend on rent increased 5.4 percent, from $372.30 to $392.30
average annual household equivalised disposable income (after tax and transfer payments and after housing costs are deducted) increased from $37,462 to $39,583 (up 5.7 percent).

[LaserEyeKiwi]

Retail sales figures are out for December quarter here: https://www.stats.govt.nz/assets/Uploads/Retail-trade-survey/Retail-trade-survey-December-2021-quarter/Download-data/rts-Dec-2021-tables.xlsx

Commentary from interest.co.nz:


In the December quarter, retail sales (https://www.stats.govt.nz/information-releases/retail-trade-survey-december-2021-quarter) were +8.8% higher than the same quarter in 2020 and +14% higher than in the same quarter in 2019. There were some big winners including online sales, recreation, hardware, clothing, pharmacies, and vehicles (hence the larger trade deficit). The losers were tourism, hospo, liquor, and department stores - on a year-on-year basis.

[LaserEyeKiwi]

Weekly update…

13563

[Waltzing]

https://www.stuff.co.nz/business/127889703/spending-up-in-last-quarter-of-2021-but-will-it-last

[winner69]

Pretty sobering outlook from a retail perspective in particular - General Business Confidence / Own Activity / Activity v last year / Profits all gloomy

ut they probably gaming the system .... trying to scare Robertson to give more handouts

https://watermarker.singletrack.io/ANZ_NZ_Business_Outlook_stagflationary_activity_do wn_inflation_pressures_up.pdf?data=DhZAW5pNirsgovB dALYwomrNyXdpUKxDB7RxefLNZ79DdE3IwkjikhCo7OhrEBsP6 Uagmgj6B6pPDNlZhuh3q7PVWhJKgz1G4y3Pa2gtvjJmZXe1ybJ XF8omQ%2F%2FM7zjwHyPlR%2B6bbE0q6n19105TIpLNmBvw7C7 T3UVCfKe%2BbA8iYCTZQzey0I9ry%2B6xH%2FWKcgoKdgeKUyQ 2hnttI2KEOENMn6ghEG7B3m7YiLMph3rkzLcGWWBepdp1QaBaW jX8K0Z0lWmkN%2BwamdbwnxMgXcWNeeyBDkyQjnBfi2%2BwSOE xZcox2HqYYQsovlUCr6fe7Tdb4cVXFw5NQjHR2nScq968DOoAW 4DQ8A4Z3WC1VlQoG9Pss%2FDo11Sohakc6H5n5JBzU0dk%2Btf VBozx%2BTrrMxpaGN4KzRrg%2Fxobq5D9YObnGNuxiDIf%2FjM dECvM6%2BHYmTLtoX2pg2mbXuVEWW3V2NmSBa8vg25tlp5zzuN YfXg%2Fkx9sarlH%2BQMYYoLFHB8vHtdBGHqvLjCiRyZkOPxBX tcY0ks8I0xFa0P8dll%2FtIuXoFQ%2F7PvwTisjefF3bS%2FZi hWuUJ%2B5iuYTC3zQxcxTlSFjNc1r5bB937dww70n2kQoLogsB Kc4XSPqI3LzEZtxhxABOr4v6DUWoJOT3hfZzM9Vr%2BpUBsf3q fUm5zEHuG4WZv6J%2BLGn%2B%2BCupiNwN%2FxIyJfs0f4WMzE PPvHcSS9BYoUrnLYkOD5r%2B82LiheIPD3Gny8o0kgG16qDPze 7QL669P5hLW6ovAFUdSex1T%2B3CpwRMz3Ce%2Fe3mZRN7HC8b JHMXAinA8mglP4cqfHtXr5jqnsDWLAcvXXPj9JeFX7%2FSAXAO 9ALIQwo%2BrZc9kfxEri6kOy5e%2FOMjFcbWkb05HTmQcWPRaP 564o%2BCdQN9dmPRpc59GxbUwGv9FoFGXvUAzI%3D&s3Url=https%3A%2F%2Fanz-singletrack.s3.ap-southeast-2.amazonaws.com%2FANZ_NZ_Business_Outlook_stagflat ionary_activity_down_inflation_pressures_up.pdf%3F X-Amz-Signature%3D371d544069ab624fe147c8dc532a42f12b8e5c 8a2d3f3272a69f02cb1c0a2cea%26X-Amz-Algorithm%3DAWS4-HMAC-SHA256%26X-Amz-Credential%3DAKIAZGZPZQBPX2SV22UN%252F20220228%252 Fap-southeast-2%252Fs3%252Faws4_request%26X-Amz-Date%3D20220228T000000Z%26X-Amz-Expires%3D86400%26X-Amz-SignedHeaders%3Dhost

[Waltzing]

if you can bring in some RAT A TAT kits you could set up a stand and retail them... hot product right now..

[LaserEyeKiwi]

Pretty sobering outlook from a retail perspective in particular - General Business Confidence / Own Activity / Activity v last year / Profits all gloomy

ut they probably gaming the system .... trying to scare Robertson to give more handouts

https://watermarker.singletrack.io/ANZ_NZ_Business_Outlook_stagflationary_activity_do wn_inflation_pressures_up.pdf?data=DhZAW5pNirsgovB dALYwomrNyXdpUKxDB7RxefLNZ79DdE3IwkjikhCo7OhrEBsP6 Uagmgj6B6pPDNlZhuh3q7PVWhJKgz1G4y3Pa2gtvjJmZXe1ybJ XF8omQ%2F%2FM7zjwHyPlR%2B6bbE0q6n19105TIpLNmBvw7C7 T3UVCfKe%2BbA8iYCTZQzey0I9ry%2B6xH%2FWKcgoKdgeKUyQ 2hnttI2KEOENMn6ghEG7B3m7YiLMph3rkzLcGWWBepdp1QaBaW jX8K0Z0lWmkN%2BwamdbwnxMgXcWNeeyBDkyQjnBfi2%2BwSOE xZcox2HqYYQsovlUCr6fe7Tdb4cVXFw5NQjHR2nScq968DOoAW 4DQ8A4Z3WC1VlQoG9Pss%2FDo11Sohakc6H5n5JBzU0dk%2Btf VBozx%2BTrrMxpaGN4KzRrg%2Fxobq5D9YObnGNuxiDIf%2FjM dECvM6%2BHYmTLtoX2pg2mbXuVEWW3V2NmSBa8vg25tlp5zzuN YfXg%2Fkx9sarlH%2BQMYYoLFHB8vHtdBGHqvLjCiRyZkOPxBX tcY0ks8I0xFa0P8dll%2FtIuXoFQ%2F7PvwTisjefF3bS%2FZi hWuUJ%2B5iuYTC3zQxcxTlSFjNc1r5bB937dww70n2kQoLogsB Kc4XSPqI3LzEZtxhxABOr4v6DUWoJOT3hfZzM9Vr%2BpUBsf3q fUm5zEHuG4WZv6J%2BLGn%2B%2BCupiNwN%2FxIyJfs0f4WMzE PPvHcSS9BYoUrnLYkOD5r%2B82LiheIPD3Gny8o0kgG16qDPze 7QL669P5hLW6ovAFUdSex1T%2B3CpwRMz3Ce%2Fe3mZRN7HC8b JHMXAinA8mglP4cqfHtXr5jqnsDWLAcvXXPj9JeFX7%2FSAXAO 9ALIQwo%2BrZc9kfxEri6kOy5e%2FOMjFcbWkb05HTmQcWPRaP 564o%2BCdQN9dmPRpc59GxbUwGv9FoFGXvUAzI%3D&s3Url=https%3A%2F%2Fanz-singletrack.s3.ap-southeast-2.amazonaws.com%2FANZ_NZ_Business_Outlook_stagflat ionary_activity_down_inflation_pressures_up.pdf%3F X-Amz-Signature%3D371d544069ab624fe147c8dc532a42f12b8e5c 8a2d3f3272a69f02cb1c0a2cea%26X-Amz-Algorithm%3DAWS4-HMAC-SHA256%26X-Amz-Credential%3DAKIAZGZPZQBPX2SV22UN%252F20220228%252 Fap-southeast-2%252Fs3%252Faws4_request%26X-Amz-Date%3D20220228T000000Z%26X-Amz-Expires%3D86400%26X-Amz-SignedHeaders%3Dhost

13569

The money shot…

[winner69]

In Aussie re January retail - Retail sales came in above expectations, posting a surprisingly robust 1.8% gain in Jan. Omicron-related drags look to have been minimal in the month with only two storetype categories recording sales declines and some exposed segments holding up much better than expected.

https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Economics/2022/2022-02/er20220228bullretailJan.pdf

[Sideshow Bob]

if you can bring in some RAT A TAT kits you could set up a stand and retail them... hot product right now..

Alot of essential businesses haven't been able to source them to date.....

[Ggcc]

Rat tests

They are arriving in supermarkets soon at cost price to the supermarkets around $6.50 a test.

[Waltzing]

oh well that could calm the local GP practises and what the profit margin for the retailers on that one?

Enquiry demanded by IWI Trust managers into the issue...

[dreamcatcher]

Few drive thru in Auckland giving away RAT KITS for free.............

[Waltzing]

Chemist warehouse $45 for kit of 5!

[LaserEyeKiwi]

Online shopping in Auckland will only see critical items now delivered. Will hit some online retail volume over the next few weeks at least.

https://i.stuff.co.nz/business/industries/127929921/covidhit-new-zealand-couriers-delivering-only-critical-items-to-auckland-as-covid-bites

[winner69]

ANZ Roy Morgan Consumer Confidence plunged 16 points in February as Omicron cases surged.

[winner69]

Consumer Confidence …pretty gloomy lot are consumers ….methinks they been reading too papers and watching too much CNBC

Some measures never been seem before (like being better off in a years time) ….and jeez the response to this question is pretty sobering - Thinking ahead, what would you say is more likely: that in New Zealand as a whole we’ll have continuous good times during the next five years or so, we’ll have bad times, or some good and some bad?

https://watermarker.singletrack.io/ANZ_NZ_Roy_Morgan_Consumer_Confidence_darkest_befo re_the_dawn.pdf?data=DhZAW5pNirsgovBdALYwomrNyXdpU KxDB7RxefLNZ79DdE3IwkjikhCo7OhrEBsP6Uagmgj6B6pPDNl Zhuh3q7PVWhJKgz1G4y3Pa2gtvjJmZXe1ybJXF8omQ%2F%2FM7 zjwHyPlR%2B6bbE0q6n19105TIrVxvBKmLX9tiLzMPY9iyzQnk 1MGWRb73DKGiR5jvigmaCzVs%2FtumxpNVjs8RaBf4bwx6oUNS Kv%2B1h3DKGj1uOmj%2B2gpBuhQWM%2FGGIiULOcgshxfYXZVq G2SE2oYZsVeuwtT1nA%2Fc8jEX5qzhtg7ttlGMS8r0Ycf9QF2A 2aoU3h2l0i%2Bvx70enALLEhcq19WjgB89%2BwErh0xL9Yi%2B RL3HUkQNJFxV7wbPieL3VSdaj9uxOA%2Brmv2sheq3dTZaORBw MO7tTGwzdSCmml0EKjrW8wNSR0nTYRwh8aIoB%2BfkykSWNxrg LU2dlNVH94T6pTrEO2Rz%2FxxjVdACjHFKpkI0vGaH0tMXfga9 GscDbvYGuEmtvaaZHF1%2Ba1iZfBGHSvXIiVuZq4WAB8bMzlzw WF6epml%2BVrGFiIZdTin9z3AXVqC1UAJp6nWHokLOWjN1kgnI t7vsCjZY3m%2Bl6h5cBhukGewGyPkRlVixtIR16j9%2Fy6aMXS ukgbwl2j3THyKleKnfJedKgyrC07w8KJZWOBjqbBFRZa3VNmOx H%2F7qgXdYV7OntHeBMlATNf49UUzPyRdk7T2YF8z%2BXSKqV2 fb0aIjmj9YePlDLNj4BZ9GumnCtElGba0i0vHaZmUI5v6a0JN6 XcghMwjS9UYKuvFV%2Fouk5hWAobCqg%2Bn3RPk1wOlE8DBk0N WbfcptFPFiKm%2Fe0KL%2FpWbKUThRnIDkDg5Vm1UJBO7KpNuR yxWNgvGWOg2M4Yq6%2BJn7245cQyf56kdg9Fmiw%3D%3D&s3Url=https%3A%2F%2Fanz-singletrack.s3.ap-southeast-2.amazonaws.com%2FANZ_NZ_Roy_Morgan_Consumer_Confi dence_darkest_before_the_dawn.pdf%3FX-Amz-Signature%3D453c99f45385f9aea91388bf93793e4d94967c 8a1189c9ad48e4420e27804757%26X-Amz-Algorithm%3DAWS4-HMAC-SHA256%26X-Amz-Credential%3DAKIAZGZPZQBPX2SV22UN%252F20220303%252 Fap-southeast-2%252Fs3%252Faws4_request%26X-Amz-Date%3D20220303T000000Z%26X-Amz-Expires%3D86400%26X-Amz-SignedHeaders%3Dhost

[LaserEyeKiwi]

Consumer Confidence …pretty gloomy lot are consumers ….methinks they been reading too papers and watching too much CNBC

Some measures never been seem before (like being better off in a years time) ….and jeez the response to this question is pretty sobering - Thinking ahead, what would you say is more likely: that in New Zealand as a whole we’ll have continuous good times during the next five years or so, we’ll have bad times, or some good and some bad?

https://watermarker.singletrack.io/ANZ_NZ_Roy_Morgan_Consumer_Confidence_darkest_befo re_the_dawn.pdf?data=DhZAW5pNirsgovBdALYwomrNyXdpU KxDB7RxefLNZ79DdE3IwkjikhCo7OhrEBsP6Uagmgj6B6pPDNl Zhuh3q7PVWhJKgz1G4y3Pa2gtvjJmZXe1ybJXF8omQ%2F%2FM7 zjwHyPlR%2B6bbE0q6n19105TIrVxvBKmLX9tiLzMPY9iyzQnk 1MGWRb73DKGiR5jvigmaCzVs%2FtumxpNVjs8RaBf4bwx6oUNS Kv%2B1h3DKGj1uOmj%2B2gpBuhQWM%2FGGIiULOcgshxfYXZVq G2SE2oYZsVeuwtT1nA%2Fc8jEX5qzhtg7ttlGMS8r0Ycf9QF2A 2aoU3h2l0i%2Bvx70enALLEhcq19WjgB89%2BwErh0xL9Yi%2B RL3HUkQNJFxV7wbPieL3VSdaj9uxOA%2Brmv2sheq3dTZaORBw MO7tTGwzdSCmml0EKjrW8wNSR0nTYRwh8aIoB%2BfkykSWNxrg LU2dlNVH94T6pTrEO2Rz%2FxxjVdACjHFKpkI0vGaH0tMXfga9 GscDbvYGuEmtvaaZHF1%2Ba1iZfBGHSvXIiVuZq4WAB8bMzlzw WF6epml%2BVrGFiIZdTin9z3AXVqC1UAJp6nWHokLOWjN1kgnI t7vsCjZY3m%2Bl6h5cBhukGewGyPkRlVixtIR16j9%2Fy6aMXS ukgbwl2j3THyKleKnfJedKgyrC07w8KJZWOBjqbBFRZa3VNmOx H%2F7qgXdYV7OntHeBMlATNf49UUzPyRdk7T2YF8z%2BXSKqV2 fb0aIjmj9YePlDLNj4BZ9GumnCtElGba0i0vHaZmUI5v6a0JN6 XcghMwjS9UYKuvFV%2Fouk5hWAobCqg%2Bn3RPk1wOlE8DBk0N WbfcptFPFiKm%2Fe0KL%2FpWbKUThRnIDkDg5Vm1UJBO7KpNuR yxWNgvGWOg2M4Yq6%2BJn7245cQyf56kdg9Fmiw%3D%3D&s3Url=https%3A%2F%2Fanz-singletrack.s3.ap-southeast-2.amazonaws.com%2FANZ_NZ_Roy_Morgan_Consumer_Confi dence_darkest_before_the_dawn.pdf%3FX-Amz-Signature%3D453c99f45385f9aea91388bf93793e4d94967c 8a1189c9ad48e4420e27804757%26X-Amz-Algorithm%3DAWS4-HMAC-SHA256%26X-Amz-Credential%3DAKIAZGZPZQBPX2SV22UN%252F20220303%252 Fap-southeast-2%252Fs3%252Faws4_request%26X-Amz-Date%3D20220303T000000Z%26X-Amz-Expires%3D86400%26X-Amz-SignedHeaders%3Dhost

Lower level than March 2020!?

Peak pessimism? Auckland was already in rapidly accelerating Omicron wave, falling housing values & rising mortgage rates starting to be noticed, Idiots were encamped in central wellington.

Good commentary around the difference between NZ vs OZ in relation to the consumer confidence reaction to the Omicron wave, in that for many in NZ this is the first experience of actually being at high risk of catching CV (whereas Australians went through that already with Delta last year, and the rest of the world went through that starting two years ago).

I do find it interesting that there is still a net expectation that housing values will keep going up. So maybe there is more pessimism to come on that front once the March survey hits. (Also Ukraine War & Fuel prices will have spiked hire as well)

[LaserEyeKiwi]

Weekly Update:

13579

[LaserEyeKiwi]

Omicron impact on February Retail sales:

https://www.stats.govt.nz/news/card-spending-drops-in-february-as-omicron-spreads


The total amount spent on consumables in February, which includes groceries and liquor, decreased by $141 million (5.7 percent) from the previous month.

Apart from consumables, the downturn was particularly driven by card spending on apparel, which includes clothing, shoes, jewellery, and watches, down $50 million (14.4 percent), and on fuel, down $35 million (5.9 percent).

[FTG]

Omicron impact on February Retail sales:

https://www.stats.govt.nz/news/card-spending-drops-in-february-as-omicron-spreads

...And when taking into account the actual price inflation for all the various goods that has occurred over the last 12 months, the deterioration in consumer spend is significantly worse than the headline numbers indicate.

Additionally, transactional data (actual number of individual consumer transactions) paints even more stark picture.

[Rawz]

Stay away from retail

[LaserEyeKiwi]

To be honest I am quite surprised the fall was only 5.7% - that is a much better result than I would have imagined given my own experience - the last time we set foot in a retail store that wasn't a supermarket or chemist was over 4 weeks ago.

[Muse]

Rising fuel prices will directly usurp previously discretionary income spent on retail. Add that with rising input costs = margins going backwards fast.

[LaserEyeKiwi]

Weekly update:

13611

[winner69]

Weekly update:

13611

Something wrong LEK …….MHJ has gone negative YTD;)

[Rawz]

You know retail is really done and dusted when MHJ has finally gone negative.

Interesting how LEKs new columns highlight how much of a dog HLG has been. Still more pain to come as well

[Beagle]

You know retail is really done and dusted when MHJ has finally gone negative.

Interesting how LEKs new columns highlight how much of a dog HLG has been. Still more pain to come as well

Its been a brutal start to the year, no question about that. Watching and waiting and using the charts and using technical analysis, (which is your best tool in times of great uncertainty) to try and time any new or enlarged positions into a new uptrend is a prudent and risk averse approach that makes the most sense to me in these incredibly uncertain times. A new uptrend on many stocks might not happen for quite some time.
Patience and very good discipline is required here. Taking new or much larger positions based solely on one's fundamental assessment of value and completely disregarding technical analysis is a very, very risky thing to do in this market.

I will share what I am doing in the hope it might help some newer investors on here.
I think great companies like HLG, SUM, HGH, GNE and TRA are great value here but the market says otherwise and they are all in a downtrend.
I've been very transparent that I moved to a high cash position late last year and I am in no hurry whatsoever to deploy that cash into risk assets so my plan is as follows.

I don't own any SUM but I think they are a great company and extremely well managed so as soon as I see a new uptrend forming, (this could be many months away), as depicted by the share price breaking up through the 30 day moving average I will put on a half sized position. If that uptrend continues and is confirmed by a break up through the 100 day moving average I will put on the other half. I will use the same technique on HLG in which I am underweight.

With regard to TRA, GNE and HGH, as I already hold quite a few I will probably start to reconsider adding a few more when they break up through a new uptrending 100 day MA indicator.

I have no plans to add to my stake in OCA until they can prove to me they are capable of growing underlying earnings per share.

I won't sell any of my shares in any company I have a stake in at their current beaten down prices.

[winner69]

Retailwatch Feb month sales data -

Feb sales up 0.1% on last year

Instore spend DOWN 2.7% but online spend domestically UP 16.5% (with offshore spend up 27%)

Online spend is 17% of total

[Waltzing]

not bad performance winner(n) ? instore only down 2.7!

[LaserEyeKiwi]

Retail related stats form todays GDP report for the December quarter:


Retail, accommodation, and restaurants was up 6.7 percent in the December 2021 quarter. Retail trade was up 10.7 percent.

Household spending rose 5.2 percent in the December 2021 quarter, following a fall of 7.1 percent in the September 2021 quarter.This rise in household spending was driven by spending on durables, up 16.9 percent, and spending on services, up 3.6 percent. Households spent more on durable goods such as clothing and footwear; and household contents and services. Spending on non-durables increased by 2.7 percent.
Household spending was 4.3 percent above the levels of the pre-COVID-19 December 2019 quarter

[LaserEyeKiwi]

Drewry world container index (good proxy for international shipping costs) finally dropped below 9000 for the first time in 9 months. Still very elevated level (it was 5000 a year ago), but now 15% below the peak price at least.

[LaserEyeKiwi]

Weekly Update:
13627

[peat]

I saw BGR said their stores were empty.... so the good result and the uptick may not last despite Duke's undoubted prowess.
lots of technical support in the high 5's , so should hold there...
no divergence on RSI tho (unlike OCA)

[Waltzing]

Brisc havnt been just sitting around in covid on their behinds doing nothing much. Who said the stores were going to be empty?

Looks like they have ideas for new stores and concepts.

"During the year $19.90 million of capital investment was made by the Group of which $9.66 million represents development of property owned by the Group in Auckland and Silverdale. The balance of the capital investment was for the fit-out of new and refurbished stores, online platform improvements, security system upgrades and enhancements to system software and hardware. Work also continued on a number of projects in relation to Group owned properties. The construction of a new concept Briscoes Homeware store at 36 Taylors Road, Auckland was completed and the store opened in early March. This allowed the introduction in April of a brand-new Rebel Sport store in the retail space on the ground floor of the Support Office building at 1 Taylors Road, Morningside. In addition, the Group’s development at Silverdale was completed and the new Briscoes Homeware and Rebel Sport stores opened in November. Rod Duke said, “Trading results from both the Silverdale stores have significantly exceeded expectations and feedback has been overwhelmingly positive. We’re extremely pleased with all of the new stores opened this year and their success gives us confidence for further network growth opportunities in relation to the refurbishment and/or establishment of new stores. In fact, work has now started on upgrades to our Rebel Sport stores in Te Rapa and Albany which will incorporate many of the ideas and concepts introduced in the new generation Silverdale and Morningside stores."

[winner69]

Now is the winter of discontent says Westpac as consumer confidence continues to tumble

https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/New_Zealand/2022/March_2022/Q1_Consumer_conf_Mar_2022_Westpac_NZ.pdf

[LaserEyeKiwi]

Now is the winter of discontent says Westpac as consumer confidence continues to tumble

https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/New_Zealand/2022/March_2022/Q1_Consumer_conf_Mar_2022_Westpac_NZ.pdf

That level of pessimism smells like a bottom, especially with employment still at historically all time high levels. Of course it will take the current half year period for that bottom of consumer confidence to be reflected in impacted retail sales (alongside the Omicron slump impact of course - which no doubt contributes to that consumer confidence figure), but I would guess the 2nd half of this year would look a lot healthier.

One spanner would of course be if the current downtrend in housing prices turns out to be a steep cliff rather than a gentle downslope.

(As someone who is hoping to add a property, I would selfishly prefer a huge housing crash to a gentle fall).

[LaserEyeKiwi]

Weekly Update:

13643

[winner69]

Some might find this interesting

Shows the growth in brand sales in NZ since pre-covid - over the 2 years from 'base' year. Reads Briscoes Homeware annual sales to Jan22 are 12.2% higher than Jan20, growth rate of 5.9% pa

Quite a variance eh between winners and losers

Make of it what you want

[LaserEyeKiwi]

Some might find this interesting

Shows the growth in brand sales in NZ since pre-covid - over the 2 years from 'base' year. Reads Briscoes Homeware annual sales to Jan22 are 12.2% than Jan20, growth rate of 5.9% pa

Quite a variance eh between winners and losers

Make of it what you want

appreciated!

That Kmart figure is amazing, but not a surprise.

I do wonder how much of Kathmandu’s turnover was tourism based. I hadn’t even considered it, but I was chatting with an Uber driver last year and he was saying his family in Canada always insist that he bring plenty of Kathmandu jackets with him on his annual trips over as they see it as a luxury brand (which he found hilarious).

[winner69]

From earlier post some might be surprised at the high overall retial sales growth - for the selected sector stores growing at 10% pa

Way above average and says covid has been kind to retail

Below is a breakdown of different sectors.The top group is loosely known as durables

[LaserEyeKiwi]

Good news - looks like global shipping costs are now in a clear downtrend…

13650

[winner69]

Bloody heck .... consumers are down in the dumps

Chart a bit spooky

ANZ Roy Morgan Poll

https://watermarker.singletrack.io/ANZ_NZ_Roy_Morgan_Consumer_Confidence_from_bad_to_ worse.pdf?data=DhZAW5pNirsgovBdALYwomrNyXdpUKxDB7R xefLNZ79DdE3IwkjikhCo7OhrEBsP6Uagmgj6B6pPDNlZhuh3q 7PVWhJKgz1G4y3Pa2gtvjJmZXe1ybJXF8omQ%2F%2FM7zjwHyP lR%2B6bbE0q6n19105TIrVxvBKmLX9tiLzMPY9iyzQnk1MGWRb 73DKGiR5jvigmRes6RUFfCoM5qheEoODxLOoR%2BgGTLv1pVzv fmrmV79nFIuZ3aRqm%2BnmA0V2xRRh9oevwxa9CtCsm%2BfXcB gDAv0R4ymWlCyM4kXPBkyM2nPpqOt%2BaNdqOLPhsEPd96UbXb eSzxzyJ%2BPt01N82Ts75OQAOIy1PEaQ%2BpnjxJbUSV%2F79P 2A%2FjRIBbWBGfAkg9vBWLNbGsC2utzykIH%2Fi74nFL7je2Ii JkgxyuhHZcb7f1j0Muu103VPInqhMj8SotlIsMv7GEvk40no4B qEL5owkh5WhEhsVQbWgexx%2FF7TyqXjaFx6YkAY5wa7cfjRj8 1ApKNQCRBgxyyAqPJavd7YPR%2BgJO0hJHA9MiJUlLYhnVZfHH 4GObZ0isLnemd7JGoK1G6ViUKyA8QhJIFyDq0falqzyI0tO2gp Tumx84P1%2FikofjyfgNs0EDH5HAzYoASurXEtwiV4KgNyYQR% 2BZjw%2FZs9OBoI2WlC%2FvOfpWUjO2o2p5xUJOi12X0q0RZXl GOY1Ye17OHJcmzVhmG180r2nk4xY9ZyXdNyjWGl4DHJg7AlWJF IhLXNFMifsPe7eEVHaqwsaEKL12EmX%2FJdQbNmT2ypFF1yBXl jwSmucd1pVwj3q80CJ%2Fz%2Bfs39T%2BdnYmyDqhM8cnq4m5c QILgZ6167Wj0Q3zm%2FHkDt5%2BWzZcBkWul1sVXD%2F%2B%2F GtWr8c2evWuZA6i&s3Url=https%3A%2F%2Fanz-singletrack.s3.ap-southeast-2.amazonaws.com%2FANZ_NZ_Roy_Morgan_Consumer_Confi dence_from_bad_to_worse.pdf%3FX-Amz-Signature%3D5a383bef24ead58683208fdd32141b214c54ee 4eae093e956c2397ee472c2d9d%26X-Amz-Algorithm%3DAWS4-HMAC-SHA256%26X-Amz-Credential%3DAKIAZGZPZQBPX2SV22UN%252F20220331%252 Fap-southeast-2%252Fs3%252Faws4_request%26X-Amz-Date%3D20220331T000000Z%26X-Amz-Expires%3D86400%26X-Amz-SignedHeaders%3Dhost

[percy]

Bloody heck .... consumers are down in the dumps

Chart a bit spooky

ANZ Roy Morgan Poll

https://watermarker.singletrack.io/ANZ_NZ_Roy_Morgan_Consumer_Confidence_from_bad_to_ worse.pdf?data=DhZAW5pNirsgovBdALYwomrNyXdpUKxDB7R xefLNZ79DdE3IwkjikhCo7OhrEBsP6Uagmgj6B6pPDNlZhuh3q 7PVWhJKgz1G4y3Pa2gtvjJmZXe1ybJXF8omQ%2F%2FM7zjwHyP lR%2B6bbE0q6n19105TIrVxvBKmLX9tiLzMPY9iyzQnk1MGWRb 73DKGiR5jvigmRes6RUFfCoM5qheEoODxLOoR%2BgGTLv1pVzv fmrmV79nFIuZ3aRqm%2BnmA0V2xRRh9oevwxa9CtCsm%2BfXcB gDAv0R4ymWlCyM4kXPBkyM2nPpqOt%2BaNdqOLPhsEPd96UbXb eSzxzyJ%2BPt01N82Ts75OQAOIy1PEaQ%2BpnjxJbUSV%2F79P 2A%2FjRIBbWBGfAkg9vBWLNbGsC2utzykIH%2Fi74nFL7je2Ii JkgxyuhHZcb7f1j0Muu103VPInqhMj8SotlIsMv7GEvk40no4B qEL5owkh5WhEhsVQbWgexx%2FF7TyqXjaFx6YkAY5wa7cfjRj8 1ApKNQCRBgxyyAqPJavd7YPR%2BgJO0hJHA9MiJUlLYhnVZfHH 4GObZ0isLnemd7JGoK1G6ViUKyA8QhJIFyDq0falqzyI0tO2gp Tumx84P1%2FikofjyfgNs0EDH5HAzYoASurXEtwiV4KgNyYQR% 2BZjw%2FZs9OBoI2WlC%2FvOfpWUjO2o2p5xUJOi12X0q0RZXl GOY1Ye17OHJcmzVhmG180r2nk4xY9ZyXdNyjWGl4DHJg7AlWJF IhLXNFMifsPe7eEVHaqwsaEKL12EmX%2FJdQbNmT2ypFF1yBXl jwSmucd1pVwj3q80CJ%2Fz%2Bfs39T%2BdnYmyDqhM8cnq4m5c QILgZ6167Wj0Q3zm%2FHkDt5%2BWzZcBkWul1sVXD%2F%2B%2F GtWr8c2evWuZA6i&s3Url=https%3A%2F%2Fanz-singletrack.s3.ap-southeast-2.amazonaws.com%2FANZ_NZ_Roy_Morgan_Consumer_Confi dence_from_bad_to_worse.pdf%3FX-Amz-Signature%3D5a383bef24ead58683208fdd32141b214c54ee 4eae093e956c2397ee472c2d9d%26X-Amz-Algorithm%3DAWS4-HMAC-SHA256%26X-Amz-Credential%3DAKIAZGZPZQBPX2SV22UN%252F20220331%252 Fap-southeast-2%252Fs3%252Faws4_request%26X-Amz-Date%3D20220331T000000Z%26X-Amz-Expires%3D86400%26X-Amz-SignedHeaders%3Dhost
No surprise there.
Price of petrol increases at the pumps,retail spending declines at the shops.

ps.Watch for Beagle to fall out of love with retail.....lol

[LaserEyeKiwi]

Bloody heck .... consumers are down in the dumps

Chart a bit spooky

ANZ Roy Morgan Poll

https://watermarker.singletrack.io/ANZ_NZ_Roy_Morgan_Consumer_Confidence_from_bad_to_ worse.pdf?data=DhZAW5pNirsgovBdALYwomrNyXdpUKxDB7R xefLNZ79DdE3IwkjikhCo7OhrEBsP6Uagmgj6B6pPDNlZhuh3q 7PVWhJKgz1G4y3Pa2gtvjJmZXe1ybJXF8omQ%2F%2FM7zjwHyP lR%2B6bbE0q6n19105TIrVxvBKmLX9tiLzMPY9iyzQnk1MGWRb 73DKGiR5jvigmRes6RUFfCoM5qheEoODxLOoR%2BgGTLv1pVzv fmrmV79nFIuZ3aRqm%2BnmA0V2xRRh9oevwxa9CtCsm%2BfXcB gDAv0R4ymWlCyM4kXPBkyM2nPpqOt%2BaNdqOLPhsEPd96UbXb eSzxzyJ%2BPt01N82Ts75OQAOIy1PEaQ%2BpnjxJbUSV%2F79P 2A%2FjRIBbWBGfAkg9vBWLNbGsC2utzykIH%2Fi74nFL7je2Ii JkgxyuhHZcb7f1j0Muu103VPInqhMj8SotlIsMv7GEvk40no4B qEL5owkh5WhEhsVQbWgexx%2FF7TyqXjaFx6YkAY5wa7cfjRj8 1ApKNQCRBgxyyAqPJavd7YPR%2BgJO0hJHA9MiJUlLYhnVZfHH 4GObZ0isLnemd7JGoK1G6ViUKyA8QhJIFyDq0falqzyI0tO2gp Tumx84P1%2FikofjyfgNs0EDH5HAzYoASurXEtwiV4KgNyYQR% 2BZjw%2FZs9OBoI2WlC%2FvOfpWUjO2o2p5xUJOi12X0q0RZXl GOY1Ye17OHJcmzVhmG180r2nk4xY9ZyXdNyjWGl4DHJg7AlWJF IhLXNFMifsPe7eEVHaqwsaEKL12EmX%2FJdQbNmT2ypFF1yBXl jwSmucd1pVwj3q80CJ%2Fz%2Bfs39T%2BdnYmyDqhM8cnq4m5c QILgZ6167Wj0Q3zm%2FHkDt5%2BWzZcBkWul1sVXD%2F%2B%2F GtWr8c2evWuZA6i&s3Url=https%3A%2F%2Fanz-singletrack.s3.ap-southeast-2.amazonaws.com%2FANZ_NZ_Roy_Morgan_Consumer_Confi dence_from_bad_to_worse.pdf%3FX-Amz-Signature%3D5a383bef24ead58683208fdd32141b214c54ee 4eae093e956c2397ee472c2d9d%26X-Amz-Algorithm%3DAWS4-HMAC-SHA256%26X-Amz-Credential%3DAKIAZGZPZQBPX2SV22UN%252F20220331%252 Fap-southeast-2%252Fs3%252Faws4_request%26X-Amz-Date%3D20220331T000000Z%26X-Amz-Expires%3D86400%26X-Amz-SignedHeaders%3Dhost

Amazing what a widespread pandemic outbreak will do to the psyche - even with two years pre-warning.

NZ basically going through what the rest of the world did in April 2020.

[Rawz]

No surprise there.
Price of petrol increases at the pumps,retail spending declines at the shops.

ps.Watch for Beagle to fall out of love with retail.....lol

Dont forget the higher mortgage payments. Mine going up $1000 a month with the new rates. Rental property going from cashflow positive to negative so have to top that up.

I told the wife that we need to live like a frugal boomer now, good bye avocado on toast :(

[LaserEyeKiwi]

Dont forget the higher mortgage payments. Mine going up $1000 a month with the new rates. Rental property going from cashflow positive to negative so have to top that up.

I told the wife that we need to live like a frugal boomer now, good bye avocado on toast :(

Did you buy the property recently? I only ask because current mortgage rates are still below the long term average so it is a bit of a worry if it has negative cashflow at this level. Are you including Principal repayments in that calculation?

13664

[percy]

Dont forget the higher mortgage payments. Mine going up $1000 a month with the new rates. Rental property going from cashflow positive to negative so have to top that up.

I told the wife that we need to live like a frugal boomer now, good bye avocado on toast :(

Crikey...........................Back to the vegemite...........

[LaserEyeKiwi]

Good news - looks like global shipping costs are now in a clear downtrend…

13650

Weekly container shipping costs continuing lower this week:

13665

[Muse]

Amazing what a widespread pandemic outbreak will do to the psyche - even with two years pre-warning.

NZ basically going through what the rest of the world did in April 2020.

Yeah I think the decline in confidence is far more broad based and not simply because of covid.

I predicted all this in detail months ago in the HLG forum - got called a conjurer of doomsday predictions. Looking pretty accurate now.

That rot has set and sadly set to fester.

Investing into any retailer very risky at the moment IMO

[LaserEyeKiwi]

Weekly update:

13671

[Beagle]

No surprise there.
Price of petrol increases at the pumps,retail spending declines at the shops.

ps.Watch for Beagle to fall out of love with retail.....lol

There have been plenty of polls already around showing its very dark and its always darkest before the dawn. I have engaged my long range sniffer and my snout tells me sniffing past and through the current retail malaise there's serious money and huge dividends to be made / enjoyed with WHS. This hounds snout is very seldom wrong.

Thing with survey's they're always backward looking. Of course people were gloomy when fuel was over $3 a liter.
Don't look now but Brent Oil is now back down to just on $100 from over $130 a barrel recently, (probably about the time that survey was taken) and saint Sindy has cut back 25 cents plus GST off the highway robbery fuel excise levies. All good, no worries.

[percy]

https://sendy.tarawera.co.nz/l/J6oLVth2f3f6IXNYvUBQEg/qu9CUKjpZcV4763Mpi10Li9g/9892v892hInmDf12RCqRs9Df8A

[Beagle]

Buy in gloom, sell in boom. Astute forward thinking investors will be looking for opportunities that have been beaten up excessively and will do extremely well on a "look through the current gloom basis" in the years ahead as fuel prices normalise and the pandemic eases.

People who wait for market conditions to return to normal will not be buying proven performers like WHS in the low $3 range or HLG in the mid $6 range in due course.

[Waltzing]

well if the recession slated for europe picks up pace in the coming months.

then there should be some bargain out in the bigger world this NZ spring , northern autumn.

NZX is a small pond..

can you stay invested in just this little country when you have a non business friendly government and political stale mate for how long to come?

2023 / 2024 could see some big rallies else where in the world.

[percy]

Buy in gloom, sell in boom. Astute forward thinking investors will be looking for opportunities that have been beaten up excessively and will do extremely well on a "look through the current gloom basis" in the years ahead as fuel prices normalise and the pandemic eases.

People who wait for market conditions to return to normal will not be buying proven performers like WHS in the low $3 range or HLG in the mid $6 range in due course.

A Beagle for every "market" season..?
Fundamentalist,
Chartist,
Momentum,
Trader.
Coin Tosser.
And now Contrarian.
Where to next.? lol

[couta1]

A Beagle for every "market" season..?
Fundamentalist,
Chartist,
Momentum,
Trader.
Coin Tosser.
And now Contrarian.
Where to next.? lol The total package. Lol

[Waltzing]

MR B , a man for all seasons.

https://www.youtube.com/watch?v=GRxofEmo3HA

[Muse]

Buy in gloom, sell in boom. Astute forward thinking investors will be looking for opportunities that have been beaten up excessively and will do extremely well on a "look through the current gloom basis" in the years ahead as fuel prices normalise and the pandemic eases.

People who wait for market conditions to return to normal will not be buying proven performers like WHS in the low $3 range or HLG in the mid $6 range in due course.

I wholly agree with "buy in gloom, sell in boom" - 100% agreement particularly for cyclical companies like retailers. But that's not where we are at. From a macroeconomic perspective we have an economy that is running (too) hot and now starting to edge down from top of the business cycle. Unemployment at the end of 31 December was an all time low of 3.2% and that might even fall to 3% or slightly below over the next two reported quarters.

Based on that its likely we will see annual inflation clock in at ~7% for the March and June quarters and remain painfully high for the remainder of the year and into next. Inflation goes up, interest rates follow, invariably followed by rising unemployment, which drives lower levels of consumption, and then contracting economic growth. That's the downslope of the economic cycle we are looking which will play out over the course of the next few years.

Falling consumption and elevated costs will eat into retailer profit, reducing dividend distributions, which we know is the driver to retailer share price sentiment. The impact is lagged, and yet to occur.

Retailer SP's have come off a bit from their peak but remain well & truly elevated. For instance, the WHS's spot price of 3.28 remains 37% higher than the daily average SP for the 12 month period preceding covid ($2.39 - February 2019 to February 2020), and nearly 50% higher than the 2 year period preceding covid ($2.22). There has been plenty residual savings splashing around, international travel remaining illusive, and unemployment at record lows, and short term dividend expectations remain healthy - so its no wonder retailer SP's haven't fallen to their pre-covid levels. But I can certainly see further falls once those things unwind.

One need only look at Warehouse's long term chart to see the impact of the business cycle on its SP, how far it can fall from its peak, and where the current SP sits relative to the economic cycle we are in - does give some pause for thought.



13674

[Waltzing]

FM says the PROS have got it all WRONG... WHS P&L is going back to its average data set. Thats a 2.50 SP.

[Rawz]

Great post FM.. agree 100.

Also WHS is not a proven performer lol

[Muse]

Great post FM.. agree 100.

Also WHS is not a proven performer lol

The yields on the WHS are great but that's for a reason - it averages about 3.8% capital depreciation a year. You net that off your dividend yield your total shareholder returns look pretty weak. Classic definition of a dividend trap.

20 year total shareholder returns:

13675

There has been plenty/serious $$$ made trading this stock (particularly the last 18 months) - those adept at TA have & can continue to do well, those who buy in recessionary times and sell when the economy is at full capacity can do extremely well.

But for investors who want to invest for yield and put in the bottom drawer, they need to take exceptional care they don't buy at or near the peak of the business cycle, as history has shown if they do its extremely difficult to ever recover their initial investment even after dividends. Though this business appears to be a mature business in long term structural decline, investors who invest in recessionary times can do well if they are careful to pick their moment to invest.

It's possible the great retail boom post covid is a one off event, in the process of winding up and unlikely ever to be repeated. With retailer SP's still elevated, it's something to at least consider on what comes next.

[Beagle]

WHS proved very resilient in the last half despite the vast numbers of days lost to lockdowns and the ongoing fear amongst consumers of visiting shops even after lockdowns had ended. Covid numbers are starting to come down, fuel prices are starting to normalise and retailers that sell consumer staples and basics (as opposed to high end discretionary spending items) are well placed to enjoy an uptick in activity when things start to normalise even more. In addition heaps of further efficiencies from store within a store, retail footprint rationalization, winding back of Covid costs, normalizing of freight rates and reduced level's of supply chain challenges. I think the analysts have this about right and we're looking at bargain basement PE's as recently outlined and 10.8% gross yield average going forward and all this as earnings grow from a FY22 cyclical low.

I have always been happy to back my own judgement and the Beagle fund is an exceptional performer. Frankly any fund manager would be exceptionally proud to do half as well.

One think I think people are not really seeing that I have got clarity on is its important not to lump all retailers into the one category.
Spending $500 on a new Ski jacket at Kathmandu, $1,000 on a new Gold watch at Michael Hill or $20 on a pack of 4 undies or socks at WHS are very different spends not just in quantum but in the basis of discretionary rather than need. e.g. This week WHS was advertising OAK Baked Beans for $1 a can. Clever advertising of a loss leader like this it fit for purpose advertising at times like this and gets people onto their website or into their stores. I know many of us, (myself included) have been giving them a kicking over their losses on the market.com but in other respects they seem to be reading the mood of the country very well and adapting their advertising very quickly to be most optimally effective.

[SPC]

The Beagle Fund. A Fund for all seasons 😉
A far from 'modest' performer..

[Old mate]

Worth noting also that international tourists will be back shortly. Numbers may not be huge to start with but they will grow giving economy a boost also.

[Waltzing]

HLG and BRISC have higher P/E for a reason and that is the P&L is a higher profit ratio.

hence the DIV is lower percentage to SP.

Best bought in recessions as well which NZ is not in at the moment.

WHS is lagging for a while and maybe a buy until and if the market REVALS it ... if it ever does.

Best DIV % at present.

But FM has a point about being careful at cyclical high point.

WHS needs it tangled IT sorted and fast.

[Beagle]

A Beagle for every "market" season..?
Fundamentalist,
Chartist,
Momentum,
Trader.
Coin Tosser.
And now Contrarian.
Where to next.? lol

The cunning hound has learned that one needs to be agile and adaptive to succeed in good times and bad. Blame my nose to find a feed if you like, it always takes me in different directions because the greedy hound is never satisfied. Beagle chases rabbits, they change direction and so do I because I like to keep eating and anyone who has met me knows that's the truth :lol: When it comes to finding his next feed Beagle has 225,000,000 scent receptor's to pick up the trail ! https://www.youtube.com/watch?v=rR63FBpJG2I

P.S. I only toss coins to find out which way to go when I have completely lost the scent of the trail and am lost. It usually doesn't take me long to pick up the scent of the next trail leading to the next feed :t_up:
All that said the last quarter was pretty tough so for the first quarter in many many years I lost some weight. Obviously that new tactic of coin tossing doesn't work lol

[Muse]

WHS proved very resilient in the last half despite the vast numbers of days lost to lockdowns and the ongoing fear amongst consumers of visiting shops even after lockdowns had ended. Covid numbers are starting to come down, fuel prices are starting to normalise and retailers that sell consumer staples and basics (as opposed to high end discretionary spending items) are well placed to enjoy an uptick in activity when things start to normalise even more. In addition heaps of further efficiencies from store within a store, retail footprint rationalization, winding back of Covid costs, normalizing of freight rates and reduced level's of supply chain challenges. I think the analysts have this about right and we're looking at bargain basement PE's as recently outlined and 10.8% gross yield average going forward and all this as earnings grow from a FY22 cyclical low.

I have always been happy to back my own judgement and the Beagle fund is an exceptional performer. Frankly any fund manager would be exceptionally proud to do half as well.

I find it interesting you think we are in a cyclical low

WHS's products are cheaper and more attractive during a recession but that didn't stop its SP fall 70% during the GFC - and has never recovered to its former level

Yes we know you are proud of your returns, as often mentioned. Many posters also probably have exceptional returns if but more modest about it, and you frankly don't know who else is lurking around these forums. But continually raising what a good investor you are as a way to close the door on discussion doesnt further anything.

Not criticising your judgement because you will have your own strategy, and as I said in my posts, there has been serious money made in this stock and traders adept at TA or timing economic cycles can continue to make money with it, and so to can long term dividend hunters if they are careful about when they invest.

But it absolutely valid to highlight that many investors become attracted to the high dividend yields, and should they invest at the peak of a cycle, 20 years of history with company has shown they do not ever recover their investment even after dividends, so they need to be mindful of when they choose to invest. Many investors aren't as savvy as you so its fair to introduce that element into the conversation.

We both obviously have different views on where we are at in the cycle and how retail fits into it with all the jumbled variables covid has thrown into it over the last 2 years. But that's why I like the discussion, because it is all difficult to work out, and its good to evolve ones thinking as views are shared and tested.

[Beagle]

Okay I will unpack it a bit more seeing as you normally make good contributions on this forum. To be frank I'm not really interested in where WHS was 20 years ago or even 10 years ago. They didn't even own Noel Leeming back then which has been a wonderful performer for them in the last 5 years and even in the latest half I had assumed with so many trading days lost and a lot of Covid nesting expenditure already done and dusted, I was thinking Noel Leeming sales would be down a lot but they weren't. Frankly, sales there in the circumstances were quite remarkable.

I think you are I are at cross purposes. I'm not talking about the economy being at a cyclical low, the cycle there has quite some time to run. WHS profits have been massively affected this year by all sorts of challenges I've alluded too at great length already. Normalize all those challenges and better times are coming. That's how the analysts see it with average forecasted profit rising from $99m in FY22 to $107m and $115m.

I also think you are lumping all retail into the one category and also ignoring product substitution with cheaper brands during tougher times and I think companies that sell the basics and staples of life are very well placed in the current environment, especially those companies with a very robust balance sheet with a LOT of cash and no debt.

You also infer that the current price is not a good entry point. Again I disagree and point to the very cheap earnings metrics, rising profits, strength of the balance sheet and ongoing efficiencies they're looking to achieve, such as store within a store and more self-checkout as well as the rollback of all sorts of Covid effects going forward.
People are only paying an effective net ex divvy price of $3.18 and on that basis the FY23 PE is only 10.25 for a company still impacted by Covid costs. Where will WHS be if we can see FY25 profits of maybe $140m unimpacted by Covid ? North of $4 again in my opinion.

The average analyst price target is $3.70 one year hence. https://www.marketscreener.com/quote/stock/THE-WAREHOUSE-GROUP-LIMIT-6491364/consensus/
Obviously you see it differently and I don't.
I also note from a TA perspective the chart provides an encouraging outlook which is highly supportive of my investment case.
Bring up the chart for the last 6 months. Now focus on the last 2 months. Doesn't that look like a bottoming process to you ?
What about the break out through the 30 day moving average. Pretty clear to me.

I'm a bit disappointed with one or two other aspects of your post which are not helpful or constructive so I won't comment further on that.

[winner69]

Whenever talk is about retail going to the dogs I remind myself that this century on an annual basis (quarterly rolling 4 quarters) retail sales in NZ have never gone backwards .... growth might slow but it never go negative

Maybe this time is going to be different

[Beagle]

Cool chart mate. One other thing, those forecasts above are after WHS investing in themarket.com and losing ~ $25m per annum doing so. If they have a change of heart that's another $25m straight onto the bottom line.

Retail sales for consumer staples and basics will do just fine. On the other hand the boom in some area's of the market such as high end boat sales looks quite vulnerable to me.

[Waltzing]

W(^n) charts looks very much a match for shadowing the market Bourses.

[winner69]

W(^n) charts looks very much a match for shadowing the market Bourses.

Maybe something to do with Price/Sales many use

[Waltzing]

has a bit of a resemblance to the DOW W(^n).

good graduate study subject there for someone.

[Muse]

Whenever talk is about retail going to the dogs I remind myself that this century on an annual basis (quarterly rolling 4 quarters) retail sales in NZ have never gone backwards .... growth might slow but it never go negative

Maybe this time is going to be different

W69 how do you get that grey attached images wrap around your picture uploads? I can't figure it out and use wrap around quotes - yours looks way better

[winner69]

W69 how do you get that grey attached images wrap around your picture uploads? I can't figure it out and use wrap around quotes - yours looks way better

From Go Advanced I go to Manage Attachments and then Add File / Choose File /Upload

Only way to put images I know ..like attaching a file rather than inserting image or something

Cheers

[Beagle]

I test drove that approach thanks mate. How I feel about the prospects for gains from WHS shares going forward, this especially for Fiordland Moose.
A very relaxed and contented looking Beagle.

[Snoopy]

From the WHS thread


who is the more cunning hound.



Perhaps Snoopy.?
I do not think he holds any WHS.............................lol.




Bit worried about my ol mates breeding....Might be a bit of whimpey Poodle mixed in there lol. Maybe he's not a real dividend hound after all lol


From the Snoopy vs The Index thread



I know that retail is offering up some spectacular yields. But I get the feeling you really need to be 'on the ball' for when the retail tide turns. I did hold WHS years ago and sold out IIRC when Foodstuffs bought in. Once again IIRC it was at a higher price than WHS trades at today! That is a lot of years of no progress. Maybe consumer retail isn't really part of the buy and hold investors menu?


From this thread



A Beagle for every "market" season..?
Fundamentalist,
Chartist,
Momentum,
Trader.
Coin Tosser.
And now Contrarian.


I think you have to be agile to make money from retail in general, and WHS in particular. And I think part of the reason that Beagle has made good money from owning WHS shares in the past is that he is all of those things that Percy has posted - (but not necessarily all at the same time). We all have our different investment styles.

I had a bit of early success in investing in retail. The last report I received from WHS was 17 years ago, which must be when I sold my shares. IIRC I bought in on the assumption that WHS would just roll their business model out all over Australia and I calculated -conservatively- that the shares were worth 8 bucks. Of course the execution of that Australian strategy did not go to plan, and the Foodstuffs offer to buy into WHS at the time offered me an exit strategy at a modest profit.

Personally I find shares that follow consumer retail cycles give me a headache in an area of business where I hold no particular analytical advantage. Those who deeply understand retail and trade these cycles can do very well - but this isn't me. The problem with 'selling out' of a given share is that this gives you the extra problem of where and when to reinvest that money. Since Covid-19 came along and Beagle announced he was largely getting out of the market at the time, I was waiting for him to 'trip up' missing his re-entry point, - but he hasn't. You would have to say that regarding retail, and thinking of HLG and WHS in particular Beagle's calls have been well signalled on this forum and his moves in and out of these retail shares have been well timed.

My overall impression then, is that what may be described as 'flip flopping' by one person or 'agility' by another, may be the key factor in Beagle's investing success in retail. I have a different investing style which tends to be more diverse portfolio which of necessity becomes more 'buy and hold', because you can't be absolutely up to date with a dozen or more companies all at once. Knowing this, I tend to look for companies with a more utility type profile that do not have the big swings of the retail sector. I am not saying I am right and Beagle is wrong, or vica versa. I am just recognising that different investors have different styles that are better suited to different sectors of the market.

Personally I respect Beagle's success in his retail investments. But I do not regret not following him, as I know we have different investment styles.

SNOOPY

[Beagle]

Might have to throw you a bone for those kind words mate. Sorry I questioned your breeding, all just a bit of fun :)

[couta1]

What is it with all these dogs brown nosing around each other on here?

[Beagle]

Its all explained in here lol https://www.youtube.com/watch?v=Ylu011z69hg

[iceman]

Great post 173 Snoopy

[nztx]

What is it with all these dogs brown nosing around each other on here?


they might be sniffing out where all the ZED takeover loot is going to wind up landing ? ;)

[Beagle]

they might be sniffing out where all the ZED takeover loot is going to wind up landing ? ;)

Now there's a really interesting subject that I've only just started thinking / sniffing around about.
Some things apparent

1. ZEL will exit the NZX50, probably before the end of this quarter to be replaced by the next most eligible candidate. Immediate index effect on the incoming candidate. I am not sure which company is the next most eligible candidate but WHS and HLG are in the running with that order (WHS then HLG) being the more to slightly less likely outcome. Its possible there is a more eligible candidate, I would certainly not rule that out.

2. My understanding is all the weightings in the index get adjusted at the time of ZEL exiting the index, (I recall how this worked when XRO delisted and went to the ASX), and there was a substantial uptick on a lot of stocks in the NZX50) so probably at the time of this index change index tracking funds have to re-weight their holdings. Certainly by the following quarterly index adjustment, (third Friday of the third month of each quarter, next one is 17 June.

3. I think there's also a MSCI index reweighting coming in May, don't ask me how that's going to effect things, I don't know.

As well as index changes and index tracking funds changes being one thing the other is where is that ~ $2 Billion going to be reinvested ?
WOW that's the really big question. I think most investors in ZEL were investing as an income stock as it was always well known its in a sunset industry so nobody realistically expected growth.

So income investors would probably be looking to shift to other stocks which would enable them to replace that lost income...I think its reasonable to draw that conclusion so that begs the question of which stocks might they buy that have high and solid level's of income ?

Four prime candidates spring to mind
WHS - Already clearly articulated why that's the best income stock on the NZX, forecast gross yield 10.8%
HGH - Recent acquisition in Australia boost income potential going forward and has a great history of steadily rising dividends. I think they can pay ~ 14 cps in FY23 fully imputed so that's 19.44 cps gross and on $2.28 that a gross prospective yield of 8.5% which should grow steadily over the years ahead
TRA - I am expecting good things from Turners and 24 cps fully imputed in dividends next year so that's 24 / 0.72 = 33.33 cps gross and on $4.11 that's 8.1% gross paid quarterly.
GNE - Also has interests in oil and gas so some might feel affinity for it coming out of ZEL, gross yield, my forecast for FY23 ~ 8%

Disc - I have significant positions in all 4 stocks mentioned.

[Muse]

Now there's a really interesting subject that I've only just started thinking / sniffing around about.
Some things apparent

1. ZEL will exit the NZX50, probably before the end of this quarter to be replaced by the next most eligible candidate. Immediate index effect on the incoming candidate. I am not sure which company is the next most eligible candidate but WHS and HLG are in the running with that order (WHS then HLG) being the more to slightly less likely outcome. Its possible there is a more eligible candidate, I would certainly not rule that out.

2. My understanding is all the weightings in the index get adjusted at the time of ZEL exiting the index, (I recall how this worked when XRO delisted and went to the ASX), and there was a substantial uptick on a lot of stocks in the NZX50) so probably at the time of this index change index tracking funds have to re-weight their holdings. Certainly by the following quarterly index adjustment, (third Friday of the third month of each quarter, next one is 17 June.

3. I think there's also a MSCI index reweighting coming in May, don't ask me how that's going to effect things, I don't know.

As well as index changes and index tracking funds changes being one thing the other is where is that ~ $2 Billion going to be reinvested ?
WOW that's the really big question. I think most investors in ZEL were investing as an income stock as it was always well known its in a sunset industry so nobody realistically expected growth.

So income investors would probably be looking to shift to other stocks which would enable them to replace that lost income...I think its reasonable to draw that conclusion so that begs the question of which stocks might they buy that have high and solid level's of income ?

Four prime candidates spring to mind
WHS - Already clearly articulated why that's the best income stock on the NZX, forecast gross yield 10.8%
HGH - Recent acquisition in Australia boost income potential going forward and has a great history of steadily rising dividends. I think they can pay ~ 14 cps in FY23 fully imputed so that's 19.44 cps gross and on $2.28 that a gross prospective yield of 8.5% which should grow steadily over the years ahead
TRA - I am expecting good things from Turners and 24 cps fully imputed in dividends next year so that's 24 / 0.72 = 33.33 cps gross and on $4.11 that's 8.1% gross paid quarterly.
GNE - Also has interests in oil and gas so some might feel affinity for it coming out of ZEL, gross yield, my forecast for FY23 ~ 8%

Disc - I have significant positions in all 4 stocks mentioned.


I'll probably rollover all my ZED shares into Genesis, which I re-became a shareholder back in January. The yield is there, and it operates in a (partially) adjacent industry to ZED with its kupe oil stake. Thats not very ESG PC these days, and thats why I'm doing it, as I want exposure to different parts of the market especially sectors beaten up by ESG do-gooders

TRA i'd consider if I wasn't overweight. HGH a prime contender. I see our favourite broker jarden gave it another price upgrade this morning to $2.53 a share (would have been more with the EPS accretion from StockCo but rising risk free rates offset some of that in their model)

[Beagle]

Thanks FM. I need to have another look at my the size of my stake in HGH after last weeks acquisition. I think Jarden's call is fair and that's about where they should be. Agree with your sentiments on the whole ESG thing which has become blown out of all proportion. I think this $2 Billion asset reallocation question probably deserves its own thread.

[LaserEyeKiwi]

Just some observations of the current environment, others likely disagree on some aspects I imagine, feel free to debate.

1. Interest rates: A lot of virtual ink has been spilt lately over the rising interest rates being detrimental to consumer spending and the economy at large. Reality check: Interest rates are still very low, people have very short memories that before 2020 4-5% interest rates are characterized as rather low.

2. Household savings: remain very high, well above historical norm.

3. Housing equity: the wealth effect of high housing values will be less this year as house prices are indeed falling in our main metro areas. However it will take a very large fall in prices to eliminate the gains experienced just from the last 2 years, before we even touch the massive gains for the last half decade before then. Household equity is still very high.

4. inflation: The BIG question - is it transitory or long term? One thing is for certain, all the increases in incomes (both benefits & wages/salaries) are permanent, and will remain in place regardless as to whether inflation subsides in the current quarter or 12/24 months from now. One other important things to note: In high inflation periods stocks are one of the best performing asset classes.

5. Impact from international travel returning: inbound tourists returning will benefit some retailers/regions, but kiwis redirecting discretionary spending to overseas travel and away from retail will undoubtedly have a negative impact for most big item retailers (good time for luggage stores - if they haven’t closed down already.)

6. The Omicron wave: Omicron had an undoubtedly negative impact on retail spending over the last 2 months, and 1st half results will reflect that. Normalcy is however returning, with both cases and hospitalizations steadily reducing now with Auckland likely dropping to Orange level this week, and the rest of the country following by end of April, along with new anti-viral treatments finally arriving in NZ. This doesn’t have much day to day impact in terms of restrictions (in fact there are basically no restrictions on retail stores at present) BUT it does have an impact on the populations perception of safety and willingness to go out and shop as a leisure activity. We likely won’t see many of the over 60 crowd packing the malls anytime soon, but likely will see the return of the middle aged crowd. There is also a time factor at play, with a couple of months of high case numbers and dozens of daily deaths, and seeing friends & family catch it and then recover (in most cases) - we are psychologically now “used to it” and the fear in many has subsided (again though, not for the elderly where chances of death are higher).

7. Budget Expectations: expect more money for low income population, and attempts to lower costs in other areas - likely extending half price public transport into something more permanent past the current three month implementation, and a possibility that going to 100% free public transport is on the cards. These kinds of efforts will be good for retailers, both for their customers and employees.

8. The “work from home” impact: I think this will continue, but how much is the big question. Honestly I have no idea how it plays out. Pros and cons for different retailers depending on whether people spend more or less time in the office, and whether it’s 1, 3 or 5 days a week.

9. Gas prices: they are already coming down, back to $100 a barrel at present. With the temporary fuel tax reduction, I think gas prices might actually get rather cheaper in the current quarter, being a benefit for retailers in both customer spending and on local transport costs.

10. Ukraine: Putin is getting his ass kicked so badly that he has no hope of winning and is now focused on retaining the small regions in the east & south that he has one hand on. negotiations will be swift now that Ukraine forces are on the March and are beating the Russian army to a pulp. Still the wildcard that Putin does something suicidal like dropping a tactical nuke, but the odds are low. The positive/negative surprises out of the war at present are probably leaning to the positive with an earlier than expected end to hostilities and the swift peace bringing energy markets back to normal.

11. New deadlier Covid variant: The big turd in the punch bowl. All bets are off if a significantly deadlier Covid variant emerges. Lockdowns and border closures would be back on the table.

I think it’s prudent that retail stocks have a built in “Covid” discount for the next couple of years, given the likelihood of further uncertainty caused by it.

[Waltzing]

new vaccines are on the way.. no lock downs unless ICU is completely over run...

await the AUS retail stats for March.

Winner(N^) will be all over them...with his trusty Casio DJ series of other such or a real high end finance calculator.

[LaserEyeKiwi]

new vaccines are on the way.. no lock downs unless ICU is completely over run...

await the AUS retail stats for March.

Winner(N^) will be all over them...with his trusty Casio DJ series of other such or a real high end finance calculator.

I agree no lockdowns are on the cards when talking about the current variants lethality. But if we get a new variant that is much more lethal and/or current vaccines have no effect, then lockdowns are definitely a possibility again for all the normal reasons.

[Muse]

Just finished reading another interesting bit of research from our favourite research analysts. Might be interesting to those tired of hearing my yapping, and from a well regarded bank. Excerpts below

Mortgage Rates Set to Hit Cyclicals
Further to inflationary pressures, we view increasing mortgage rates as a significant incremental downsides for cyclical companies. Our estimates suggest a total of 8.8% year on year reduction in consumer discretionary spending over calendar year 2022, with 4.1% a result of increased mortgage expense, and ~4.7% a result of inflation across most non cyclical industries.

The impact of rising mortgage rates are expected to kick in shortly, with the boom in fixed mortgages as a result of elevated home buying in late 2020 to 2021 due to roll off over the next quarter. With some home loans now sitting above 6% we estimate the impact will result in a $4.1bn reduction in household discretionary income, ramping up to a $7.5bn deficit by CY24.

We view this as a risk to cyclicals, more so in durables (IE clothing and retail) than tourism-leisure names, the later which may have some offsetting benefit from pent-up demand.

Then they do some fancy charts showing the level of elevated mortgages were taken out the last few years, when they are expected to have their pricing roll off, the old mortgage rate and new mortgage rate. They then show the annualized deficit in household discretionary income, relative to now, till the end of 2024. It shows that while the 9% fall in spending this year is bad, household spending will continue to fall across 2023 and 2024.

They separately note specific to the WHS that the margin outlook is softening, and while the valuation remains optically attractive they now see a perfect storm of risks to consumer demand coupled with WHS's high operating leverage, which has increased the risk of downgrades to their and other analyst EPS, TP, and ratings.

Food for thought. Caught my attention.

[winner69]

Good thoughts there LEK

I’ve come to the conclusion that those who are apparently affected / suffering because of this media driven ‘cost of living crisis’ were suffering a few years ago in the good times and probably will still be suffering in a few year years time.

So what’s really changed in the big picture ….just a bit more ‘noise’ these days.

[Waltzing]

Anti V's are next up for treatments and that means if no deadly variants then as the supply of Anti V's flood in Lock downs are not high maths prob.

as for who gets in the NZX 50 that have to leave to the maths geeks...

there is probably a newer paper somewhere.

https://companyresearch.nzx.com/deep_ar/files/NZX_Equity_Indices_Methodology_June_2012.pdf

WHS and BRISC are where the retail line is for NZ. Cant see either expanding sales to far.

Not many taking holidays in europe this year or next and ZOOM can do the Business.

Who wants to do a dose of nuclear on the baltic....

[LaserEyeKiwi]

Just finished reading another interesting bit of research from our favourite research analysts. Might be interesting to those tired of hearing my yapping, and from a well regarded bank. Excerpts below

Mortgage Rates Set to Hit Cyclicals
Further to inflationary pressures, we view increasing mortgage rates as a significant incremental downsides for cyclical companies. Our estimates suggest a total of 8.8% year on year reduction in consumer discretionary spending over calendar year 2022, with 4.1% a result of increased mortgage expense, and ~4.7% a result of inflation across most non cyclical industries.

The impact of rising mortgage rates are expected to kick in shortly, with the boom in fixed mortgages as a result of elevated home buying in late 2020 to 2021 due to roll off over the next quarter. With some home loans now sitting above 6% we estimate the impact will result in a $4.1bn reduction in household discretionary income, ramping up to a $7.5bn deficit by CY24.

We view this as a risk to cyclicals, more so in durables (IE clothing and retail) than tourism-leisure names, the later which may have some offsetting benefit from pent-up demand.

Then they do some fancy charts showing the level of elevated mortgages were taken out the last few years, when they are expected to have their pricing roll off, the old mortgage rate and new mortgage rate. They then show the annualized deficit in household discretionary income, relative to now, till the end of 2024. It shows that while the 9% fall in spending this year is bad, household spending will continue to fall across 2023 and 2024.

They separately note specific to the WHS that the margin outlook is softening, and while the valuation remains optically attractive they now see a perfect storm of risks to consumer demand coupled with WHS's high operating leverage, which has increased the risk of downgrades to their and other analyst EPS, TP, and ratings.

Food for thought. Caught my attention.

the mention of 6% interest rates is a bit of a stretch. All our main banks have the “normal” 1-2 year rates at 3.99%-4.99% at present for those with at least 20% equity (which is the vast bulk of mortgage holders). In fact plenty of 2 year rate offers around 4.5%.

you are only looking at a 6% rate if you are sub-20% low equity customer wanting a long 4-5 year rate.

In fact if you are coming off a 3+ year mortgage from 2019 or earlier, your new mortgage rates now will likely be cheaper than they were.

myself I will be looking at heartland for my next rollover - they are still offering 3.49% 1 year rates.

[Muse]

the mention of 6% interest rates is a bit of a stretch. All our main banks have the “normal” 1-2 year rates at 3.99%-4.99% at present for those with at least 20% equity (which is the vast bulk of mortgage holders). In fact plenty of 2 year rate offers around 4.5%.

you are only looking at a 6% rate if you are sub-20% low equity customer wanting a long 4-5 year rate.

In fact if you are coming off a 3+ year mortgage from 2019 or earlier, your new mortgage rates now will likely be cheaper than they were.

myself I will be looking at heartland for my next rollover - they are still offering 3.49% 1 year rates.

They mention that only by way of reference.
Their forecasts are based on a blended average of pricing tenure (ie % 1yr, 2yr, floating, etc) and LVRs.
Its in a chart but if I eye it that number for Q1 was about 4.75% and 2Q just over 5%, going up linearly until 6.5% in 3Q 2023. That is a scary number - 6.5%

The chart section of interest.co.nz is fantastic
They show the simple average of carded rates for 2 year fixed mortgages is now 4.59%.
on 30 June 2021 that was 2.53%. up 81% in less than a year. amazing how fast rates can move.

[LaserEyeKiwi]

They mention that only by way of reference.
Their forecasts are based on a blended average of pricing tenure (ie % 1yr, 2yr, floating, etc) and LVRs.
Its in a chart but if I eye it that number for Q1 was about 4.75% and 2Q just over 5%, going up linearly until 6.5% in 3Q 2023. That is a scary number - 6.5%

The chart section of interest.co.nz is fantastic
They show the simple average of carded rates for 2 year fixed mortgages is now 4.59%.
on 30 June 2021 that was 2.53%. up 81% in less than a year. amazing how fast rates can move.

thanks for the great tip! I look at interest.co.nz frequently and didn’t know that chart area was there.

looks to me that on all the fixed interest periods rates are still lower or equal to where they were pre-pandemic.

13679

and stepping back further are still low compared to recent historical rates from last 20 years.

13680

but given the big increase in house values, i agree a future possibly 6.5% interest rate would be a bit scary if you happened to have been a first home buyer with a low deposit who purchased over the last 5 years (or an over levered real estate investor).

[Rawz]

LEK dont underestimate how many people leveraged back up to buy new cars, boats, caravans, redo the backyard, new pool etc etc. Or back to 80% lvr by upgrading homes.. townhouse to stand alone. 3 bedroom to 4 bedroom..

I've seen a heap of $100k+ assets that typically would be funded by the asset financiers get swallowed up by the banks. They were keen as to add it to the mortgage. Not so much now.

This group are 25-45 and they are the spenders.
This group will spend less now. It is going to be a headwind for retail.

But W69 says retail spend never goes backwards, so no worries maybe

[Beagle]

Lazy professional's question. Small client emailed me on the weekend and wants to buy the house he is renting in a small provincial town that his landlord is selling.
He will be in the lowest deposit group as he's always been "a spender"
Its been a LONG time since anyone I act for has bought a house.
How much deposit will he need ? Are there any special provisions for low deposit lending these days with new houses compared to existing houses ?
What interest rate would they likely to be paying for locking in the lending for say 5 years ?
Sorry to be so lazy...I just thought I'd tap into the collective wisdom on here.

[Waltzing]

whoops ...

https://www.stuff.co.nz/business/money/300557505/is-this-the-new-normal-bank-lifts-home-loan-rates-near-7-per-cent

and leverage up double mortgages to send kids to Harvard or

https://www.juilliard.edu/

[Muse]

thanks for the great tip! I look at interest.co.nz frequently and didn’t know that chart area was there.

looks to me that on all the fixed interest periods rates are still lower or equal to where they were pre-pandemic.

13679

and stepping back further are still low compared to recent historical rates from last 20 years.

13680

but given the big increase in house values, i agree a future possibly 6.5% interest rate would be a bit scary if you happened to have been a first home buyer with a low deposit who purchased over the last 5 years (or an over levered real estate investor).


Yeah I don't agree with the over arching theme of that.
Average 2019 fixed mortgages were 3.75% for 2 year (vs 4.59% now), 4.2% for 3 year (vs 4.84% now), 4.7% vs 5.87% now. And that gap only spreads wider after 2019 with current fixed rates almost double what they were in 2021.
The other key point is the aggregate level of housing turnover during 2021 was massive. House sales were absolutely massive during 2021, way way way more than in all the previous years. All those houses would have been priced and fixed at very low levels - mostly a combination of 1-3 year mortgages, with 2 year fixed mortgages probably the single best proxy.

and the point jarden are making is that huge chunk of debt fixed over the last of of 2020 and over 2021 is due to start rolling off. and that differential is going to be significant, and will impact the spending behaviour.
And whats the weighted average duration in mortgages? It's on the shorter side. As a % of total fixed mortgages, there isn't a large amount of mortgages rolling off that were fixed in 2017 and 2018 when fixed pricing was comparable and no shock to that household. The majority of mortgages from pre covid will have been refinanced at lower levels at some point post covid, generating enourmous savings and increases in discretionary income, and again will be repriced much higher going forward.

I'm not sure why this is a controversial point, everyone from mark lister at craigs to Milford have been making this point on the herald every weekend. And this bit of research has done a fantastic job of quantifying its impact on discretionary spending.

what is worse is mortgates rates are still going up from here, which jarden expect will get to 6.5%.

[Waltzing]

7 percent ... getting very very close now ...

who wants to lever up on retail stocks right now ...

[Muse]

thanks for the great tip! I look at interest.co.nz frequently and didn’t know that chart area was there.

looks to me that on all the fixed interest periods rates are still lower or equal to where they were pre-pandemic.

13679

and stepping back further are still low compared to recent historical rates from last 20 years.

13680

but given the big increase in house values, i agree a future possibly 6.5% interest rate would be a bit scary if you happened to have been a first home buyer with a low deposit who purchased over the last 5 years (or an over levered real estate investor).

LEK - those mortgages from pre covid that were at higher rates, a large proportion if not the majority of them, would have come off and been repriced at some point over the last 18 months, when pricing was incredibly lower. All that extra saving in mortgage expense, which is staggering and flowed into retail spending, will again be repriced at some point this year at much higher levels. So that unprecedent surge in mortgage savings and increase to discretionary income will vanish and go backwards sharply (by 9% according to jarden), and what do you think that will do to retail spending?

We have this dramatic savings in mortgage costs over the last 2 years together with a virtual cessation of all international travel - and low and behold that finds its way into unprecedent retail and discretionary spending and superlative profits and dividends from retailers.

I dunno - maybe its just me here in retail land - but in connecting those dots - isn't that a massive red flag?

[Waltzing]

Markets pivot long before the .... hits the fan....

looked at what happened to COMP PROPS...

WHS might hold up on DIV and low P/E and people buying the DIV...

DOW now going to get sold off?

[Beagle]

LEK dont underestimate how many people leveraged back up to buy new cars, boats, caravans, redo the backyard, new pool etc etc. Or back to 80% lvr by upgrading homes.. townhouse to stand alone. 3 bedroom to 4 bedroom..

I've seen a heap of $100k+ assets that typically would be funded by the asset financiers get swallowed up by the banks. They were keen as to add it to the mortgage. Not so much now.

This group are 25-45 and they are the spenders.
This group will spend less now. It is going to be a headwind for retail.

But W69 says retail spend never goes backwards, so no worries maybe

I think he's right but also we will see a big shift from a lot of higher cost discretionary spending getting reallocated to basic brands and consumer necessities.
If for example if I owned a high end store like Rodd and Gunn https://www.roddandgunn.com/nz?msclkid=d77a4c76baff1d5b540b2e3c8081ac16&utm_source=bing&utm_medium=cpc&utm_campaign=Brand%7CPure%7C%7C%7CNZ%7CExact%7CSea rch%7CRG&utm_term=rod%20and%20gunn&utm_content=Brand%7CPure I would be concerned that customers would be trading down in brands into more mainstream modest cost brands like HLG.
HLG customers might be trading down to cheap WHS clothing.

At the end of the day while FM seems to be making a concerted effort to outline retail spending concerns and he's not wrong to point them out, what's he's not saying is that there is highly likely to be a shift in consumer behavior. Consumers will always buy basics and necessities because its no surprise that people's undies and socks wear out and people want to buy their families basic treats like cheap Easter eggs. On the other hand will Kathmandu be selling as many ~ $500 ski jackets, Michael Hill as many $1,000 Seiko gold watches or https://rmarine.nz/models/ as many multi million dollar launches ? Clearly the answer to those questions is NO !

[Waltzing]

retail Investors may align themselves with MR B views as in a inflation cycle a steady SP with a HIGH DIV could be seen as blue chip.

if there is fall out from AIR investor wise then retail investors could drive the price of WHS up and MR B will again have beaten the market.

AIR smashing up over 1.0

when does the AIR come out of that in the next FA report

[LaserEyeKiwi]

LEK dont underestimate how many people leveraged back up to buy new cars, boats, caravans, redo the backyard, new pool etc etc. Or back to 80% lvr by upgrading homes.. townhouse to stand alone. 3 bedroom to 4 bedroom..

I've seen a heap of $100k+ assets that typically would be funded by the asset financiers get swallowed up by the banks. They were keen as to add it to the mortgage. Not so much now.

This group are 25-45 and they are the spenders.
This group will spend less now. It is going to be a headwind for retail.

But W69 says retail spend never goes backwards, so no worries maybe

I trust data over anecdotes.

Average property equity for kiwis is 75%, From Stats NZ:



For every $100 of property owned by New Zealand households, including those held in family trusts, they owe $25 in real estate loans.

[LaserEyeKiwi]

7 percent ... getting very very close now ...

who wants to lever up on retail stocks right now ...

its “almost 7%” (6.7%) for one bank on its 5 year term. The rest of the article you linked to is talking about its most popular rates (1 & 2 year with over 20% equity rates) increasing to rates still under 4%/5% - 3.99% for 1 year & 4.85% for 2 year.

honestly headlines touting “mortgage rate at 7%” are nonsense when a bank is still offering as low as exactly half that: 3.49% at heartland.

[Muse]

I think he's right but also we will see a big shift from a lot of higher cost discretionary spending getting reallocated to basic brands and consumer necessities.
If for example I owned a high end store like Rodd and Gunn https://www.roddandgunn.com/nz?msclkid=d77a4c76baff1d5b540b2e3c8081ac16&utm_source=bing&utm_medium=cpc&utm_campaign=Brand%7CPure%7C%7C%7CNZ%7CExact%7CSea rch%7CRG&utm_term=rod%20and%20gunn&utm_content=Brand%7CPure I would be concerned that customers would be trading down in brands into more mainstream modest cost brands like HLG.
HLG customers might be trading down to cheap WHS clothing.

At the end of the day while FM seems to be making a concerted effort to outline retail spending concerns and he's not wrong to point them out, what's he's not saying is that there is highly likely to be a shift in consumer behavior. Consumers will always buy basics and necessities because its no surprise that people's undies and socks wear out and people want to buy their families basic treats like cheap Easter eggs. On the other hand will Kathmandu be selling as many ~ $500 ski jackets, Michael Hill as many $1,000 Seiko gold watches or https://rmarine.nz/models/ as many multi million dollar launches ? Clearly the answer to those questions is NO !

Aye I agree that what is unfolding will impact our listed retailers differently - and in truth when I was talking about 'retail' generically I was in fact thinking about the warehouse and briscoes. Discretionary spending clearly relevant to all of them, but briscoes leveraged to nesting and housing sentiment a bit more (wonder where that is going), MHJ higher end but also well diversified by country which let it fire when NZ was on lockdown, HLG with half its business in AU, KMD which surprisingly depends a bit on travel and importantly inbound visitors to drive sales (but has been changing post acquisition of rip curl), and WHS which is a more basics diversified offering. All will be impacted by the wind (discretionary spending) but they clearly have different hulls & sails.

WHS are focused on basics yes but they surely aren't counter cyclical.

From 2007 its adjusted net profit after tax fell from $97.5m to $80.9m in 2008. And in terms of how the listed market perceived it, its share price fell 59% from its 2007 peak of 7.32 to 2008 low of 3.32. Ignoring the absolute daily peaks and troughs, the average share price across 2008 of 4.58 fell 27.4% from the 2007 average SP of 6.28. the average annual share price fell a further 13% the year after, and has never recovered to 2007 levels. Today it remains 48% below the 2007 average SP, and interestingly still, hasn't recovered to 2009 levels.

I suppose what I am getting 1) the WHS isn't counter cyclical and earnings will fall with discretionary income, and 2) discretionary income the last 2 years clearly unsustainable.

[Waltzing]

If BRIS comes down to the MID 4's its a load up for DIV. Even better option than WHS is now.

[Muse]

If BRIS comes down to the high 4's its a load up for DIV. Even better option than WHS is now.

Briscoe's is our best in class retailer but I have worries for that one too.

I fear it in a year or two will get to where the warehouse was 20 years ago - absolutely dominant, fully mature with little or no new stores. Once you are in that situation its very difficult to even maintain same store sales as new entrants start chipping away at your existing catchments. Rod is savvy and no doubt aware of this - needs a new brand or even better a new geography - but the KMD forway/takeover was a disaster, and the WHS precedent or australian red sheds & grocery was equally fruitless.

Briscoes have done fabulous eeking out margin and increasing the operational performance, but I think they've probably all that they can, so that growth avenue closing too.

I think we can safely assume nesting has run its course as well.

Roll forward a few years after discretionary income has stablised, I don't see where or how they will grow. Could just be a long slow slide after a new, lower baseline is set

[Beagle]

WHS a different company to what it was in the GFC. Noel Leeming and Torpedo 7 were acquired in FY13. Noel Leeming has grown sales from $390m and net profit of $11m in 2013 to sales of over $1.1 Billion and net profit over $60m in FY21.

This year WHS celebrates 40 years since its inception. I agree there is much work still to be done to transform the image of the red sheds but huge scope for retail footprint efficiency with store within a store for Warehouse Stationary and with staff efficiencies. WHS and WHS stationary a work in progress, Noel Leeming acquisition was a masterful stroke of genius.

Historical share price comparison paints a gloomy picture. The current chart which will be of much more interest to investors today looks highly encouraging.
Today is the last day to buy cum the 10 cents per share fully imputed dividend.

Again I reiterate that despite how you see it FM, the average analyst sees it as fair value at $3.70 a year from now. Predicting the future is hard but I think WHS will do just fine and we hopefully gradually come out of all the effects Covid has imposed upon us for the last 2 years. The end of the world is not coming and while interest rates are higher for mortgage holders so too are they for those on the other side of the ledger and term deposit holders who were getting less than 1% on their funds can now get considerably more, over 3% for longer terms.
Tens and tens of billions on term deposit are owned by retiree's depending upon that interest for their daily living costs and all of those retiree's are very familiar with the WHS brand and will be spending their 3%+ interest they get on term deposit not saving it.
By historical averages interest rates are still very low.

[LaserEyeKiwi]

Yeah I don't agree with the over arching theme of that.
Average 2019 fixed mortgages were 3.75% for 2 year (vs 4.59% now), 4.2% for 3 year (vs 4.84% now), 4.7% vs 5.87% now. And that gap only spreads wider after 2019 with current fixed rates almost double what they were in 2021.
The other key point is the aggregate level of housing turnover during 2021 was massive. House sales were absolutely massive during 2021, way way way more than in all the previous years. All those houses would have been priced and fixed at very low levels - mostly a combination of 1-3 year mortgages, with 2 year fixed mortgages probably the single best proxy.

and the point jarden are making is that huge chunk of debt fixed over the last of of 2020 and over 2021 is due to start rolling off. and that differential is going to be significant, and will impact the spending behaviour.
And whats the weighted average duration in mortgages? It's on the shorter side. As a % of total fixed mortgages, there isn't a large amount of mortgages rolling off that were fixed in 2017 and 2018 when fixed pricing was comparable and no shock to that household. The majority of mortgages from pre covid will have been refinanced at lower levels at some point post covid, generating enourmous savings and increases in discretionary income, and again will be repriced much higher going forward.

I'm not sure why this is a controversial point, everyone from mark lister at craigs to Milford have been making this point on the herald every weekend. And this bit of research has done a fantastic job of quantifying its impact on discretionary spending.

what is worse is mortgates rates are still going up from here, which jarden expect will get to 6.5%.

not sure what part of the website you are on, but I’m using he “fixed mortgage rate” charts.

for instance here are the charts for the 1, 2 & 3 year fixed rates (which covers vast majority of mortgage market in NZ).

136831368413685

i see it’s a longer timeframe than I thought,so I was incorrect in saying they were same or lower than 2019. Instead it’s starting in 2017. But todays rates are still below or equal to 2017 rates (which themselves were low by historical standards as the RBNZ graph for last 20 years shows).

13686

do you disagree with the RBNZ data?

[LaserEyeKiwi]

Forgive me if I’m sounding overly defensive here - am enjoying the back and forth. Would be interesting to see the total amounts in dollar terms we are talking about and how that stacks up to income as well. Entirely possible 2 year rates at 5% are a lot more burdensome in 2022 vs 2017 at same rate given the surge in house prices. Then again maybe it’s relatively small difference across the total market.

also worth noting in case it’s being overlooked that interest costs are not the total cost of a mortgage payment. So if we see some people with interest costs rising 50%, that doesn’t mean their mortgage payment is increasing 50% as the principle payment level is unchanged, or even lowered via a mortgage length change.

[Muse]

not sure what part of the website you are on, but I’m using he “fixed mortgage rate” charts.

for instance here are the charts for the 1, 2 & 3 year fixed rates (which covers vast majority of mortgage market in NZ).

136831368413685

i see it’s a longer timeframe than I thought,so I was incorrect in saying they were same or lower than 2019. Instead it’s starting in 2017. But todays rates are still below or equal to 2017 rates (which themselves were low by historical standards as the RBNZ graph for last 20 years shows).

13686

do you disagree with the RBNZ data?

My charts (spashed with interest.co.nz) are from there and have the same exact data as yours - they just don't have the floating line on it.
I'm using: https://www.interest.co.nz/charts/interest-rates/mortgage-rates
You're using: https://www.interest.co.nz/charts/interest-rates/fixed-mortgage-rates
= same exact data

Of course I don't disagree with RBNZ data

But I think you may be missing my point, or I'm struggling to articulate it well enough

The vast majority of those fixed mortgages that were written with higher interest rates will have been repriced at some point post covid where interest rates were dramatically lower. That, together with it being impossible to travel, has driven an unprecedent surge in retail spending. Looking forward, nearly all mortgages coming up for repricing are being done so at levels dramatically higher than at their last refinance. That creates negative retail spending, and faced with the prospect of even higher interest rates in the future, we could be lowing a scenario where discretionary income falls consecutively from 2022 to 2024 (that is what Jarden are saying). Mortgages get repriced probably on a weighted average basis every 2 years, and not all at once, spread through out the year. The whole country's mortgage book is continuiously turning over and being repriced everyday. Mortgages being repriced today were initially written say anywhere from 1-3 years ago. So there is a continuous lag for it to flow through - in a falling interest rate enviroment that cycle of repricing gives you visibility on the runway dispolsable income growth has. But the inverse is true is a rising rate environment. Even if interest rates stayed flat at where they are now, holding all else equal, you could have fall discretionary income over several years as the country's mortgage book turns over. Compounding that, if interest rates are expected to rise as they are (jarden forecast 6.5% mortgage rates by 2024), that sets in place a long term cycle as mortgages are repeatedly repriced at higher rates over time, sucking more and more cash out of spending each consecutive year.

Thanks to our binge on housing, household debt has also increased over the last 5 years, and at September 2021 was 174.5% of nominal disposable income, only just below its all time peak of 178.7%. At high levels of debt, small increases in interest rates have a disproportionate impact on total interest costs. However, large increases in mortgages rates from a very high level is even worse.

Anyway - I haven't crunched the numbers - but Jarden have.

The reason why its relevant is because its human tendency to assume last years earnings or the current year is a reasonable base to forecast from. Analysts and investors often think well okay last year was a bit hot, i'll just assume 3% growth, or flat to be conservative, or down 5% because I'm bearish.

But if those earnings were no where near ever being maintainable because of what we have just been through, all those consensus forecasts and expectations could be wildly off, and as that trickles through as new earnings are released, you could see carnage.

[Waltzing]

BRISC already has new store layouts and comcepts coming along.

if you look at its long term chart its a much slower burner...

Low 4's will be a vert good DIV.

It chances of getting there are slim..

[Muse]

Forgive me if I’m sounding overly defensive here - am enjoying the back and forth. Would be interesting to see the total amounts in dollar terms we are talking about and how that stacks up to income as well. Entirely possible 2 year rates at 5% are a lot more burdensome in 2022 vs 2017 at same rate given the surge in house prices. Then again maybe it’s relatively small difference across the total market.

also worth noting in case it’s being overlooked that interest costs are not the total cost of a mortgage payment. So if we see some people with interest costs rising 50%, that doesn’t mean their mortgage payment is increasing 50% as the principle payment level is unchanged, or even lowered via a mortgage length change.

I enjoy it too!

and apologies if I am sounding lecturing - which I know I am - my thought process is evolving and I am sort of writing it down as a way of making sense of it all. my communication skills aren't great, either.

the nice thing about the impact on interest rates and inflation on retail is that it is lagged, and of course earnings announcements are lagged after that fact, which gives time for consideration and taking action.

I have exited about half my briscoes stake this year - will hold on to the rest as a long term dividend stock, which I purchase the majority of during march 2020. but even that, i have on watch.

[Waltzing]

New stuff for BRISC: came out in the reports. Who doesnt look through the Retail Preso's.

"Work also continued on a number of projects in relation to Group owned properties. The construction of a new concept Briscoes Homeware store at 36 Taylors Road, Auckland was completed and the store opened in early March. This allowed the introduction in April of a brand-new Rebel Sport store in the retail space on the ground floor of the Support Office building at 1 Taylors Road, Morningside. In addition, the Group’s development at Silverdale was completed and the new Briscoes Homeware and Rebel Sport stores opened in November. Rod Duke said, “Trading results from both the Silverdale stores have significantly exceeded expectations and feedback has been overwhelmingly positive. We’re extremely pleased with all of the new stores opened this year and their success gives us confidence for further network growth opportunities in relation to the refurbishment and/or establishment of new stores. In fact, work has now started on upgrades to our Rebel Sport stores in Te Rapa and Albany which will incorporate many of the ideas and concepts introduced in the new generation Silverdale and Morningside stores."

[Muse]

WHS a different company to what it was in the GFC. Noel Leeming and Torpedo 7 were acquired in FY13. Noel Leeming has grown sales from $390m and net profit of $11m in 2013 to sales of over $1.1 Billion and net profit over $60m in FY21.

This year WHS celebrates 40 years since its inception. I agree there is much work still to be done to transform the image of the red sheds but huge scope for retail footprint efficiency with store within a store for Warehouse Stationary and with staff efficiencies. WHS and WHS stationary a work in progress, Noel Leeming acquisition was a masterful stroke of genius.

Historical share price comparison paints a gloomy picture. The current chart which will be of much more interest to investors today looks highly encouraging.
Today is the last day to buy cum the 10 cents per share fully imputed dividend.

Again I reiterate that despite how you see it FM, the average analyst sees it as fair value at $3.70 a year from now. Predicting the future is hard but I think WHS will do just fine and we hopefully gradually come out of all the effects Covid has imposed upon us for the last 2 years. The end of the world is not coming and while interest rates are higher for mortgage holders so too are they for those on the other side of the ledger and term deposit holders who were getting less than 1% on their funds can now get considerably more, over 3% for longer terms.
Tens and tens of billions on term deposit are owned by retiree's depending upon that interest for their daily living costs and all of those retiree's are very familiar with the WHS brand and will be spending their 3%+ interest they get on term deposit not saving it.
By historical averages interest rates are still very low.


Agree and it's interesting to consider the drivers & trajectory of the different parts of the WHS

Torpedo7: fitness & outdoors. Similar to nesting, when everyone was locked up, they bought mountain bikes, home gym gear, hiking clothes. Mountain biking sales went ballistic in NZ. That all at risk of drying up as the masses are released and they have made their purchases (ie people dont buy a new mountain bike, set of weights, or tramping gear every year - it lasts a while). Acedotale only, but look at peloton sales post covid.

Noel Leeming: another beneficiary of lockdowns, electronic nesting at its finest. Surge of people buying new TV's to wait out the lockdown, xboxs & playstations to keep their ratty kids occupied, laptops and home PCs to work from home, fridges and microwaves etc. IMO thats done and dusted and can only fall sharply from here

Redsheds: nesting. People bought more clothes, toys for the kids, basic homeware for the nesting. Ironically I see this as having the least amount to fall, given it is basics, but its still discretionary and see it still falling.

Stationary: I forgot about this and dont haven't thought about till now. Probably a big beneficiary of people working from home. That'll give it some runway, but still probably a fall compared to last year as people drift back into the office. Or is it net b2c and the reverse is true i dont know

With inflation rising faster than wages, expensive as fuel, rising rents, a surge in mortgage expenses - surely the realistic expectation is people won't be buying or replacing TVs, fridges, xboxes, mountain bikes, weight lifting equipment they bought last year, and wearing that those clothes a wee bit longer rather than replace them the moment they got a pit stain on them

Regarding the consensus, I think they are wrong. Jarden have very clearly now taken the view that their could be negative eps and tp revisions this year and i expect others will follow.

I guess given the implied pricing the market is saying it doesnt believe the consensus either.

Lots of companies have looked cheap based on consensus, until the actuals were released.

[winner69]

parked outside Noel Leeming

Guy loaded a big TV, possibly a new laptop, and a Dyson Vac into his wagon

Must be a cost of living crisis in his household

[Muse]

parked outside Noel Leeming

Guy loaded a big TV, possibly a new laptop, and a Dyson Vac into his wagon

Must be a cost of living crisis in his household

But if last year there were 2 guys walking out the store with a bigger haul, thats still a problem

[Waltzing]

Those retailers that have a strategy and are seeing results will have momentum in the market.

The consumer still wants to shop no matter what. Its build into the DNA. They cant help holding a BBQ and showing off.

[Beagle]

This debate is becoming circular. I've made a fulsome effort to outline my views already. there will always be opposing views in the market, that's what makes a market. What I have learned over a long period of time is that fighting against TA is FAR more often than not going to cost you money or cost you an opportunity and the TA looks encouraging for WHS.

I'm simply going to agree to disagree with you FM and wish you luck finding a better income stock than WHS.
I'd better get on and try and do some real work in between huge debates on ST lol

[Muse]

I'd better get on and try and do some real work in between huge debates on ST lol

You and me both, and this is the most yappy I've ever been on ST! I think I am becoming another version of Bull - just way wordier.

[Beagle]

Yeah, I am "yapped out", which is a very rare thing for me on here lol
One final thing though. I had very limited time for, and even less respect for TA when I came on here 12 years ago.
I have learned that fighting TA is like swimming against the tide at the Manukau heads.
Usually not a good course of action especially on an outgoing tide ;)

[percy]

Yeah, I am "yapped out", which is a very rare thing for me on here lol

First time I can remember........................lol.

[Beagle]

First time I can remember........................lol.

Beagle, a dog for all seasons :lol: Truth is I have some guy who wants his 31 March 2022 financials' super quick because he wants to buy a house.
Its only in exceptional circumstances a Beagle will stop yapping lol

[couta1]

First time I can remember........................lol. And you have a very long memory.

[Waltzing]

deleted, wrong thread.

[Waltzing]

Retail SP's hanging in there today steady from WHS BRIS and HLG, KMD.

MHJ the laggard ....

[LaserEyeKiwi]

New data for March NZ retail from Worldline:


Meanwhile, spending in the rest of the core retail sector reached $2.9B in March, which is up 2.5% on last year, and up 10% on pre-COVID levels. However, as Putnam notes, the patterns can be markedly different for groupings of merchants.
“There is a wide mix of merchants within the non-hospitality core retail merchants and a wide range of experiences as well. For example, the group of merchants selling hardware, appliance, furniture etc. experienced 23% more spending relative to March 2019,” he says.
“Likewise, spending is up amongst groups such as pharmacies (+45%) and recreational goods merchants (+3%). However, in contrast, spending is below 2019 levels amongst groups of booksellers (-5%), clothing (-20%) and footwear (-30%)merchants.”

[Waltzing]

its if the big 2 .. KMD, HLG are hit and they are multi national now ... NOT NZ only thankfully.

[winner69]

Another source of Retail data - Retail Watch sales data for March month

I've done v last year and v 2020

Overall not a great month for a lot of retail but it seems a lot of spend on Travel/Entertainment and Fuel in March .... at expense of normal spend?

[LaserEyeKiwi]

Another source of Retail data - Retail Watch sales data for March month

I've done v last year and v 2020

Overall not a great month for a lot of retail but it seems a lot of spend on Travel/Entertainment and Fuel in March .... at expense of normal spend?

Thanks for sharing - interesting to see Travel & Accommodation on there doing so well y-o-y.

[LaserEyeKiwi]

Weekly Update:

13702

[Muse]

article on cost pressures in retail land
https://www.interest.co.nz/business/115303/anz-economists-say-latest-survey-results-shows-urgent-need-rbnz-hike-rates-anz-sees

[percy]

article on cost pressures in retail land
https://www.interest.co.nz/business/115303/anz-economists-say-latest-survey-results-shows-urgent-need-rbnz-hike-rates-anz-sees

Thanks for posting.
An excellent article.

[LaserEyeKiwi]

article on cost pressures in retail land
https://www.interest.co.nz/business/115303/anz-economists-say-latest-survey-results-shows-urgent-need-rbnz-hike-rates-anz-sees

Meanwhile, in Australia:


BUSINESS OPTIMISM RISES IN AUSTRALIA
In Australia, business conditions surged higher in March and confidence also strengthened. Trading conditions and profitability rose markedly, suggesting demand remains strong, and employment also rose. The improvement was largely driven by the retail sector. Overall business confidence rose (https://business.nab.com.au/wp-content/uploads/2022/04/NAB-Monthly-Business-Survey-March-2022.pdf), continuing the steady rise since December.

It pays to be a retailer who has diversified their geographic base

[Muse]

Meanwhile, in Australia:



It pays to be a retailer who has diversified their geographic base

Agree - tis a virtue.

Why have one piston when you can several

[LaserEyeKiwi]

Weekly update:

13725

[LaserEyeKiwi]

Container shipping index continues dropping, now under $8,000

13727

[Rawz]

Love your work LEK

[Habits]

Container shipping index continues dropping, now under $8,000

13727

Good work. 1.2 percent drop over a week, I will take that, tho rate of fall seems slowing. Is this for imports, exports or both

[Beagle]

Weekly update:

13725

Keep up the good work, its much appreciated. The outperformance this year of MHJ, (consumer discretionary) relative to WHS (consumer staples) and BGP which could also be described as consumer staples (household goods) seems counter intuitive to me and I am expecting that to reverse as the year progresses and consumers with less money to spend focus on what they need as opposed to making discretionary purchases, (possibly to boost their mental health and wellbeing due to Covid).
I also think the metrics for the consumer staples stocks mentioned are far more compelling.

HLG is probably in a holding pattern until summer when I would expect people will be out updating their wardrobes to go "peacocking". Its a long time until December when the next dividend is due and the low and falling rate of imputation credit attached isn't helping my sentiment towards them as there's few things more distasteful than paying tax twice, once by the company itself in Australia on Glassons Au profits which make up the lions share of income now and again by shareholders when those profits are distributed. I expect this problem will get worse over the years ahead so as an income stock HLG is no longer attractive to me. It was paying a 15% gross yield when I got in back in late 2016 @ $2.75 and now is just a mere 5%. Disc: I recently completely sold out in the late $6's and invested into WHS at an average of $3.09. I will revisit HLG in due course if the yield becomes more attunable to investment objectives.

To be clear, I am not expecting great capital gains from WHS in the years ahead, I am simply buying it for the full imputation credits and the average prospective gross yield of 10.8% in the years ahead...but you never know what might happen. I only ever bought HLG for the yield but to my surprise its been a really fabulous investment over the years for me and might be again one day if the metrics become more compelling in due course. Who knows, maybe WHS might prove to be truly lucrative too.

[Rawz]

Wow based on going to Sylvia park today you wouldn’t have thought there was a cost of living crisis!?! It felt like Christmas Eve. Queues for parking, no free tables in the food court, shoppers everywhere holdings bags of goods purchased.

Was blown away with how busy it was.

Maybe the punters were on a chocolate high? Or maybe Auckland was on a high after the blues dusted up the crusaders?? What ever it was the tills were ringing and special mention to MHJ- the store looked slick and professional (and busy!)

[winner69]

Wow based on going to Sylvia park today you wouldn’t have thought there was a cost of living crisis!?! It felt like Christmas Eve. Queues for parking, no free tables in the food court, shoppers everywhere holdings bags of goods purchased.

Was blown away with how busy it was.

Maybe the punters were on a chocolate high? Or maybe Auckland was on a high after the blues dusted up the crusaders?? What ever it was the tills were ringing and special mention to MHJ- the store looked slick and professional (and busy!)

And zillions will be spent on Lotto tonight as well

Going well is Lotto they say

[nztx]

And zillions will be spent on Lotto tonight as well

Going well is Lotto they say


I find the Aussie lotteries offer far better odds and prize range by many lengths :)

If NZ Lotto was any good or going anywhere - then they would have increased the
million $ top shelf - but instead it sits potentially shared and badly inflation eroded over
the years since they last shafted the punters with that lot of changes :)

[Waltzing]

will the big office return drive a farther round of retail therapy?

The great hybrid return to work: Psychotherapist's tips for return to the office - NZ Herald (https://www.nzherald.co.nz/nz/the-great-hybrid-return-to-work-psychotherapists-tips-for-return-to-the-office/APCXFNYRR7LUTPZLB5NNWNXEU4/)

[LaserEyeKiwi]

Weekly update:

13731

[LaserEyeKiwi]

Weekly global shipping rates continuing its downward trend:

13733

[LaserEyeKiwi]

Good work. 1.2 percent drop over a week, I will take that, tho rate of fall seems slowing. Is this for imports, exports or both

I think it’s looking at both directions of a bunch of key global shipping routes. You can see the breakdown of individual routes & directions on the same page: https://www.drewry.co.uk/supply-chain-advisors/supply-chain-expertise/world-container-index-assessed-by-drewry

[Waltzing]

still got a way to drop. Sports equipment like rowing boats and canoes from european manufactures carry a very high freight component these days. Gives the local manufactures an edge to survive.

anyone watching NZ champions in action at Karapiro friday/sat would have been surprised at the number of young canoeing athletes in action.

whole new generations out their working toward world glory.

[LaserEyeKiwi]

Relevant for MHJ, given its Canadian revenue:

Canadian Feb retail sales released: “Jewelry, luggage & leather goods” category up 17% year on year.

(They also gave an uncommon early preview of March data - which presently indicates annual retail sales growth continues)

for context, MHJ has already released its trading update for this period, and their revenue in Canada was up 42% in Q1. Canada is now MHJs 2nd biggest market after Australia (NZ is now third in line)

[winner69]

Relevant for MHJ, given its Canadian revenue:

Canadian Feb retail sales released: “Jewelry, luggage & leather goods” category up 17% year on year.

(They also gave an uncommon early preview of March data - which presently indicates annual retail sales growth continues)

for context, MHJ has already released its trading update for this period, and their revenue in Canada was up 42% in Q1. Canada is now MHJs 2nd biggest market after Australia (NZ is now third in line)

NZ a non-event ..... esp after more stores are closed

MHJ not really a NZ company now ....based in Australia .... stuff all retail presence in NZ


May as well save a few bob and delist from NZX

[LaserEyeKiwi]

Spooky timing: MHJ announces it has received a $12 million payment for its finance book in Canada:

(the cash pile continues to mount)

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MHJ/390977/369228.pdf

[Habits]

Christopher Luxon on 'huge spike' in ram raids as mall in his electorate targeted
https://www.nzherald.co.nz/nz/christopher-luxon-on-huge-spike-in-ram-raids-as-mall-in-his-electorate-targeted/SB64P5NHGIEXMACMJXE3PZACRM/

Lawless

When we did our small retail dev umpteen years ago we installed heavy steel posts outside. People asked me why and I kind of wondered myself too. Question no longer

[LaserEyeKiwi]

Christopher Luxon on 'huge spike' in ram raids as mall in his electorate targeted
https://www.nzherald.co.nz/nz/christopher-luxon-on-huge-spike-in-ram-raids-as-mall-in-his-electorate-targeted/SB64P5NHGIEXMACMJXE3PZACRM/

Lawless

When we did our small retail dev umpteen years ago we installed heavy steel posts outside. People asked me why and I kind of wondered myself too. Question no longer

massive fail by whoever designed the mall entrances. It’s been standard practice for a long time to have blockages to avoid just this scenario. I’m guessing it was some ill conceived architectural pitch to promote a more “open & welcoming” entranceway. Either that or someone forgot to re-install a barrier after a large item was moved into/out of the mall. Its a bit of a paradox but the higher the perceived wealth and safety of an area, the less security retail outlets seem to have despite the higher priced inventory on hand, which makes them the best targets for thieves.

I see its a Todd Corp project, so maybe their first mall development? Steep learning curve i suppose.