WHS - Warehouse Group

[winner69]

WHS share price now at lowest level this century

Punters maybe thinking that a takeover premium isn't even warranted

[Beagle]

https://www.nbr.co.nz/article/large-transformation-vital-keep-warehouse-afloat-cs-p-200507

This behind the paywall article's title speaks for itself.

Can't cut and paste or comment on the detail other than to point out what I suggested some time back that the restructure of head office and admin staff is just the first step.

I won't mince words, I think management should write off their financial services division as the chances of them achieving critical mass to make this profitable are very slim in my opinion.

If they are truly targeting bottom rung creditworthiness customers as a poster suggested yesterday then in my opinion they are on a hiding to nothing as these sort of customers hit the no asset procedure button, (short form 12 month bankruptcy procedure for anyone with negligible assets and debts under $47,000) in droves when things get too tough.

Technically anyone holding when the chart looks absolutely horrible is "incredibly brave" in my opinion. The potential for shareholder wealth destruction as they go through an attempted transformation puts this stock into the fairly risky category in my opinion. A good stock to short if you can get access to the necessary scrip.

[Ogg]

What's the dividend date?

[winner69]

What's the dividend date?

Lazy bugger - look it up

Goes ex March 31 and paid 17 April

[Ogg]

Lazy bugger - look it up

Goes ex March 31 and paid 17 April

LOL, I did look, it wasn't on the latest announcement like it was last year :)

[macduffy]

LOL, I did look, it wasn't on the latest announcement like it was last year :)

Best source of this info, Ogg is the NZX website. Not easy to navigate around but if you persevere, having located the particular company's page, the divvy info - and a lot of other stuff is there.

Good hunting!

:)

[Ogg]

Best source of this info, Ogg is the NZX website. Not easy to navigate around but if you persevere, having located the particular company's page, the divvy info - and a lot of other stuff is there.

Good hunting!

:)


Cheers have found it

[macduffy]

I wonder where the Norman family stand on this? Not known for throwing money away on lost clauses, are they backing the current policy? Happy to see the shareprice wobble in aid of future private plans? Or something else?

:confused:

[winner69]

Even kicked out of the NZX50 and relegated to the Small Cap Index



(Free float probably doesn't help ....but how the might have fallen)

[tim23]

[You were right - I couldn't see it in the aaouncement either QUOTE=Ogg;658543]LOL, I did look, it wasn't on the latest announcement like it was last year :)[/QUOTE]

[winner69]

Best place to look is the NZX itself
https://nzx.com/companies/WHS/announcements/298018

Under the WHS announcement the other day is a list of all the other interesting stuff submitted like below

The Appendix 7 notice is dividend details
https://nzx.com/files/attachments/254558.pdf

[carrom74]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11815985

An interesting weekend read...In the end, i am cautiously optimistic with WHS and Nick seems to me to be the good pick...a seasoned retailer just like how Nigel Morrison was with Skycity(who eventually turned it around)...

[winner69]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11815985

An interesting weekend read...In the end, i am cautiously optimistic with WHS and Nick seems to me to be the good pick...a seasoned retailer just like how Nigel Morrison was with Skycity(who eventually turned it around)...

Nick probably learnt a lot at Sears - how to try and make a business sustainable. They are still trying...incurring losses and closing heaps of stores etc etc and still haven't worked out the model is broken.

In another article Nick said "“It would be very tempting to keep on doing what we’re doing and expect a different result. But the reason the board chose to recruit me is I’ve had experience of what happens to traditional retail when it gets disrupted by some of those pure plays and changing customer preferences"

OK he recognises a problem ...but did Sears work out a solution?

Maybe saw the light of day at Sears and couldn't get out fast enough?

[Sideshow Bob]

Australian article but pertinent to WHS

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11816562

[winner69]

Australian article but pertinent to WHS

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11816562

Good article

Social per se doesn't seem to be part of Nick's strategy to transform WHS


Plenty of 'endless aisles' though

[Hoop]

What's the dividend date?

Sometimes It's a mission for us investors to find announcements and even more common is the Company results that forget to add the dividend amount and when it goes ex- date....I have for a long time now thought companies regard their investors (shareholders) as a problem and treat them with lack of proper respect...That's a good omen...A bad omen is when companies start being nice, akin to a grooming process in preparation to fleece more money from you....:(.

The NZX website is investor unfriendly as well...I, Lizard and many others complained to them when the website first hit the internet..A waste of my valuable time as my communications went unanswered...but don't worry Ogg..us lowly lifeforms (investors) like all low lifeforms in nature adapt quicker than other higher lifeforms..I have since stopped whinging and adapted to find a few things on the NZX...thanks to bookmark....so to help others by saving lost time trawling the NZX website in trying to find market announcements and dividend amounts and ex-dates , open this NZX web link below and bookmark it for future use.

https://www.nzx.com/markets/NZSX

[Hoop]

What's the dividend date?

Oh..and a question...From the query post I assume you are a WHS shareholder....I hope you have just bought in (that's bad enough) and not using long term buy /hold strategy on this dog..

[winner69]

Sometimes It's a mission for us investors to find announcements and even more common is the Company results that forget to add the dividend amount and when it goes ex- date....I have for a long time now thought companies regard their investors (shareholders) as a problem and treat them with lack of proper respect...That's a good omen...A bad omen is when companies start being nice, akin to a grooming process in preparation to fleece more money from you....:(.

The NZX website is investor unfriendly as well...I, Lizard and many others complained to them when the website first hit the internet..A waste of my valuable time as my communications went unanswered...but don't worry Ogg..us lowly lifeforms (investors) like all low lifeforms in nature adapt quicker than other higher lifeforms..I have since stopped whinging and adapted to find a few things on the NZX...thanks to bookmark....so to help others by saving lost time trawling the NZX website in trying to find market announcements and dividend amounts and ex-dates , open this NZX web link below and bookmark it for future use.

https://www.nzx.com/markets/NZSX

Good one Hoop

The main announcement is more along the lines of a media release

You need to read the other stuff to get the real story.

Like whatI showed the other day - there were numerous attachments - 7 in all

[Ogg]

Oh..and a question...From the query post I assume you are a WHS shareholder....I hope you have just bought in (that's bad enough) and not using long term buy /hold strategy on this dog..

LOL, nice reply above. I agree that the NZX and also ASB securities websites/platforms are total crap. The problem is that there's no real competition.

I'm an ex shareholder. WHS was one of my first investments back in 2009. Held for a few months and sold out for a tiny profit.

I've always liked the company as I'm a North Shore guy and my dad would always talk about Stephen Tindall being a great Kiwi entrepreneur.

The failure of Masters (Woolworths entry into hardware in Austraila) got my thinking about big box retail. Woolworths lost $1b trying to compete with Bunnings. The take away I think is that branding and customer loyalty/behaviour play a huge part. The fact is that the Warehouse will remain the go to place for the average kiwi. That's also the reason why the Warehouse failed to take hold in Australia.

The revenue is still strong and growing. Noel Leeming is looking good. Margin is down but improving. Warehouse online growth is strong. The problem lies in the cost of doing business and the financal subsidiary. However, now that the good will has been written off and an operational change is in place that should be the catalyst for change. At the current price it's worth the risk.

I'm planning on going in big after the dividend for tax reasons. Hopefully it trades down further over the coming weeks.

I'm not worried about Amazon. It's a similar issue between trademe and Ebay. Amazon has missed the boat and I think it will never take off in NZ.

I'm more worred about the level of household debt in NZ and the effects that will have on retail spending going forward. There could be further downside risk but as long as they can sort out the CODB than they should be able to ride it out.

[Balance]

It's run separately in New Zealand and Australia. They've had a lot of success here with their refurbs

http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11721407

A parent (Coles) with deep deep pockets to effect the transformation and turnaround - short term pain with long term gains.

WHS does not have such a shareholder (Tindall is taking WHS for dividends to maintain his charitable and venture capital initiatives) - short term gain for long term pains.

As long as Tindall remain the controlling shareholder, nothing is going to change save a continuation of the structural decline we have witnessed for the last 10 years.

Remember WHS's profits used to be bolstered by property development and investment gains - now it is rental expense putting further squeeze on margins and profits.

[Hoop]

nice post Ogg..

[Hoop]

WHS has been down trending for more than a decade now and to make matters worse there is a long term Descending Triangle (Bearish) Pattern in play..The !!! alerts the fact that the more favoured chance of a predicted downward breakout may have occurred

http://i458.photobucket.com/albums/qq306/Hoop_1/WHS%2010032017%20week.png (http://s458.photobucket.com/user/Hoop_1/media/WHS%2010032017%20week.png.html)

Has WHS bottomed out?? the Dragonfly Doji appears at turning points..If WHS gaps up Monday it will confirm as an abandoned baby, a very bullish candle stick sign..If there's no gap up Monday then it will be concerning that primary support may have been broken (beyond the margin of error) and in the chartist's world that is seen as bad news...

http://i458.photobucket.com/albums/qq306/Hoop_1/WHS%2010032017%20daily.png (http://s458.photobucket.com/user/Hoop_1/media/WHS%2010032017%20daily.png.html)

[Beagle]

Even kicked out of the NZX50 and relegated to the Small Cap Index



(Free float probably doesn't help ....but how the might have fallen)

Index tracker funds and some institutions will be selling as a result of this.

Hard to believe they're paying such a big dividend considering the most recent financial performance. Struggle to understand how that's good prudent management given the apparent need for substantial additional restructuring ?
Also struggle to see on what basis Directors and management have confidence in the future of the finance business ? What evidence are they basing this on ? Why are they stripping so much cash out of the company if they're planning or taking more losses on the chin with the finance arm in the hope of turning it around ? How are they going to fund other restructuring costs going forward ?
This dividend hound can see other hounds being very disappointed with the significantly reduced size of their feeds after this current one.

Balance - Top post above mate, couldn't agree more. Noel Leeming the only bright spot on a very dismal landscape.

[Balance]

Index tracker funds and some institutions will be selling as a result of this.

Hard to believe they're paying such a big dividend considering the most recent financial performance. Struggle to understand how that's good prudent management given the apparent need for substantial additional restructuring ?
Also struggle to see on what basis Directors and management have confidence in the future of the finance business ? What evidence are they basing this on ? Why are they stripping so much cash out of the company if they're planning or taking more losses on the chin with the finance arm in the hope of turning it around ? How are they going to fund other restructuring costs going forward ?
This dividend hound can see other hounds being very disappointed with the significantly reduced size of their feeds after this current one.


The financial profile of the group certainly does not support such a high dividend payout policy.

To reinforce one of the points I made above, Roger:

In 2010, WHS operating lease commitments were $180m.

In 2016, the commitments have ballooned out to $811m!

Meanwhile, NPAT has dropped from $83.2m in 2010 down to $64.1m in 2016, and forecast to be between $54m - $58m!

In other words, WHS financial risk has been ratcheting upwards even while the group attempts restructuring after unsuccessful restructuring, acquisition after acquisition.

But for the $100m equity placement in 2014 (shares issued at $3.23 so ain't no likelihood of the institutions putting up their hands for more), WHS would definitely be unable to keep the high dividend payout going.

[winner69]

The financial profile of the group certainly does not support such a high dividend payout policy.

To reinforce one of the points I made above, Roger:

In 2010, WHS operating lease commitments were $180m.

In 2016, the commitments have ballooned out to $811m!

Meanwhile, NPAT has dropped from $83.2m in 2010 down to $64.1m in 2016, and forecast to be between $54m - $58m!

In other words, WHS financial risk has been ratcheting upwards even while the group attempts restructuring after unsuccessful restructuring, acquisition after acquisition.

But for the $100m equity placement in 2014 (shares issued at $3.23 so ain't no likelihood of the institutions putting up their hands for more), WHS would definitely be unable to keep the high dividend payout going.

I thought to myself that $811m can't be right so I checked - yes it is $811 in lease commitments

I also see occupancy costs are about $150m - sort of highlights the degree of 'fixed cost' embedded in the organisation - which makes cost cutting even harder

[Beagle]

The financial profile of the group certainly does not support such a high dividend payout policy.

To reinforce one of the points I made above, Roger:

In 2010, WHS operating lease commitments were $180m.

In 2016, the commitments have ballooned out to $811m!

Meanwhile, NPAT has dropped from $83.2m in 2010 down to $64.1m in 2016, and forecast to be between $54m - $58m!

In other words, WHS financial risk has been ratcheting upwards even while the group attempts restructuring after unsuccessful restructuring, acquisition after acquisition.

But for the $100m equity placement in 2014 (shares issued at $3.23 so ain't no likelihood of the institutions putting up their hands for more), WHS would definitely be unable to keep the high dividend payout going.

WOW, so in FY19 when the new accounting standard comes into effect that requires companies to account for lease commitments as liabilities their balance sheet is going to look truly horrible !
I don't follow this one closely Balance but I assume they have gone through a substantial sale and lease back process, really substantial by the look of those scary figures.
Just saw your post Winner. Hard to cut much labor cost either. Lets face it finding a staff member at the Warehouse to help you with your shopping enquiry is already a major mission and don't even start me on the way people have to queue up like cattle already for the very minimal number of checkout's open at any one point although I suppose they could do a K Mart and make people scan and pack their own purchases but how do they then overcharge people 10 cents per plastic bag ?

[winner69]

WOW, so in FY19 when the new accounting standard comes into effect that requires companies to account for lease commitments as liabilities their balance sheet is going to look truly horrible !
I don't follow this one closely Balance but I assume they have gone through a substantial sale and lease back process, really substantial by the look of those scary figures.

....and they would have picked up a lot for the Noel Leeming stores

[Balance]

....and they would have picked up a lot for the Noel Leeming stores

Note that net debt has gone from a minimal $72m in 2010 to $299m in 2016?

Could be debated that dividends have been all paid from increased borrowings ($227m) and the $100m equity raised in 2014.

All part of the 'efficient use of lazy balance sheet' push by institutions as I recall back in the early 2010s - balance sheet certainly has been working hard since then!

[stoploss]

More pressure on WHS here ....
http://i.stuff.co.nz/business/money/90259269/Kiwi-retailers-have-cause-to-fear-as-TK-Maxx-hits-Australia?cid=app-iPhone

Or is it cheaper for these guys to takeover WHS to get the footprint ?????

[Snow Leopard]

WOW, so in FY19 when the new accounting standard comes into effect that requires companies to account for lease commitments as liabilities their balance sheet is going to look truly horrible !...

Like each and every other company to which IFRS16 will apply the bringing onto the balance sheet of all these lease liabilities will also be accompanied by the bringing on the balance sheet of an amount of leased assets.

So while some companies will have a net decrease in equity, some will have a net increase in equity and it will probably, more or less, all come out the same colour in the wash.

It is unlikely that the movement in net equity will be 'significant' in most cases.

Best Wishes
Paper Tiger

Disc: Do not hold WHS, I bought some once & did not get a bargain. :(

[Balance]

Like each and every other company to which IFRS16 will apply the bringing onto the balance sheet of all these lease liabilities will also be accompanied by the bringing on the balance sheet of an amount of leased assets.

So while some companies will have a net decrease in equity, some will have a net increase in equity and it will probably, more or less, all come out the same colour in the wash.

It is unlikely that the movement in net equity will be 'significant' in most cases.

Best Wishes
Paper Tiger

Disc: Do not hold WHS, I bought some once & did not get a bargain. :(

Good point PT.

I guess the issue for investors (and financiers) is financial stress - as measured by financial leverage or simplistically, debt to equity. Companies in the past have often moved assets off balance sheet (via receivables discounting, off balance sheet inventory funding, sale & leaseback of fixed assets especially properties, but often plant & equipment) to show lower debt levels and hence, lower financial leverage.

Go back to the 1990s and Fletcher Challenge was the master of financial leverage (or showing low financial leverage) but it all came crashing down when the first headwinds hit the group's earnings.

WHS has been building up financial leverage in a big hurry it seems since 2010, with little by way of earnings uptick to show for all that increased leverage.

[BlackPeter]

I thought to myself that $811m can't be right so I checked - yes it is $811 in lease commitments

I also see occupancy costs are about $150m - sort of highlights the degree of 'fixed cost' embedded in the organisation - which makes cost cutting even harder

Just a thought after trying to digest this number - it might be worthwhile for holders of property funds to check whether their funds are overexposed to the WHS as tenant ... I guess with this huge liability and dropping income it would not be impossible for them to try to reduce at some stage their leases (i.e. shutting down shops) whenever they can.

[Ogg]

Looks like it's closed the $2.5 gap. Might have missed the bottom on this?

[BlackPeter]

Looks like it's closed the $2.5 gap. Might have missed the bottom on this?

Trend doesn't look pretty. There might be some gain for a lucky day trader ... but not sure I'd see this stock at this stage as investment opportunity.

Remember: never buy into a downtrend ...

[couta1]

Trend doesn't look pretty. There might be some gain for a lucky day trader ... but not sure I'd see this stock at this stage as investment opportunity.

Remember: never buy into a downtrend ... Why not?(Averaging down in a downtrend if it's a quality company for example) Done quite well out of buying into downtrends, as well as uptrends and sideways trends. PS-Not keen on this Company atm though.

[Beagle]

Note that net debt has gone from a minimal $72m in 2010 to $299m in 2016?

Could be debated that dividends have been all paid from increased borrowings ($227m) and the $100m equity raised in 2014.

All part of the 'efficient use of lazy balance sheet' push by institutions as I recall back in the early 2010s - balance sheet certainly has been working hard since then!

Financial engineering experiment that clearly isn't working. Hope dividend hounds enjoy their next (last?), big feed.

[BlackPeter]

Why not?(Averaging down in a downtrend if it's a quality company for example) Done quite well out of buying into downtrends, as well as uptrends and sideways trends. PS-Not keen on this Company atm though.

Look couta, there are always exceptions. If you are really sure that your beloved stock bottomed out (or is close to) - and if you know from experience that you are good in bottom picking (i.e. more often right than wrong), than buying in a downtrend can be the right thing for you. I'd however like to point out that in this case you are not buying in a downtrend, but you are just better (or faster) than others to recognise the trend change :p;

However in any other situation ... given that trends tend to be sticky (i.e. every single day the chance that the trend continues is larger than the chance that it ends) is it more sensible to wait with the buying until you know the trend has changed. Why would anybody buy a share today if it is likely to be cheaper tomorrow?

Re the bottom picking skills ... I assume you keep your stats .... how does this work for you if you look at past performance? How often do you get it right and how often not?

[Ogg]

Struggling to hold 2.5 now.

[couta1]

Look couta, there are always exceptions. If you are really sure that your beloved stock bottomed out (or is close to) - and if you know from experience that you are good in bottom picking (i.e. more often right than wrong), than buying in a downtrend can be the right thing for you. I'd however like to point out that in this case you are not buying in a downtrend, but you are just better (or faster) than others to recognise the trend change :p;

However in any other situation ... given that trends tend to be sticky (i.e. every single day the chance that the trend continues is larger than the chance that it ends) is it more sensible to wait with the buying until you know the trend has changed. Why would anybody buy a share today if it is likely to be cheaper tomorrow?

Re the bottom picking skills ... I assume you keep your stats .... how does this work for you if you look at past performance? How often do you get it right and how often not? I don't pick bottoms BP:eek2: I average down using big volume over a period of time like I did with Air from $2.80 to $2.22. PS-Of course it's better to be perfect and always buy at the bottom, but that's not me.

[Biscuit]

I don't pick bottoms BP:eek2: I average down using big volume over a period of time like I did with Air from $2.80 to $2.22.

I have a similar "never-fails" scheme for winning at the casino: every time you bet and lose your stake, you just repeat the same bet with double the previous stake. Regardless of the odds, eventually you will win and get all your loosings back!

[JeremyALD]

I have a similar "never-fails" scheme for winning at the casino: every time you bet and lose your stake, you just repeat the same bet with double the previous stake. Regardless of the odds, eventually you will win and get all your loosings back!

I've done that and whilst it's possible you need very deep pockets!!!

[Biscuit]

I've done that and whilst it's possible you need very deep pockets!!!

OMG! Good for you! I would never dare try!

[BlackPeter]

I don't pick bottoms BP:eek2: I average down using big volume over a period of time like I did with Air from $2.80 to $2.22.

I see that fund managers need to apply this strategy (buy into downtrends and sell into uptrends) given that they otherwise wouldn't had a chance to move the volumes they want to move. Judging from your posts it sounds you are typically owning quite large parcels. Maybe your situation is already closer to the situation of a fund manager than to an average retail shareholder?

Just being curious - are you doing the numbers (measuring the average return on your equity) and how does this relate to the usual benchmarks (like NZX50 or some of the larger funds)? There is a reason funds have typically smaller returns than (successful) retail shareholders ...

[h2so4]

OMG! Good for you! I would never dare try!

:ohmy:What are the odds? Don't they reset every time you bet?
Like the 1 in one hundred year floods that happen every year.

[stoploss]

I have a similar "never-fails" scheme for winning at the casino: every time you bet and lose your stake, you just repeat the same bet with double the previous stake. Regardless of the odds, eventually you will win and get all your loosings back!

This is a losing strategy , as you will come up against the table/ house limit on a bad run.

[winner69]

WHS has been down trending for more than a decade now and to make matters worse there is a long term Descending Triangle (Bearish) Pattern in play..The !!! alerts the fact that the more favoured chance of a predicted downward breakout may have occurred

http://i458.photobucket.com/albums/qq306/Hoop_1/WHS%2010032017%20week.png (http://s458.photobucket.com/user/Hoop_1/media/WHS%2010032017%20week.png.html)

Has WHS bottomed out?? the Dragonfly Doji appears at turning points..If WHS gaps up Monday it will confirm as an abandoned baby, a very bullish candle stick sign..If there's no gap up Monday then it will be concerning that primary support may have been broken (beyond the margin of error) and in the chartist's world that is seen as bad news...

http://i458.photobucket.com/albums/qq306/Hoop_1/WHS%2010032017%20daily.png (http://s458.photobucket.com/user/Hoop_1/media/WHS%2010032017%20daily.png.html)

Just in case punters didn't see a few pages back

[Biscuit]

This is a losing strategy , as you will come up against the table/ house limit on a bad run.

I'm certainly not advocating that as an actual gambling strategy. In theory, though, it does not seem to matter to me what the table/house limits are, you would just go to a different table/house. The "strategy" does not rely on "the odds not resetting" (Sulphuric Acid) but just on the fact that, given any odds, ultimately you will win - even if it takes forever and infinite money (Couta's strategy).

[percy]

I have a similar "never-fails" scheme for winning at the casino: every time you bet and lose your stake, you just repeat the same bet with double the previous stake. Regardless of the odds, eventually you will win and get all your loosings back!

I think this system was perfected by the late Kerry Packer.Most people got nervous when he started betting $2mil or $4mil double or quits.
ps.He met a big loud mouth in a Vegas Casino.Packer asked the guy what he was worth.$100mil the guy said,to which Packer famously replied,"I will toss you for it.".....

[Biscuit]

I think this system was perfected by the late Kerry Packer.Most people got nervous when he started betting $2mil or $4mil double or quits.
ps.He met a big loud mouth in a Vegas Casino.Packer asked the guy what he was worth.$100mil the guy said,to which Packer famously replied,"I will toss you for it.".....

Yes, and he died a rich man! But stoploss is right, you would either get lucky, run out of money or run out of partners with big enough stakes to bet against.

[stoploss]

Mmmm so all these winning punters st casinos ..... Sky posted a few losses over the years ???

[JeremyALD]

This is a losing strategy , as you will come up against the table/ house limit on a bad run.

In theory it's very hard to get 20 bets in a row wrong with 50/50 odds, but I guess it's possible. Personally the strategy has never really worked for me, but I don't have big enough pockets to last more than 7 losses on the trot :)

[stoploss]

In theory it's very hard to get 20 bets in a row wrong with 50/50 odds, but I guess it's possible. Personally the strategy has never really worked for me, but I don't have big enough pockets to last more than 7 losses on the trot :)
What game you playing with 50/50 odds ?

[h2so4]

Starting at $1 the 20th bet is $524288 after having lost $524287 on the 19th bet.

[Snow Leopard]

Sorry but I am having trouble with the subject under discussion here.

Does the Warehouse have Roulette Wheels and the like on special?

Best Wishes
Paper Tiger

[Joshuatree]

Yes ; could rename this thread for newbies "HOW NOT TO INVEST"

[winner69]

Starting at $1 the 20th bet is $524288 after having lost $524287 on the 19th bet.

so the 20th bet is $1

[James108]

If anyone is actually interested in optimal bet sizeing google the Kelly criterion.

[Balance]

Just in case punters didn't see a few pages back

A thought - where would be the Warehouse sp be but for the Normans buying?

Based on last SSH, they have only 1.39% to go and they reach 20% - either corporate activity happens (merger with farmers?) or sp is going to be without support, especially now that WHS is getting kicked out of NZX50 this Friday.

[Baa_Baa]

A thought - where would be the Warehouse sp be but for the Normans buying?

Based on last SSH, they have only 1.39% to go and they reach 20% - either corporate activity happens (merger with farmers?) or sp is going to be without support, especially now that WHS is getting kicked out of NZX50 this Friday.

Normans don't build substantial positions without intent.

[Balance]

Normans don't build substantial positions without intent.

They have certainly dealt themselves into a pivotal position to influence any corporate activity outcome if Tindall ever decides to sell his controlling stake.

[Balance]

Shame about the $22m impairment on the Financial Services side of the business

And this was going to be a game changer

But maybe hope - still in 'pre-launch' whatever that means

This is what WHS announced when it raised $115m of new equity in March 2014 as part of its strategic move into financial services:

1. Ambition to be a 'Leading NZ Retail financial services company'.

2. Financial Services will lose up to $3M after tax in FY14 and FY15 as the business base is developed.

3. But the growth of product range and receivables portfolio should result in a positive contribution from Financial Services by FY16.

As it turned out, the Financial Services business showed a loss of $2.7m in FY16 and we now read that FY17 showed an increased loss of $5.2m! Basically means that this business is running behind schedule by 2 years! Hence, the 'pre-launch' excuse?

As for the $22.5m goodwill impairment write-off being 'non-cash', history tells us that simply means that the cash was spent in previous years and was capitalized (hence, making previous years' profits look better). It is a very real adverse cash and profit impact indeed!

No wonder the institutions who supported the equity raising are selling out? Hard to see any positives coming out of WHS from this results.

[bull....]

warehouse should ditch have of the s.it they sell and close all noel leaming and warehouse stationary stores and fold them all under one roof- save heaps on lease costs, staff costs, head office costs etc etc and then rebrand get rid of the warehouse brand its had its day. but i guess the new guy supported by the board will continue to waste millions on a no hope situation in its current state.
gee when the warehouse closes one day there be lots of mall spaces around.

[Balance]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11818080

Some insightful comments from Rod Duke - Briscoe's profit and market cap now both bigger than WHS!

2 notable points :

1. Kiwis are over cheap rubbish. Perception of the WHS after years of restructuring is that it still sells cheap rubbish.

2. The likes of Amazon, Ebay & Alibaba will impact the most on certain categories like books, clothings, toys etc. WHS is still busy selling these items!

Long road ahead for WHS - it has got plenty of retail space (used to be its claim to fame) but a lot of that space is now used for stocking and selling sunset goods. Meanwhile, lease payments are ballooning higher and higher, one side effect to the sale and leaseback strategy.

PS. Reminder to oneself - NEVER buy into a sustained downtrend!

[Beagle]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11818080

Some insightful comments from Rod Duke - Briscoe's profit and market cap now both bigger than WHS!

2 notable points :

1. Kiwis are over cheap rubbish. Perception of the WHS after years of restructuring is that it still sells cheap rubbish.

2. The likes of Amazon, Ebay & Alibaba will impact the most on certain categories like books, clothings, toys etc. WHS is still busy selling these items!

Long road ahead for WHS - it has got plenty of retail space (used to be its claim to fame) but a lot of that space is now used for stocking and selling sunset goods. Meanwhile, lease payments are ballooning higher and higher, one side effect to the sale and leaseback strategy.

PS. Reminder to oneself - NEVER buy into a sustained downtrend!

Couldn't agree more. Whether just consumer perception or reality the perception amongst people I talk too is Warehouse generally does not sell good quality merchandise. (Caveat: Mind you I am hardly WHS's target market customer).

[Biscuit]

Couldn't agree more. Whether just consumer perception or reality the perception amongst people I talk too is Warehouse generally does not sell good quality merchandise. (Caveat: Mind you I am hardly WHS's target market customer).

There will always be a good market for cheap rubbish. The problem isn't the product, its the perception and the competition. People buy even more cheap rubbish than ever, they just get it on Trademe, Briscoes etc.

[h2so4]

Always bought my Cadbury marshmallow centered easter eggs there. Seemed to be alright.

[h2so4]

....mmmmmmm

[Beagle]

There will always be a good market for cheap rubbish. The problem isn't the product, its the perception and the competition. People buy even more cheap rubbish than ever, they just get it on Trademe, Briscoes etc. I agree that there will always be a segment of the market and a pretty sizeable one at that where people must buy the cheapest product out there that does the job but quite aside from the old cliché which is one of my favorites that "the bitter taste of poor quality lingers long after the thrill of a bargain" the thing is when you go into a Briscoes store the perception is, (well mine is for what that's worth), that you're buying product someone around the middle of the market as opposed to cheap rubbish.
For example we updated our cutlery before Christmas, (the stuff my wife and I were given at our wedding 25 years ago was very tired) with some very nice Simon Gault cutlery at Briscoes and have found it to be very good quality and it was at quite a reasonable price when acquired when on sale at 50% off.
I think this explains why Rod Duke is doing so well. He creates the perception of pretty good quality at a fairly reasonable price and I think that's what most people want, well most people I know.

[Balance]

I think this explains why Rod Duke is doing so well. He creates the perception of pretty good quality at a fairly reasonable price and I think that's what most people want, well most people I know.

Also, Briscoe stock the full range of products - from cheap to very expensive. The very expensive (eg. Scanpan, Tefal and Wustof) tends to uplift the whole store's image.

WHS does not stock the full range and when it has upmarket brands like Apple or Sony, it sells but a few items of that brand. Heck, most brands would not want to be associated with the Warehouse!

Think how often you go into Briscoe intending to buy something on special and walk out with something more upmarket for 20% or 30% more, and thinking you made the right decision.

[Beagle]

Also, Briscoe stock the full range of products - from cheap to very expensive. The very expensive (eg. Scanpan, Tefal and Wustof) tends to uplift the whole store's image.

WHS does not stock the full range and when it has upmarket brands like Apple or Sony, it sells but a few items of that brand. Heck, most brands would not want to be associated with the Warehouse!

Think how often you go into Briscoe intending to buy something on special and walk out with something more upmarket for 20% or 30% more, and thinking you made the right decision.

That's spot on Balance. Fact is there was a whole range of cutlery in there, from stuff that would most likely bend or break pretty quickly to the stuff we bought that will probably last us another 25 years.
On the other hand I wouldn't even contemplate going to the Warehouse for cutlery, what's the point of buying utensils that you know on the balance of probabilities won't last a reasonable period of time ?
As you suggest, there's probably many brands that don't want to be associated with the Warehouse so WHS can probably never achieve a decent spectrum of product quality in any particular range of merchandise even if they wanted too. I think its this key fact that compromises the WHS's business model going forward, (along with their other challenges), and no amount of restructuring can change that.
The exception in my view is the Noel Leeming stores that I continue to expect to do well given Dick Smith's demise.

[BlackPeter]

OK - so the Warehouse obviously made a lot of mistakes and forgot to change with the times. Still - it must be worth something.

Their average EPS (over the last 10 years or so) are 25 cents, future average EPS estimated around 20 cents. Analyst consensus is $2.65, though coupled with an "underperform" recommendation.

A good board and management team would have plenty of opportunities to build on the strengths (and there still are some - the red sheds normally have plenty of customers (other than the blue ones) and Noel Leemings and torpedo 7 don't do too bad either) and lose all the redundant and inefficient ballast ...

So - how much would it be worth for somebody to pick it up (assuming Steven Tindall is prepared to sell) and turn it back into a better business?

What do people think is the underlying value? If I take the 20 cents future earning and a PE of 10 - This would make it $2 per share. If we accept a PE of 12.5 we are already at $2.50.

Add the 10 cents dividend (until end of the month) and some value for gaining synergies if somebody does tidy it up ... maybe the current share price does not look that bad?

[percy]

Try your workings with a PE of 7.5.

[BlackPeter]

Try your workings with a PE of 7.5.

Why is that - they don't fly or float (which would command a higher risk factor), don't they ;)?

[Beagle]

Forest would be very disappointed in the hound if he didn't weigh in with an opinion on this so here goes, all data based off average forecast analyst earnings off 4 traders website and focus is on next year's earnings which exclude any current year restructuring charges.

Market always looking ahead so I focus on FY 18 data.
WHS forecast PE 13.1
HLG forecast PE 12.3.

I would argue HLG is an extremely well run company with excellent well refined business practices and has no systemic issues that require dramatic restructuring of any kind and note top line sales growth is very comfortably outstripping the extremely modest rate WHS is "growing" their sales at.

As noted in previous posts and as noted by the CEO of WHS himself WHS faces ongoing significant potential restructuring issues and I would argue extremely serious challenges turning their finance operations around.

Given the known headwinds and slower growth rate and the fact that HLG is known to be a far more efficient retailer with best of breed stock turn I would argue the WHS should trade at a PE discount of at least 1, more fairly 2 to HLG.

If we said a fair FY18 PE for WHS was a 2 discount to HLG a PE of 10.3 there is potential for the current SP to fall from a PE of 13.1 to 10.3 = 21%.
If we said a PE discount of 1 is warranted there is potential for the current SP to fall from a PE of 13.1 to 11.3 = 14%.

In my opinion an ex dividend price of about $2.00 might be fair / good value going forward IF you believe, (I don't), in the current directors and management's business model and believe they can turn around the finance arm so its doesn't act like a sea anchor on future earnings.

[winner69]

Last time when things got bad Stephen offered $5.75 to buy the company back ....with the help of PEP I think it was

Would he offer to privatise it again .......or just call it quits and find somebody to take his shares off his hands - getting cheaper by he day eh

[Biscuit]

.... IF you believe, (I don't), in the current directors and management's business model and believe ....

I think that is the critical question. Don't touch if you don't trust the strategy/business model, and who could have any faith in that any longer?

[Hoop]

There will always be a good market for cheap rubbish. The problem isn't the product, its the perception and the competition. People buy even more cheap rubbish than ever, they just get it on Trademe, Briscoes etc.

Over the years the cheap rubbish has got dearer and WHS profit has not improved, so there lies the problem..Many years ago the Warehouse was a price disruptor with their smaller shops full of all sorts of bargains. Now its just a giant barn full of all sorts...gardening supplies and home hardware cheaper at Bunnings, Auto supplies cheaper at Repco or Supercheap Autos, Food and soft drinks cheaper at the Supermarkets etc etc...A retail scattergun strategy's weakness is it's lack of individual expertise/product/supply chain focus to compete effectively...They went some way to fix this problem in the Electronic/Whiteware area with Noel Leeming takeover...Years ago they had individualised speciality stores under the Warehouse roof...but for some reason they moved away from that..

[percy]

Why is that - they don't fly or float (which would command a higher risk factor), don't they ;)?

Retail is as always a very difficult sector to be in.
Even more so today with Amazon and other strong online retailers growing very quickly.
Bricks and mortar retailers such as The Farmers, Briscoes and Hallenstein Glassons are well focussed in their target markets.Even K-mart have moved ahead.
So WHS is lost in this tough market.They had to buy Leemings to source quality products,as rubbish was no longer acceptable,or profitable,ie you make no money on products that are returned.
They have kept adding to their cost structure with staff,and lease commitments.
I think the Normans would be able to reposition WHS.It would mean reducing the product range considerably,and making the store flow better.Cut out non performing departments and strengthen departments where they are strong.
In retail you either go forward or you end up going backwards very quickly.At the present time WHS has to find a strategy that will work.Whether they can or can not means it is a very poor,or dangerous punt.
Therefore one must be very careful on valuing WHS on dividend yield,PE or whether the Normans will make a takeover bid.

[h2so4]

Yeah. You might not make the grade if you gave your girlfriend a diamond ring purchased from The Warehouse.

[bull....]

I think there cheap apparel has a place in the market esp cheap kids clothing as for the rest agree they are trying to be jack of all but expert in none.

As for technical I believe all time low is happening so very bearish my long term channel down is currently under 2 dollars at this time.

[whatsup]

WHS slowly slip sliding away $2.42 now !

[Ogg]

What's the all time low?

[bull....]

What's the all time low?

I had around or just under 2.50 that's looking at my data last 10ys whos knows what it was before that 2.50 looked like huge support just been breached not uncommon to get a big fall when major support is broken

[Baa_Baa]

I had around or just under 2.50 that's looking at my data last 10ys whos knows what it was before that 2.50 looked like huge support just been breached not uncommon to get a big fall when major support is broken


Yeah I have 2.48 low week of Feb 17 2012, so this is a major breakdown below all time lows. Might trigger a few stops eh.

[bull....]

bounced of it in mid 2015 too just too confirm the level = agree looks bad on the chart - I think in mid 2015 I was saying it was stuffed too and the normans buying was the only thing holding it up .

[Balance]

In retail you either go forward or you end up going backwards very quickly.At the present time WHS has to find a strategy that will work.Whether they can or can not means it is a very poor,or dangerous punt.
Therefore one must be very careful on valuing WHS on dividend yield,PE or whether the Normans will make a takeover bid.

Strategy? WHS has been re-positioning since 2006 when Ian Maurice was CEO. Remember Warehouse Extra? Warehouse Cellars? Warehouse Pharmacy?

He and subsequent CEOs had the luxury of a very strong balance sheet (with company owned freehold stores and land as backup assets) and still high levels of cash flow to pursue all those 'failed' re-positioning and restructuring.

Nick Grayston does not now have the benefit of a very strong balance sheet or very strong cash flow to have the same flexibility - the need to raise equity in 2014 is testimony to the lack of balance sheet strength.

The recent announcement of a change in operating model is really only about staff cuts imo. When a company embarks upon staff cuts to effect cost savings, usually means it is bloated in the first place or it is running out of ideas. As Roger has pointed out, Warehouse stores have hardly enough staff as it is! Contrast with K-mart where there are staff everywhere to tidy up, re stack shelves and to answer customers' queries.

PS. reminder to not to invest into a downtrend.

[macduffy]

I had around or just under 2.50 that's looking at my data last 10ys whos knows what it was before that 2.50 looked like huge support just been breached not uncommon to get a big fall when major support is broken

Big Charts "All data" shows a closing price around $1.25 in 1997 and prices around $1.50 for a month or two. Hard to be definitive as the data is compressed to cover around 20 years' worth!

[Balance]

Forest would be very disappointed in the hound if he didn't weigh in with an opinion on this so here goes, all data based off average forecast analyst earnings off 4 traders website and focus is on next year's earnings which exclude any current year restructuring charges.

Market always looking ahead so I focus on FY 18 data.
WHS forecast PE 13.1
HLG forecast PE 12.3.

I would argue HLG is an extremely well run company with excellent well refined business practices and has no systemic issues that require dramatic restructuring of any kind and note top line sales growth is very comfortably outstripping the extremely modest rate WHS is "growing" their sales at.

As noted in previous posts and as noted by the CEO of WHS himself WHS faces ongoing significant potential restructuring issues and I would argue extremely serious challenges turning their finance operations around.

Given the known headwinds and slower growth rate and the fact that HLG is known to be a far more efficient retailer with best of breed stock turn I would argue the WHS should trade at a PE discount of at least 1, more fairly 2 to HLG.

If we said a fair FY18 PE for WHS was a 2 discount to HLG a PE of 10.3 there is potential for the current SP to fall from a PE of 13.1 to 10.3 = 21%.
If we said a PE discount of 1 is warranted there is potential for the current SP to fall from a PE of 13.1 to 11.3 = 14%.

In my opinion an ex dividend price of about $2.00 might be fair / good value going forward IF you believe, (I don't), in the current directors and management's business model and believe they can turn around the finance arm so its doesn't act like a sea anchor on future earnings.

Best comparison may be Briscoe?

Take out the $60m cash and BGR is trading on a historical PER of 15.7 times.

WHS compared to BGR should be trading on a discount of at least 25% to reflect i) earnings downtrend vs BGR's uptrend & ii) weak balance sheet vs BGR's cashed up overcapitalized financial position.

So WHS should trade on a PER of 11.8 times on EPS of say, 15.5c = sp of $1.83.

Your $2.00 is in the same ball park direction of what WHS is now worth! Scary!

[bull....]

I thinking this maybe the last 10c div unless they can grow profit and margins or it could be 10c for the yr guess the well cemented trend is falling profits and falling dividends.

Im sure some people will try and catch falling knife for the div - not a sure fire way to wealth unless you get the shares real cheap today but what is real cheap? or a bargain

[winner69]

Hey Balance, you mentioned Warehouse Pharmacy of days gone by

Whether Nick actually said this or not I can't tell but they seem to be back on the agenda -

Chief executive Nick Grayston said e-commerce only makes up about 10 percent of the New Zealand market, much lower than in other developed countries. But Warehouse has to prepare for increased disruption and part of the response is to move away from a "transactional relationship" with customers where price is the only determinant, to "an engagement model" which could include walk-in health clinics, a return to pharmacies, financial advice and mobile services.

http://www.sharechat.co.nz/article/591f5330/warehouse-prepares-for-amazon-juggernaut-by-upping-customer-engagement-adding-services.html

[Ogg]

I thinking this maybe the last 10c div unless they can grow profit and margins or it could be 10c for the yr guess the well cemented trend is falling profits and falling dividends.

Im sure some people will try and catch falling knife for the div - not a sure fire way to wealth unless you get the shares real cheap today but what is real cheap? or a bargain

I'm gonna try and catch the falling knife when it goes ex-div :D

[Balance]

Hey Balance, you mentioned Warehouse Pharmacy of days gone by

Whether Nick actually said this or not I can't tell but they seem to be back on the agenda -

Chief executive Nick Grayston said e-commerce only makes up about 10 percent of the New Zealand market, much lower than in other developed countries. But Warehouse has to prepare for increased disruption and part of the response is to move away from a "transactional relationship" with customers where price is the only determinant, to "an engagement model" which could include walk-in health clinics, a return to pharmacies, financial advice and mobile services.

http://www.sharechat.co.nz/article/591f5330/warehouse-prepares-for-amazon-juggernaut-by-upping-customer-engagement-adding-services.html

Holy shoot, it gets worse! What engagement model? They are cutting back staff!

[winner69]

as I said the other lowest since last century

[Biscuit]

... But Warehouse has to prepare for increased disruption and part of the response is to move away from a "transactional relationship" ... to "an engagement model" which could include .....financial advice.....


LOL, hands up who wants financial advice at The Warehouse!

[Beagle]

Best comparison may be Briscoe?

Take out the $60m cash and BGR is trading on a historical PER of 15.7 times.

WHS compared to BGR should be trading on a discount of at least 25% to reflect i) earnings downtrend vs BGR's uptrend & ii) weak balance sheet vs BGR's cashed up overcapitalized financial position.

So WHS should trade on a PER of 11.8 times on EPS of say, 15.5c = sp of $1.83.

Your $2.00 is in the same ball park direction of what WHS is now worth! Scary!

Yes a very valid company for comparative PE analysis, probably the best in terms of product offer and distribution methodology but obviously they are chalk and cheese in terms of their track record but nonetheless makes for a very interesting point of comparison.

I think all on here would agree that with a huge vested interest because of the size of his shareholding Rod Duke has carved out for himself a very well defined position in the market with excellent execution of his business model.
I checked on 4 traders and yes 2018 forward average analyst PE, you are quite right is late 15's.

Over the last six years profit has increased by 27%, 11%, 10%, 17%, 20% and most recently as just announced 26% and they are cautiously optimistic about the year ahead.

In my book there should be a very large amount of daylight between a company like BGR and WHS in terms of PE. Really if BGR is 15.7 then maybe Percy is right and a PE of only 7.5 is warranted considering all the challenges WHS faces ?
Certainly no more than 10. Really BGR looks pretty good value to me considering their long term stellar track record.
Conclusion: WHS is still heavily overvalued on a comparative basis with what are vastly better business models with other retailers.

[percy]

I think Balance picked it correctly.
WHS have still not got a "workable" strategy after two or three different CEOs.
Like any turn around,they always take longer,and cost more than expected.
AND often they don't work.Think Postie Plus,Pumpkin Patch etc.
Is WHS latest stategy going to work,or be another failure.?
All the time other retailers are moving further ahead of WHS.

[Under Surveillance]

Holy shoot, it gets worse! What engagement model? They are cutting back staff!
Some customers might fall for an engagement model, but WHS shareholders would do best to disengage via a divorce model, i.e. sell out.

[whatsup]

and still the drop continues

[whatsup]

Yes a very valid company for comparative PE analysis, probably the best in terms of product offer and distribution methodology but obviously they are chalk and cheese in terms of their track record but nonetheless makes for a very interesting point of comparison.

I think all on here would agree that with a huge vested interest because of the size of his shareholding Rod Duke has carved out for himself a very well defined position in the market with excellent execution of his business model.
I checked on 4 traders and yes 2018 forward average analyst PE, you are quite right is late 15's.

Over the last six years profit has increased by 27%, 11%, 10%, 17%, 20% and most recently as just announced 26% and they are cautiously optimistic about the year ahead.

In my book there should be a very large amount of daylight between a company like BGR and WHS in terms of PE. Really if BGR is 15.7 then maybe Percy is right and a PE of only 7.5 is warranted considering all the challenges WHS faces ?
Certainly no more than 10. Really BGR looks pretty good value to me considering their long term stellar track record.
Conclusion: WHS is still heavily overvalued on a comparative basis with what are vastly better business models with other retailers.


so based on .10 eps the s p would be .75 that will make a lot on N Z retirement plans very very sick imo!

[Beagle]

According to 4traders the average analyst EPS for FY18 is 19 cps. Personally I think there is an AWFUL LOT of risk to that earnings estimate.
Choose whatever PE you think is appropriate. Percy's 7.5 for example gives $1.43. On the other hand BP might think a PE of 12 is appropriate giving fair value of $2.28 so trading at $2.36 cum a 10 cent dividend is "an opportunity".
Me - I will not buy stocks in a downtrend no exceptions ! This becomes a theoretical exercise of academic interest only but if someone put a gun to my head and forced me to pick what I think is a fair PE in the circumstances I would probably have to go with only 8.5-9 after seeing such a stellar performer as BGR trading on 15 point something.

Upon reflection I think 8.5 -9 x 19 = $1.61 -$1.71 is a fairer price range than the $2.00 I suggested the other day but the caveat to that is I would only invest at that price if I believed management had a viable plan to turn the company around and stem the losses in the finance unit.

Disc: I am currently considering investing in Briscoes. I think its an under appreciated stock considering its truly stellar growth record.

[winner69]

Much was been made in recent reports what a 'success' Noel Leeming has been

However with a razor thin EBIT margin of ~2% it doesn't contributes very much to the groups bottom line (after interest and tax is taken off) - but at least its positive

Wouldn't be counting on NL being the saviour for WHS

[percy]

The "success" Leemings has been for WHS, is access to "quality" products, which suppliers would not supply to WHS previously.

[tim23]

I dont think the company make enough of being one of the best payers of staff in retail sector it may appeal to customers sense of fair play it does to me anyway

[macduffy]

Apologies if this has been posted before - if so, I missed it. Article from last Saturday's NZ Herald about WHS putting its Newmarket premises up for sale and redevelopment. The implication is that WHS is prepared to leave Newmarket, relying on its neighbouring outlets to service local customers. A bold move?

http://truecommercial.nzherald.co.nz/insights/news/property-articles/warehouse-newmarket-on-the-market/?ref=NZHNetwork

[Joshuatree]

FWIW my broker has a hold rating and"Unable to recover from slow peak season""Disappointing""Doing it tough" etc .

[winner69]

Into the 220's she goes ......and ominously closes on the low of the day / week .....and a huge sell off at the close.

Spose somebody thinks its a bargain buying at these prices.

[whatsup]

$2.29 and falling !

[BlackPeter]

$2.29 and falling !

Anybody noticed the depth? More than 6 million shares changed hands ... this must come close to capitulation!

[winner69]

Anybody noticed the depth? More than 6 million shares changed hands ... this must come close to capitulation!


.....and you get the 10 cent divie if you buy at these prices.yyyy

[macduffy]

Anybody noticed the depth? More than 6 million shares changed hands ... this must come close to capitulation!

Yes, I don't hold WHS these days but 6m shares is a huge number for a stock that rarely trades more than a few thou per day. RSI is now below 20, a level reached only 2-3 times in the last 10 years and then only briefly. Stand by for developments!

[kiwitrev]

Yes, I don't hold WHS these days but 6m shares is a huge number for a stock that rarely trades more than a few thou per day. RSI is now below 20, a level reached only 2-3 times in the last 10 years and then only briefly. Stand by for developments!

You would have to expect JP making their move, no other buyers of any quantity for ages.

[Balance]

Yes, I don't hold WHS these days but 6m shares is a huge number for a stock that rarely trades more than a few thou per day. RSI is now below 20, a level reached only 2-3 times in the last 10 years and then only briefly. Stand by for developments!

Indexing - out of NZX50 as of 5.01 pm tonite.

Big big loss of mana for WHS and Tindall - from top 10 company in NZX to lesser than Briscoe!

[winner69]

Wonder what Foodstuffs are thinking -- must be hurting seeing their 'investment' going down the gurgler

[Ogg]

Wow, that's a sizeable off market trade. I reckon it's foodstuffs selling out to James Pascoe. That would be my guess.

My plan is falling into place. Hopefully this goes into the "teens" or lower. Tempted to go all in, lol.

[winner69]

Wow, that's a sizeable off market trade. I reckon it's foodstuffs selling out to James Pascoe. That would be my guess.

My plan is falling into place. Hopefully this goes into the "teens" or lower. Tempted to go all in, lol.

Possibly some funds selling out as WHS falls out of NZX50 on Monday

[tim23]

I thought JP were already at 19.9% if so can't be them would have to launch takeover
Wow, that's a sizeable off market trade. I reckon it's foodstuffs selling out to James Pascoe. That would be my guess.

My plan is falling into place. Hopefully this goes into the "teens" or lower. Tempted to go all in, lol.

[Baa_Baa]

I thought JP were already at 19.9% if so can't be them would have to launch takeover

Maybe they are, who knows?

[Ogg]

I thought JP were already at 19.9% if so can't be them would have to launch takeover

O yeah, it's probably not him then.

[Ogg]

http://www.stuff.co.nz/business/90456569/.html

Interesting article today.

[Balance]

http://www.stuff.co.nz/business/90456569/.html

Interesting article today.

Interesting indeed when a real estate consultant comments on the fortunes of a retailer! Not something they would do in a big hurry as WHS is a very big player on the property scene so Mr Keane needs to be careful what he says.

He makes a good point though and the answer could be that WHS is running into financial stress to continue to pay such 'high' dividends. Have to sell whatever remains of company owned assets to keep going.

[kiwitrev]

Re the off market trade 6m shares, according to the last top 20 SH F/Stuffs 30m shares(10%), Citibank Nominees 5.67m(1.63%) and no other entity close to the 6m off market trade Friday(about 2.2%). So based on those facts F/Stuffs would appear to be the seller unless something else has occurred not yet disclosed. How could JP not be the buyer? All will be revealed next week.

[Ogg]

Re the off market trade 6m shares, according to the last top 20 SH F/Stuffs 30m shares(10%), Citibank Nominees 5.67m(1.63%) and no other entity close to the 6m off market trade Friday(about 2.2%). So based on those facts F/Stuffs would appear to be the seller unless something else has occurred not yet disclosed. How could JP not be the buyer? All will be revealed next week.

Maybe it was Briscoes looking to form a merger, lol.

[kiwitrev]

Maybe it was Briscoes looking to form a merger, lol.

Can't do much with 2%. BTW what happens to your plan if a TO is successful?

[Ogg]

Can't do much with 2%. BTW what happens to your plan if a TO is successful?

Yeah, this has ruined my plan.

It will probably rally hard on Monday.

There's one buy at $2.26 for 250,000 shares.

I think $2.29 will be bottom.

The big players are starting to load up. Won't be enough supply to drop it further.

[winner69]

Do you all think a takeover is in the cards?

If so is it Tindall privatising the dog ....or do the Normans have a greater motive than just having 20% as an 'investment'

Or is WHS ripe for private equity to sort it out and do some asset stripping along the way ......(and then another IPO)

Enterprise Value current $1.1 billion so $1.3/$1.4 billion get it over the line

Cheap as

I better take a punt .....and hope Stephen is cooperative one way of the other. It all depends on him eh

[bull....]

haha gamblers lining up for the hoped for bounce a , i would think the only people interested in a takeover would be the pascoes at a much lower price, time moved on most people know big box retail has had its day all you need now is a specialty store or a warehouse to service online.
Im picking under 2 dollars in the not to distant future.

[Ogg]

haha gamblers lining up for the hoped for bounce a , i would think the only people interested in a takeover would be the pascoes at a much lower price, time moved on most people know big box retail has had its day all you need now is a specialty store or a warehouse to service online.
Im picking under 2 dollars in the not to distant future.

It's not gonna go under $2, that's just too cheap. Things aren't that bad. It's already been sold off heavily over the last few weeks. The big buyers are in now, it's gonna bounce for sure on Monday. I'll have a look after it goes ex div. There could be huge upside for long term holders.

[kiwitrev]

Do you all think a takeover is in the cards?

If so is it Tindall privatising the dog ....or do Pascoes have a greater motive than just having 20% as an 'investment'

Or is WHS ripe for private equity to sort it out and do some asset stripping along the way ......(and then another IPO)

Enterprise Value current $1.1 billion so $1.3/$1.4 billion get it over the line

Cheap as

I better take a punt .....and hope Stephen is cooperative one way of the other. It all depends on him eh

From what you say EV $1.3b say doesn't value the shares at $4+ ?? A long way from last closing price.

[winner69]

From what you say EV $1.3b say doesn't value the shares at $4+ ?? A long way from last closing price.

EV includes debt remember

[Beagle]

Interesting indeed when a real estate consultant comments on the fortunes of a retailer! Not something they would do in a big hurry as WHS is a very big player on the property scene so Mr Keane needs to be careful what he says.

He makes a good point though and the answer could be that WHS is running into financial stress to continue to pay such 'high' dividends. Have to sell whatever remains of company owned assets to keep going.

When all else fails sell off the silverware, report the sale as a profit and hope nobody notices its an extraordinary item and not part of operating profit. CVT been at it this year too, don't own them either.

[Ogg]

When all else fails sell off the silverware, report the sale as a profit and hope nobody notices its an extraordinary item and not part of operating profit. CVT been at it this year too, don't own them either.

CVT also bounced. I think this will do something similar.

[Ogg]

https://www.facebook.com/TheWarehouseNZ/videos/10155055057866474/

Check out this video.

What does everyone think of this new advertising theme? It's using a dark blue theme instead of the normal red. Looks alot more premium.

I think this is the "new warehouse".

[whatsup]

Didn't I read somewhere that the Norman family-- Pascoes/Farmers/Stevens /plus other retail brands some in Aust/NZ own a decent % of WHS, approaching 19.5% now I think.

[percy]

Didn't I read somewhere that the Norman family-- Pascoes/Farmers/Stevens /plus other retail brands some in Aust/NZ own a decent % of WHS, approaching 19.5% now I think.

You would have read it here.!.lol.

[JeremyALD]

When all else fails sell off the silverware, report the sale as a profit and hope nobody notices its an extraordinary item and not part of operating profit. CVT been at it this year too, don't own them either.

The problem I have with the warehouse is where is growth going to come from in the next five years? Yes fair value for this might be a little higher if they can keep sales and profits flat (I think $2.50), but why place a risk on a company that's going to make you 10% to 20% at most given the potential downsides? They have so many headwinds and the SP performance over the last 10 years is woeful. Why will this be any different?

EDIT: This is in response to Ogg posts btw, sorry Roger I agree with you!

[whatsup]

You would have read it here.!.lol.

No Percy, I think I read it as a shareholder notice sometime ago, last year I think.

[Ogg]

The problem I have with the warehouse is where is growth going to come from in the next five years? Yes fair value for this might be a little higher if they can keep sales and profits flat (I think $2.50), but why place a risk on a company that's going to make you 10% to 20% at most given the potential downsides? They have so many headwinds and the SP performance over the last 10 years is woeful. Why will this be any different?

EDIT: This is in response to Ogg posts btw, sorry Roger I agree with you!

Their revenue and gross profit is good. They just have to find a way to cut costs in their business.

They need to close or sell alot of their stores, like the one in New Market. Then invest in large online distribution centers in the major cities. The focus should be growing online sales.

Spending $700m on leases is a joke, they should move further out of town and buy the land outright and build more super stores. People will drive 30mins to get a bargain, like a large fridge from Noel Leeming, then when they are in the store you sell them smaller but higher margin products. But again, the focus should be online, and the fridge should get delivered "for free", and customers will be happy to add extra items to their shopping cart.

They need to get rid of more people in their head office and streamline more. Invest in technology that drives efficiency, just like what all the big banks are doing.

Then their needs to be a branding change. Something major, like getting rid of the "red theme", changing the buy line "everyone gets a bargain", or just make up an entire new one. It can be done, for example when Telecom changed to Spark.

The finance business needs to go. As well as the smaller businesses like Torpedo7, Shotgun Supplement, etc. Even warehouse stationary could go as it's just a hassle to run and they aren't going to be very profitable online. Just sell them all off and pay down debt before interest rates go up. Noel Leeming and the Red sheds should merge, after a major brand change.

At the end of the day, this is the go to place for the average kiwi. It is a well known and trusted company. There just need to be a bit of house cleaning and a huge make over.

I would go as far as saying they should stop dividends next year and do all of the above. The share price has already been hammered. There's going to be alot more volatility anyway. It's basically not A grade investment anymore.

Anyway, I see potential here if they can execute well and position themselves for the future.

[h2so4]

Their revenue and gross profit is good. They just have to find a way to cut costs in their business.

They need to close or sell alot of their stores, like the one in New Market. Then invest in large online distribution centers in the major cities. The focus should be growing online sales.

Spending $700m on leases is a joke, they should move further out of town and buy the land outright and build more super stores. People will drive 30mins to get a bargain, like a large fridge from Noel Leeming, then when they are in the store you sell them smaller but higher margin products. But again, the focus should be online, and the fridge should get delivered "for free", and customers will be happy to add extra items to their shopping cart.

They need to get rid of more people in their head office and streamline more. Invest in technology that drives efficiency, just like what all the big banks are doing.

Then their needs to be a branding change. Something major, like getting rid of the "red theme", changing the buy line "everyone gets a bargain", or just make up an entire new one. It can be done, for example when Telecom changed to Spark.

The finance business needs to go. As well as the smaller businesses like Torpedo7, Shotgun Supplement, etc. Even warehouse stationary could go as it's just a hassle to run and they aren't going to be very profitable online. Just sell them all off and pay down debt before interest rates go up. Noel Leeming and the Red sheds should merge, after a major brand change.

At the end of the day, this is the go to place for the average kiwi. It is a well known and trusted company. There just need to be a bit of house cleaning and a huge make over.

I would go as far as saying they should stop dividends next year and do all of the above. The share price has already been hammered. There's going to be alot more volatility anyway. It's basically not A grade investment anymore.

Anyway, I see potential here if they can execute well and position themselves for the future.

Or you could sell your shares.

[Balance]

Anyway, I see potential here if they can execute well and position themselves for the future.

I too see huge potential of an unrivaled magnitude - would be a great company but for the product range, cheap rubbish image, unimaginative and outdated management etc etc.

There will always be a market for cheap rubbish - unfortunately, more and more of the cheap rubbish can be obtained via the internet, and more often, at cheaper prices than the WHS!

[winner69]

I too see huge potential of an unrivaled magnitude - would be a great company but for the product range, cheap rubbish image, unimaginative and outdated management etc etc.

.......but changing from red to blue will do the trick.... And make it the place that makes the desirable affordable and also the affordable desirable.

Nick picked that idea up from his old job at Sears I reckon - not doing them much good

[h2so4]

.......but changing from red to blue will do the trick.... And make it the place that makes the desirable affordable and also the affordable desirable.

Nick picked that idea up from his old job at Sears I reckon - not doing them much good

https://m.youtube.com/watch?v=F2AitTPI5U0

[bull....]

interesting report put out by Credit Suisse about amazons arrival in Australia. Interesting kathmandu is seen as ripe for a pummelling even jb hifi seen losing 33% of sales wow myer possibly the biggest loser. poor old warehouse cant see how they going to survive in current form.

https://www.businessinsider.com.au/heres-when-amazon-will-reach-a-tipping-point-in-australia-and-who-it-will-hurt-2017-3

[Ogg]

Has it bottomed?

[carrom74]

Has it bottomed?

Yes IMHO...Also Joan Withers has picked up 400000 shares averaging $2.38 a piece...I find it reassuring...The announcement was released yesterday at NZX(apologies if already been mentioned in the thread)

[kiwitrev]

Yes IMHO...Also Joan Withers has picked up 400000 shares averaging $2.38 a piece...I find it reassuring...The announcement was released yesterday at NZX(apologies if already been mentioned in the thread)

But I don't think purchased on her own behalf, rather as Trustee for WHS management - probably as part of their staff share incentive scheme

[winner69]

Yes IMHO...Also Joan Withers has picked up 400000 shares averaging $2.38 a piece...I find it reassuring...The announcement was released yesterday at NZX(apologies if already been mentioned in the thread)

See trev's response

I think Withers probably has less shares (in her own name) than you do anyway

[trackers]

I've worked with TWL (as a supplier) for a decade, and personally my thoughts are:

- Things picked up a couple years ago when the quality of their product range improved a lot (this is my opinion, I see some people here think differently)
- Red is a stable business but it does not grow, and its very hard to grow
- Financial services has been a massive fail
- Their marketing in the last year (particularly 6 months) has been terrible
- A lot of their acquisitions have performed ok, but they have realised zero efficiencies through the integration of even long term holds like warehouse stationary, which is part of the reason for the current head office cull
- Their last cull was only a couple years ago. Unfortunately they do not value staff or are able to retain key talent
- Kmart has been going well. As has Briscoes. Amazon is a big, big risk, although it will be a few years before they really start to takeover NZ I would suspect

I think if they can fix/sell/ditch financial services, improve their marketing, and realise some efficiencies in the logistics chain (and back office functions), they are a good bet from here.

[winner69]

trackers

I think if they can fix/sell/ditch financial services, improve their marketing, and realise some efficiencies in the logistics chain (and back office functions), they are a good bet from here.


They seem hell bent on keeping finance arm - they seem to think key to their future long term success

Improve their marketing - long shot that is

Efficiencies should be made but as you sort of suggest it never seems to work out that well. I can imagine the guy who bought paper for Warehouse Stationery now also buying the candles for the Red Sheds

End result - continuing disappointment

[Beagle]

They seem hell bent on keeping finance arm - they seem to think key to their future long term success

Improve their marketing - long shot that is

Efficiencies should be made but as you sort of suggest it never seems to work out that well. I can imagine the guy who bought paper for Warehouse Stationery now also buying the candles for the Red Sheds

End result - continuing disappointment

They simply lack any plausible cohesive plan to reinvigorate what is a very tired old brand. Believing they can turnaround the finance division against a wide plethora of other financial service providers seems a fanciful idea at best and far more likely to see an ongoing destruction of shareholder value. Far better to admit its a mistake and write the thing off but of course that requires fresh clean sheet thinking and I think that's beyond them...

[Ogg]

Harvey Norman directors offloading shares. Is this the end for large retail?

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11822326

[macduffy]

A strange NZX announcement. Director Anna Campbell sells 25k shares and purchases 15k in error. Net result, sells 10,000.

https://www.nzx.com/companies/WHS/announcements/298616

[Beagle]

A strange NZX announcement. Director Anna Campbell sells 25k shares and purchases 15k in error. Net result, sells 10,000.

https://www.nzx.com/companies/WHS/announcements/298616

Seems analogous to what's happening within the company itself.

[bottomfeeder]

I see a lot of doom and gloom in the previous posts. Warehouse goods are not cheap and nasty. I would say value for money. Similar stock in No 1 shoes, Kmart, etc, at same quality, but higher prices. Its the Briscoes/Kathmandu deal all over again. High prices but when there is a special the prices come down. I would never buy from Kathmandu or Briscoes unless they did not have their specials. People have learnt this marketing ploy, and it will not be successful forever. Usually you will get a bargain at the warehouse, and when they are on special wow what a bargain. I bought some boardshorts for $4-74. Sure they have borrowed for expansion, which I feel was misguided. Remember when these shares were $7-50. The Warehouse Money card was an endeavour to move into loyalty cards, such as Farmers Card. Its a long term strategy, I hope it pays off. I have used mine a number of times on line. The Extra 5 - 10% discount is not great but its on top of other specials and once the public gets used to it, I think it will take off.

I would like to see them have a share issue, to clear all debt. A public company should not have long term debt. They have access to capital, and they should use it. I believe that if a public company has no long term debt, it would engender more confidence towards their shareholders. Better than raising capital because there is no profit (Wynyard). I would be happy to subscribe for more shares to repay all debt. I worry what it would do to the shareprice so it would have to be done very carefully, and should be mandatory on all shareholders.

No matter what business you are in there will be competition. If you are good at what you do the competition will think twice. That is why Ebay has never taken off in New Zealand. Trademe just seems to have it tied up pretty well. So we welcome competition. If they dont work out it scares off everyone else.

I see it as a worthwhile buy at under $2-30, div coming up, and the propensity for the shareprice to increase getting better all the time. I see it all the time, the shareprice drops, and everyone thinks it is going to drop like a stone. Just can't see it happening with the Warehouse.

[couta1]

Yes like you bottomfeeder, I see a lot of warehouse products as good value, all my phones have come from there and they have all been excellent for coverage, connectability etc. Bought a German made AEG vacuum cleaner from Whs 20 yrs ago and it's still going strong despite my wife's best efforts to blow it up. Use oil and other car products from there with no problems. Wear sports clothing from there, it looks good, breathes and functions well etc etc

[Beagle]

I would never shop at the Warehouse for oil or car products. Each of our three vehicles need a specific type of oil, not a single one of which is stocked by the warehouse. Their range of car products is pathetic.
Why waste your time ? Repco or Supercheap has almost every variety of oil and car products for DIY maintenance at cheaper prices when on their regular 25% off storewide sales and what they don't stock you'll find a friendly customer assistant readily at hand to assist with ordering it in.

[Hectorplains]

I see a lot of doom and gloom in the previous posts. Warehouse goods are not cheap and nasty. I would say value for money. Similar stock in No 1 shoes, Kmart, etc, at same quality, but higher prices. Its the Briscoes/Kathmandu deal all over again. High prices but when there is a special the prices come down. I would never buy from Kathmandu or Briscoes unless they did not have their specials. People have learnt this marketing ploy, and it will not be successful forever. Usually you will get a bargain at the warehouse, and when they are on special wow what a bargain. I bought some boardshorts for $4-74. Sure they have borrowed for expansion, which I feel was misguided. Remember when these shares were $7-50. The Warehouse Money card was an endeavour to move into loyalty cards, such as Farmers Card. Its a long term strategy, I hope it pays off. I have used mine a number of times on line. The Extra 5 - 10% discount is not great but its on top of other specials and once the public gets used to it, I think it will take off.

I would like to see them have a share issue, to clear all debt. A public company should not have long term debt. They have access to capital, and they should use it. I believe that if a public company has no long term debt, it would engender more confidence towards their shareholders. Better than raising capital because there is no profit (Wynyard). I would be happy to subscribe for more shares to repay all debt. I worry what it would do to the shareprice so it would have to be done very carefully, and should be mandatory on all shareholders.

No matter what business you are in there will be competition. If you are good at what you do the competition will think twice. That is why Ebay has never taken off in New Zealand. Trademe just seems to have it tied up pretty well. So we welcome competition. If they dont work out it scares off everyone else.

I see it as a worthwhile buy at under $2-30, div coming up, and the propensity for the shareprice to increase getting better all the time. I see it all the time, the shareprice drops, and everyone thinks it is going to drop like a stone. Just can't see it happening with the Warehouse.

I've returned three items (airbed, air bed pump and bluetooth speakers) all faulty, in the last week. I'll not be bothering to shop at the Red Shed again. I appreciate their no fuss return policy BUT I buy goods to use them, not to stand in a returns queue!

The notion that a public company shouldn't carry debt is absurd. With interest rates still at lows, why wouldn't you carry appropriately geared debt?

You may dismiss Briscoes marketing strategy but it's been successful and continues to be so. Warehouse needs to look back to when it was selling quality goods - I reno-ed my kitchen in Smeg and Westinghouse product from the Warehouse. Currently they are peddling crap and their results are similar.

[couta1]

I would never shop at the Warehouse for oil or car products. Each of our three vehicles need a specific type of oil, not a single one of which is stocked by the warehouse. Their range of car products is pathetic.
Why waste your time ? Repco or Supercheap has almost every variety of oil and car products for DIY maintenance at cheaper prices when on their regular 25% off storewide sales and what they don't stock you'll find a friendly customer assistant readily at hand to assist with ordering it in. Mate, I'm talking about oil for my 1994 Suzuki with 313k on the clock, 4 liters of 20w-50 at $15 on special at the warehouse is just perfect. Turtlewax is the same no matter where you buy it from as is CRC or WD-40.

[huxley]

When people shop at Briscoes they think "value" when people shop at the warehouse they think "budget"

[jmsnz]

When people shop at Briscoes they think "value" when people shop at the warehouse they think "budget"

Exactly, and that is the problem for WHS. There long-term brand has been about budget but budget stuff is easy now for many categories as you have ebay, amazon, aliexpress etc. The other problem they have is that their range of product means that they look like a jack of all trades, master of none. BGR as an example have a much narrower product range and so find it easier to sell "value", whether that is actually true or not.

[Beagle]

Mate, I'm talking about oil for my 1994 Suzuki with 313k on the clock, 4 liters of 20w-50 at $15 on special at the warehouse is just perfect. Turtlewax is the same no matter where you buy it from as is CRC or WD-40.

Mate but does the warehouse stock the right oil for that 1,000 horsepower Hennesey tuned ZO6 Corvette you have on order :cool:

[couta1]

Mate but does the warehouse stock the right oil for that 1,000 horsepower Hennesey tuned ZO6 Corvette you have on order :cool: That would be a big fat NO, however that order is still in dream phase.

[janner]

Aaahh... The Warehouse..

When I returned from Dnipropetrovsk to reside in my deceased Mother's house. I found that the vacuum ( Husqvarna ) at least 40 years old still performed the job. Unfortunately the internal connection gave up.. The old large National Micro ( great machine ) gave up the ghost..
The idiot box was not Digital. Sheets that mother would have " Turned " ( If able ) .. needed replacing ( you cold spit peas through them )..

etc. etc. etc.. The Warehouse became a one stop shop.. Even down to a $7.50 bag of compost for the severely suffering plants.
With surprisingly lower prices than on their price tickets..
Of course the receipts have been kept . No problems yet over value for money..

" Turning the sheets " ........ How many on here can remember that ??????.

Disc. Never a holder.. Just a happy shopper.

[Grimy]

"Bought a German made AEG vacuum cleaner from Whs 20 yrs ago and it's still going strong "
"Warehouse needs to look back to when it was selling quality goods - I reno-ed my kitchen in Smeg and Westinghouse product from the Warehouse."

We also bought an AEG vacuum cleaner and dishwasher from WHS 20-odd years ago. Neither have had a problem. I also look forward to the day they again sell quality brands at good prices. They don't have to be cheap (quality usually never is), just good value and a decent range. Apart from HN and Kitchen Things, it's hard to find an AEG agent to even think about upgrading. But with Noel Leeming in the group are they going to push for carrying better products at the Red Sheds?
Pleased I sold at high 2.90's a while back, but I do want them to succeed as they have been good to me over the years as a purchaser and a shareholder.

[Balance]

https://en.wikipedia.org/wiki/James_Pascoe_Group

$2 billion turnover - accomplished retailers who know the game and has changed with the times, and changed their game.

Looks like this is the one hope for the Warehouse - but will Tindall ego and pride allow him to sell or merge with JP Group?

Guess Tundall is running out of options when Duke crows how Briscoes Group knows the retail game (unlike the WHS).

[janner]

https://en.wikipedia.org/wiki/James_Pascoe_Group

$2 billion turnover - accomplished retailers who know the game and has changed with the times, and changed their game.

Looks like this is the one hope for the Warehouse - but will Tindall ego and pride allow him to sell or merge with JP Group?

Guess Tundall is running out of options when Duke crows how Briscoes Group knows the retail game (unlike the WHS).

Well said..

[bottomfeeder]

Joan Withers is a very experienced Director, and doesn't mince decisions that need to be made. The next twelve months will be interesting. Disc, Just bought quite a few before there was a little jump. 10cents dividend translates to 13.8 cents pre imputation. Suits me for the long term.

[Ogg]

http://www.cnbc.com/2017/03/21/sears-flags-going-concern-doubts.html

http://www.usatoday.com/story/money/business/2017/03/21/sears-says-substantial-doubt-can-stay-business/99479726/

http://www.foxbusiness.com/features/2017/03/21/sears-drops-new-bombshell-acknowledges-doubts-about-future.html

Real-estate investment trust paid Sears $2.6 billion for stores that it purchased, many of which were then leased back to the retailer.

Could be just the beginning of the end for WHS?

[winner69]

http://www.cnbc.com/2017/03/21/sears-flags-going-concern-doubts.html

http://www.usatoday.com/story/money/business/2017/03/21/sears-says-substantial-doubt-can-stay-business/99479726/

http://www.foxbusiness.com/features/2017/03/21/sears-drops-new-bombshell-acknowledges-doubts-about-future.html

Real-estate investment trust paid Sears $2.6 billion for stores that it purchased, many of which were then leased back to the retailer.

Could be just the beginning of the end for WHS?

Nick Grayston's came from Sears ......hmmm

This is what he did at Sears -

Nick was appointed Chief Executive of The Warehouse Group in January, 2016. He moved to New Zealand from Chicago where he held leadership roles with Sears Holdings, including president of footwear, home, fine jewellery and apparel. At Sears, Nick was responsible for leading change from traditional retail into omnichannel and integrated retail, building profitable businesses, driving operational turnarounds, changing business models and leading high-performance teams.

[janner]

It all comes down to DEBT.. These companies are over extended. As are many companies and most Countries..

[winner69]

No doubt Nick Grayston learned a lot at Sears - stuff he can put to good use at The Warehouse to transform it into a retail giant again

[Ogg]

Interesting video about the future of department stores.

http://prod-video-cms-amp-microsoft-com.akamaized.net/tenant/amp/entityid/AAna62E?blobrefkey=103

http://fortune.com/2017/03/22/sears-stock-price/

1. Having trouble getting Millennials into shopping

2. People are used to discounts so it's impossible to get people to pay full price.

Don't be surprised that a few of these companies go private for a few years while they figure out how to become a department store for the 21st Century.

[bottomfeeder]

Interesting videos. The Briscoes model, ie normally high prices but big sales, must be at an end soon as shoppers are now expecting sale prices all the time. Maybe the Warehouse model may work a lot longer. The Warehouse one day deals, online sales etc, may keep them as a successful retailer/etailer.

Who knows, but if you keep looking at the worst case scenarios for every investment you probably shouldn't be in the sharemarket as those dead certs must be selling at some ridiculous price earnigs figure. So its really all in the relative shareprice. Probably at $2.40 with a gross 13.8 cent dividend coming soon it must be a reasonable punt.

[tim23]

At $2.50 the net yield is 6% not sure where you get 13.8% gross from?

[couta1]

At $2.50 the net yield is 6% not sure where you get 13.8% gross from? 9.3% gross is closer to the mark, still none too shabby.

[Balance]

9.3% gross is closer to the mark, still none too shabby.

Sp is on a continuous decline with the dividend to give a 'high' dividend yield.

In my books, a big loss of capital to get a 'high' dividend yield is not my idea of investing for dividend yield!

[winner69]

Sp is on a continuous decline with the dividend to give a 'high' dividend yield.

In my books, a big loss of capital to get a 'high' dividend yield is not my idea of investing for dividend yield!

Not much risk factor built into those WHS020 bonds at current price of 4.1%

[Ogg]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11825379

[winner69]

http://www.cnbc.com/2017/03/21/sears-flags-going-concern-doubts.html

http://www.usatoday.com/story/money/business/2017/03/21/sears-says-substantial-doubt-can-stay-business/99479726/

http://www.foxbusiness.com/features/2017/03/21/sears-drops-new-bombshell-acknowledges-doubts-about-future.html

Real-estate investment trust paid Sears $2.6 billion for stores that it purchased, many of which were then leased back to the retailer.

Could be just the beginning of the end for WHS?

OGG - maybe Amazon would have destroyed Sears eventually but this is fascinating insight into how it is self destructing anyway.

Article 3 years old but sort of foretold the problems to come.

Hope Nick not doing it this way

https://www.bloomberg.com/news/articles/2013-07-11/at-sears-eddie-lamperts-warring-divisions-model-adds-to-the-troubles#pq=46C67y

Plagued by the realities threatening many retail stores, Sears also faces a unique problem: Lampert. Many of its troubles can be traced to an organizational model the chairman implemented five years ago, an idea he has said will save the company. Lampert runs Sears like a hedge fund portfolio, with dozens of autonomous businesses competing for his attention and money. An outspoken advocate of free-market economics and fan of the novelist Ayn Rand, he created the model because he expected the invisible hand of the market to drive better results. If the company’s leaders were told to act selfishly, he argued, they would run their divisions in a rational manner, boosting overall performance.

[winner69]

Microwave died yesterday so a rare visit to Warehouse today

Bought a $499 microwave marked down to $119. Even the $299 job was marked down $119. Labels say it was delivered to store last August. There were quite a few on the shelf as well. I would hazard a guess not much, if any, return on these microwaves

Probably break in 6 months

[Balance]

Microwave died yesterday so a rare visit to Warehouse today

Bought a $499 microwave marked down to $119. Even the $299 job was marked down $119. Labels say it was delivered to store last August. There were quite a few on the shelf as well. I would hazard a guess not much, if any, return on these microwaves

Probably break in 6 months

Saw small appliances on 50% off at Noel Leeming so decided time to replace the coffee machine.

Eyed a Breville at $419.50 ($420 off), popped across to Harvey Norman 5 minutes away and what do you know - they have also quickly reduced theirs down to $415!

Ain't no advantage these days in discounting any more.

Anyway, WHS sp is tracking header - now at $2.40 which is a nice move from the massive crossings done at $2.29 when it was kicked out of NZX50.

Looks like the stock sold at $2.29 have found 'stable' homes?

[kiwitrev]

All speculation re the 6m off market trade totally awry so the stable home with a 2% or so parcel and no filing from any party in the top 20 re sale confuses me (not hard to do). Anyone care to offer what's going on - maybe nothing?

[bottomfeeder]

At $2.50 the net yield is 6% not sure where you get 13.8% gross from?

13.8 cents per share not percent.

Only a few days left to get that dividend, and then I wonder where the share price will land. Maybe higher?

[Balance]

13.8 cents per share not percent.

Only a few days left to get that dividend, and then I wonder where the share price will land. Maybe higher?

https://www.nzx.com/companies/WHS/announcements/298951

The CPO (Chief People Officer) is not waiting - he has sold a few.

[kiwitrev]

https://www.nzx.com/companies/WHS/announcements/298951

The CPO (Chief People Officer) is not waiting - he has sold a few.
Only sold 25k out of 89k so not getting out. Lots of reasons holders need to sell so I don't see this transaction as anything for holders to be concerned about.

[bottomfeeder]

Still, with all of the goings on in the company, over recent months and the large drop in the shareprice, just what does Campbell think she is doing. Don't they stick together in the Warehouse camp. Or are they all individuals out for themselves. If I was CEO I would frown very much on staff selling shares at time like this, eventhough there is probably not a lot overtly can be done about it, but covertly there must be some cards being marked.

[winner69]

Only sold 25k out of 89k so not getting out. Lots of reasons holders need to sell so I don't see this transaction as anything for holders to be concerned about.

Don't forget she bought 15,000 shares the other day .......in error

You only want to hear good news eh trev

[kiwitrev]

Don't forget she bought 15,000 shares the other day .......in error

You only want to hear good news eh trev

The news is the news and whether good or bad not possible to escape either. As BF says not a good look for Campbell to be selling some at this time but at the same time it's all speculation as to why.

[tim23]

[15c per share is what we can expect not 13.8 still quite tidy=bottomfeeder;660729]13.8 cents per share not percent.

Only a few days left to get that dividend, and then I wonder where the share price will land. Maybe higher?[/QUOTE]

[bottomfeeder]

[15c per share is what we can expect not 13.8 still quite tidy=bottomfeeder;660729]13.8 cents per share not percent.

Only a few days left to get that dividend, and then I wonder where the share price will land. Maybe higher?[/QUOTE]

Can never be sure about the math, but a 10 cent fully imputed dividend still translates to 13.8 cents, to me. 10 x 100/72. The other 5% is RWT deducted from the 10 cents.

[bull....]

amazon has said they will be fully operational in Aust by the end of next yr - bit of time left for the warehouse

[macduffy]

amazon has said they will be fully operational in Aust by the end of next yr - bit of time left for the warehouse

That time might best be spent by shareholders in assessing alternative investment, imo.

Disc: No longer a holder.

[Balance]

amazon has said they will be fully operational in Aust by the end of next yr - bit of time left for the warehouse

Could be trigger for corporate activity by Pascoes with Tindall at last?

Nothing like the clock ticking to prompt action.

[bull....]

on no new lows, hope no one was trying div strip:scared:

[couta1]

on no new lows, hope no one was trying div strip:scared: Divvy stripping this pup would put you at risk of being stripped naked.

[Balance]

on no new lows, hope no one was trying div strip:scared:

Grim - sp back to where it was in 1999!

No updated SSH from Pascoes which means they have not been buying. Recent SSHs showed that WHS staff share scheme was buying so that was where the price support was from.

[JeremyALD]

A few big sales on the way too. This is going to drop further. Gosh to think this was $3.15 not so long ago.

[winner69]

A few big sales on the way too. This is going to drop further. Gosh to think this was $3.15 not so long ago.

...and over $7 at their peak a few years ago

And today they are what they were last century

[Stranger_Danger]

And today they are what they were last century

Are you talking about the shops or the shares?

[bull....]

...and over $7 at their peak a few years ago

on todays share price is there motto relevant now - where everyone gets a bargain?

[Ogg]

Are you talking about the shops or the shares?


on todays share price is there motto relevant now - where everyone gets a bargain?

LOL

I've decided to hang on the sidelines as of now. I was going to go in after it went ex-dividend but I just think there's too much risk over the medium term.

It does seem like a bargain at these prices but it's probably more likely going to trade in this range over the next few years. I don't see upside long term.

Probably better plays out there than trying to catch the bottom.

[kura]

I exited out of frustration (at approx $3) when my application for a WHS credit card was declined (Only wanted it for the extra %5 discount )

Just goes to show how beneficial for ones financial health, it is to have a poor credit rating !

[JeremyALD]

I exited out of frustration (at approx $3) when my application for a WHS credit card was declined (Only wanted it for the extra %5 discount )

Just goes to show how beneficial for ones financial health, it is to have a poor credit rating !

What a blessing getting declined was tho. Probably has saved you thousands in SP loses!

[bottomfeeder]

I dont know how you would be declined for a Warehouse Money Card. Mine went through on line so fast I was in a bit of a daze after reading some of the previous posts. OK only 5% but just a little cherry on the top. You guys that missed out must have such a poor credit rating. I just dont even have a credit rating. Havent had one for years and years.

I believe the price reflects the current postion in conservative terms. As Jeremy ALD said they were over $7-00 a few years back. Looking good at this stage. Ebay cant get into NZ because of Trademe, and I believe the Amazon "system" wont succeed in NZ due to the Warehouse. Amazon don't really stock a lot of their products. They are an intermediary. So scaremongering is what it is all about. See how many people are scared by hype. I have some by orders in at a little below the current price and am just waiting.

[Beagle]

According to 4traders the average analyst EPS for FY18 is 19 cps. Personally I think there is an AWFUL LOT of risk to that earnings estimate.
Choose whatever PE you think is appropriate. Percy's 7.5 for example gives $1.43. On the other hand BP might think a PE of 12 is appropriate giving fair value of $2.28 so trading at $2.36 cum a 10 cent dividend is "an opportunity".
Me - I will not buy stocks in a downtrend no exceptions ! This becomes a theoretical exercise of academic interest only but if someone put a gun to my head and forced me to pick what I think is a fair PE in the circumstances I would probably have to go with only 8.5-9 after seeing such a stellar performer as BGR trading on 15 point something.

Upon reflection I think 8.5 -9 x 19 = $1.61 -$1.71 is a fairer price range than the $2.00 I suggested the other day but the caveat to that is I would only invest at that price if I believed management had a viable plan to turn the company around and stem the losses in the finance unit.

Disc: I am currently considering investing in Briscoes. I think its an under appreciated stock considering its truly stellar growth record.

FWIW I am sticking with the above posted in mid March 2017 as where I see fair value.

[JeremyALD]

I dont know how you would be declined for a Warehouse Money Card. Mine went through on line so fast I was in a bit of a daze after reading some of the previous posts. OK only 5% but just a little cherry on the top. You guys that missed out must have such a poor credit rating. I just dont even have a credit rating. Havent had one for years and years.

I believe the price reflects the current postion in conservative terms. As Jeremy ALD said they were over $7-00 a few years back. Looking good at this stage. Ebay cant get into NZ because of Trademe, and I believe the Amazon "system" wont succeed in NZ due to the Warehouse. Amazon don't really stock a lot of their products. They are an intermediary. So scaremongering is what it is all about. See how many people are scared by hype. I have some by orders in at a little below the current price and am just waiting.

I think Winner said that lol. From my records they were $7 in 2008 so about 9 years ago. My problem with the warehouse is they never grow. Their historical performance is terrible. So yes while this MAY settle back to a $2.70 level is it really worth the risk?

[Balance]

I believe the price reflects the current postion in conservative terms. As Jeremy ALD said they were over $7-00 a few years back. Looking good at this stage. Ebay cant get into NZ because of Trademe, and I believe the Amazon "system" wont succeed in NZ due to the Warehouse. Amazon don't really stock a lot of their products. They are an intermediary. So scaremongering is what it is all about. See how many people are scared by hype. I have some by orders in at a little below the current price and am just waiting.

Need to add, many people are also enthused by hype? Warehouse shares were in fact as high as $8.00 at one stage when the market thought their success in NZ would be duplicated in Oz.

As for Amazon, I would not be so complacent as to think they will not impact on the WHS. Online shopping has already adversely impacted and will impact even more when Amazon makes it very easy to open accounts and purchase online. Heck, WHS has so much 'dead' retail space now in low margin and low turnover DVDs, CDs, books, toys, groceries etc that it's prudent to think what Amazon could do with the Warehouse other categories.

As the Warehouse did to music, toy and book stores when it launched aggressively into those categories, so has online decimated WHS's business in those categories already. Go to K-mart and you do not see K-mart selling Dvds and CDs any more.

http://www.news.com.au/finance/business/retail/australian-retailers-are-unprepared-for-the-entry-of-amazon/news-story/7fa56b9aded85aae0a47ea4155c9aa8f

http://www.adnews.com.au/woolworths-responds-to-amazon-threat

The second article regarding Big W makes for sober reading.

[couta1]

Hey Roger, I see the WHS has Castrol GTX 20w-50 on sale for $19, classic oil that, one of the best that has ever been produced, shame it's not suitable for your Hemi aye.

[McGinty]

Haha, had to give this Warehouse card application a go (mostly for entertainment purposes, but the 5% discount is a nice kicker for my time)......."Sorry, your application was not successful"

I guess I don't fit their ideal 'Money card' customer being mid 30's, financially free and deriving my income from interest, rent and dividends. To be fair though, a few of the big banks would say no as well, due to their focus on employee generated income rather than asset based income.

At least I can try again in 6 months :-)

[bull....]

Haha, had to give this Warehouse card application a go (mostly for entertainment purposes, but the 5% discount is a nice kicker for my time)......."Sorry, your application was not successful"

I guess I don't fit their ideal 'Money card' customer being mid 30's, financially free and deriving my income from interest, rent and dividends. To be fair though, a few of the big banks would say no as well, due to their focus on employee generated income rather than asset based income.

At least I can try again in 6 months :-)

lol i got a q card once for a purchase from jb hifi put down no income or job on the application after a funny look from the sales person came back and said they given you a credit limit of 7000 lol to his amazement.
Maybe i should get a warehouse card?

[kura]

Haha, had to give this Warehouse card application a go (mostly for entertainment purposes, but the 5% discount is a nice kicker for my time)......."Sorry, your application was not successful"

I guess I don't fit their ideal 'Money card' customer being mid 30's, financially free and deriving my income from interest, rent and dividends. To be fair though, a few of the big banks would say no as well, due to their focus on employee generated income rather than asset based income.
At least I can try again in 6 months :-)

I have $8K limit on my big bank credit card, (not that I ever asked for that much, just got automatically increased over time ) but according to WHS I wasn't good enough for the $1K I applied for.

Yes lucky me even got permission to apply again in 6 months time for a WHS credit card. Personally I would rather waste my time watching paint dry !

[Baa_Baa]

Hey Roger, I see the WHS has Castrol GTX 20w-50 on sale for $19, classic oil that, one of the best that has ever been produced, shame it's not suitable for your Hemi aye.

Indeed that is a good oil couta, been around since Adam, great price too from the WHS. Just one fill in the mower every couple of years, a refill in the MX bike every ride, change it every 5k's in the road bike, or 10k's in the car, dilute it a bit and it's better than CRC, even works just fine as a 2-stroke oil ... a whole hosts of uses. Just need to turn it over in the motors before its 'use by date'. Those ****y synthetics are just another ploy to suck in the rich car owners who wouldn't know how to change their own oil, but are happy to pay the grease monkey a -very- tidy margin on some super slippery lube that lasts ... oh, just as long. Lol.

[Baa_Baa]

lol i got a q card once for a purchase from jb hifi put down no income or job on the application after a funny look from the sales person came back and said they given you a credit limit of 7000 lol to his amazement.
Maybe i should get a warehouse card?

Lol. Good story. I think I've said before, anyone who's worked in credit finance will know that they don't want any customers who can pay back their debts, preferably just the interest and let the principle run forever.

Those of you who have means will have no chance of securing a credit facility, whereas if you lied and wrote that you are on the dole, have no other income, or assets, you'd be signed up on the spot. This story seems to be the MO for posters trying to get a WHS finance credit card. Hardly surprising is it, albeit rather cynical?

[bottomfeeder]

If you were an investor using the contrary view, soon would be the time to buy.

[Beagle]

Hey Roger, I see the WHS has Castrol GTX 20w-50 on sale for $19, classic oil that, one of the best that has ever been produced, shame it's not suitable for your Hemi aye.

Is a shame mate, Mobil 1 OW-40 Gold at $109 only available at Repco is just a "little" more expensive.

[Balance]

If you were an investor using the contrary view, soon would be the time to buy.

I am with Roger on this one :

"Upon reflection I think 8.5 -9 x 19 = $1.61 -$1.71 is a fairer price range than the $2.00 I suggested the other day but the caveat to that is I would only invest at that price if I believed management had a viable plan to turn the company around and stem the losses in the finance unit."

Warehouse entry into the finance/credit card business is the best example of a company which has lost its*way. On paper, it all looks great - big customer base to sell credit cards to and by offering 5% discount, capture more of their retail spend.

What is very telling is its inability to execute the strategy successfully.

First it bought Diners' Card - a dinosaur which retailers and restaurants refuse to accept (or charge 3.5% surcharge for using) presumably to use its platform. Next, it raised $115m to support the roll out of the business and expressed great confidence of a two year plan to achieve profitability. Well, nothing to plan so far and it looks grim.

[winner69]

I am with Roger on this one :

"Upon reflection I think 8.5 -9 x 19 = $1.61 -$1.71 is a fairer price range than the $2.00 I suggested the other day but the caveat to that is I would only invest at that price if I believed management had a viable plan to turn the company around and stem the losses in the finance unit."

Warehouse entry into the finance/credit card business is the best example of a company which has lost its*way. On paper, it all looks great - big customer base to sell credit cards to and by offering 5% discount, capture more of their retail spend.

What is very telling is its inability to execute the strategy successfully.

First it bought Diners' Card - a dinosaur which retailers and restaurants refuse to accept (or charge 3.5% surcharge for using) presumably to use its platform. Next, it raised $115m to support the roll out of the business and expressed great confidence of a two year plan to achieve profitability. Well, nothing to plan so far and it looks grim.

Even though this 4traders outfit has F18 earnings at 19 cents a share its only going to be about 17 cents, unless dramatic improvement in financial performance is happening right now.

So 9 X 17 is $1.53 ......but NZ market is more optimistic than that and as long as WHS keep selling properties and maybe borrow more they'll continue with that big 15 cent dividend .......so it will never get to $1.53 eh

[winner69]

Punters not worried about WHS going broke - WHS020 still at miserable 4.2% yield

[artemis]

I see retailers are now worried about Amazon opening a warehouse (small w) here if GST is imposed on lower priced imports. As seems to be happening in Oz, either causally or coincidentally, with distribution centres planned near to large metro areas.

Case of be careful what you wish for?

http://www.stuff.co.nz/business/industries/91404460/gst-change-could-encourage-amazon-into-nz

[Balance]

https://www.nbr.co.nz/article/warehouse-sell-newmarket-property-65m-b-201959

Positive news?

Or a case as in past property sales, booking the gains short term and on the hook for rentals and long term lease commitments?

[Beagle]

https://www.nbr.co.nz/article/warehouse-sell-newmarket-property-65m-b-201959

Positive news?

Or a case as in past property sales, booking the gains short term and on the hook for rentals and long term lease commitments?

Selling the silverware to pay the bills. Expect them to disingenuously highlight their total profit for the year inclusive of the profit on the sale of this building just like Comvita will probably do with their silverware sale. One can simply speculate as to whether senior management bonus's are based on real IFRS profit or reported profit.

[Ogg]

The sell off continues.

[Beagle]

http://www.4-traders.com/WAREHOUSE-GROUP-LTD-6491364/revisions/

Revisions for earnings for 2017 tell the sad story. I simply don't "buy" the recovery story next year and think 19 cents EPS forecast is a joke. I think its clear to "blind freddy" management have bought themselves more losses by sticking to trying to recover a systemically flawed finance department offer. They are simply too embarrassed to admit they've made a massive mistake and as a result these ongoing losses may dog the company for years to come. First lesson in business is if you have a business division which is systemically flawed, surgically remove the thing before the cancer spreads !
I think they struggle to make 15 cps next year, (probably a LOT less after the next round of restructuring costs) and why anyone would give current management a PE of more than 10 is beyond my comprehension. Best chance for the company is a takeover but why would any company want to takeover WHS with its aging model of a widespread footprint of ultra big format expensive leases ?

[Balance]

http://www.4-traders.com/WAREHOUSE-GROUP-LTD-6491364/revisions/


I think they struggle to make 15 cps next year, (probably a LOT less after the next round of restructuring costs) and why anyone would give current management a PE of more than 10 is beyond my comprehension. Best chance for the company is a takeover but why would any company want to takeover WHS with its aging model of a widespread footprint of ultra big format expensive leases ?

Talked to an ex-video shop owner and he lamented that he left the game too late to get any value for his shop 2 years ago when he tried to sell it. Was a great business when he set it up (franchise) 15 years ago - huge profits and phenomenal cash flow. Too easy to just keep it going until it was too late to get out.

Starting to get the same feeling with the Warehouse?

[Beagle]

Talked to an ex-video shop owner and he lamented that he left the game too late to get any value for his shop 2 years ago when he tried to sell it. Was a great business when he set it up (franchise) 15 years ago - huge profits and phenomenal cash flow. Too easy to just keep it going until it was too late to get out.

Starting to get the same feeling with the Warehouse?

Your analogy isn't without merit. Holders will no doubt point to the fact that there is still some modest sales growth and cling on in the belief that this icon of N.Z. retail cannot possibly head the way of the dinosaur but I have some reservations. Its such a tired old mature brand and management seem determined to keep shooting themselves in the foot and seem unable to execute a new and truly fresh strategy.
Death by 1000 cuts unless they can somehow totally reinvigorate what is surely a very mature brand. Holders are very, very "brave" in my opinion. What if they really stuff things up in FY18 just like FY17 and only make 7-8 cents EPS, how does the market price them then ? How many times can you restructure a restructured company before the market totally loses confidence ?
Interestingly over ten years ago on 31 January 2007 they were $7.30. The very long term chart looks pretty damming and the short term SP chart looks even worse :eek2:

[bull....]

Statement put out by Amazon

"Amazon Web Services launched an Australian region in 2012, we launched a Kindle store on amazon.com.au in 2013 and we now have almost 1000 employees in the country," Amazon said.
"The next step is to bring a retail offering to Australia, and we are making those plans now."


http://www.theage.com.au/business/retail/amazon-is-coming-to-australia-with-low-prices-vast-selection-and-fast-delivery-20170419-gvo6lb.html

[Balance]

Your analogy isn't without merit. Holders will no doubt point to the fact that there is still some modest sales growth and cling on in the belief that this icon of N.Z. retail cannot possibly head the way of the dinosaur but I have some reservations. Its such a tired old mature brand and management seem determined to keep shooting themselves in the foot and seem unable to execute a new and truly fresh strategy.
Death by 1000 cuts unless they can somehow totally reinvigorate what is surely a very mature brand. Holders are very, very "brave" in my opinion. What if they really stuff things up in FY18 just like FY17 and only make 7-8 cents EPS, how does the market price them then ? How many times can you restructure a restructured company before the market totally loses confidence ?
Interestingly over ten years ago on 31 January 2007 they were $7.30. The very long term chart looks pretty damming and the short term SP chart looks even worse :eek2:

A few thoughts :

1. WHS does have a valuable retail footprint - all the restructuring to date has been about adding onto the footprint and moving into other businesses rather than maximizing use of the existing footprint. So every year that goes by reduces the value of that footprint.

2. The footprint, as Roger has pointed out, has been used to maintain a high dividend via sale & leaseback of properties. It is still mindboggling that WHS had $811m of lease commitments in the last financial year.

3. Takeover? Telling that JP did not take the opportunity of the NZX50 exit to top up their stake towards 20%?

[whatsup]

I wonder what the Norman ( Pasceo ) family is thinking of their "investment " now, maybe WHS should bring them on into the management team to produce the magic that they did with Farmers and several other retail purchases!

[Jim]

I wonder what the Norman ( Pasceo ) family is thinking of their "investment " now, maybe WHS should bring them on into the management team to produce the magic that they did with Farmers and several other retail purchases!

WHS is into a slippery slope. Is now in uncharted territory. Wait till Amazon appears, interesting time ahead

[Balance]

WHS is into a slippery slope. Is now in uncharted territory. Wait till Amazon appears, interesting time ahead

Nope - sp was here back in 1999.

[nocomment]

i see morningstar are recommending buying WHS ... does anyone pay attention to these recommendations? or are they just automatically generated based on the current price vs their calculated value? anyone thinking they should just sell WHS now and cut losses? how much lower is this rollercoaster going

[Balance]

i see morningstar are recommending buying WHS ... does anyone pay attention to these recommendations? or are they just automatically generated based on the current price vs their calculated value? anyone thinking they should just sell WHS now and cut losses? how much lower is this rollercoaster going

Don't waste your time with Morningstar. They still have WHS's NPAT for F17 at $68m!

[bottomfeeder]

Newsflash "Amazon makes takeover bid for the Warehouse to secure warehousing and infrasructure base in New Zealand, and proposes expansion into Australia to merge with their existing operations"

COULD BE TRUE?

[BlackPeter]

Newsflash "Amazon makes takeover bid for the Warehouse to secure warehousing and infrasructure base in New Zealand, and proposes expansion into Australia to merge with their existing operations"

COULD BE TRUE?

Not a good fit. Warehouse owns or leasees a huge amount of expensive retail space (and parking space) in shopping malls to facilitate customers (in the flesh) coming through their doors.

Amazon however would only need storage capacity with good truck access but without the need to cater for foot (or vehicle traffic) from customers. They would look for large buildings in industrial parks, not in shopping malls.

Warehouse would need a suitor with very deep pockets in the brick and mortar retail industry. Something like a big foreign discounter trying to break into the comfortable NZ supermarket duopoly like e.g. Aldi. Wouldn't hold my breath though, and doubt that any single suitor would be interested in the whole lot (including Blue sheds, Noel Leeming, ...).

[Beagle]

Newsflash "Amazon makes takeover bid for the Warehouse to secure warehousing and infrasructure base in New Zealand, and proposes expansion into Australia to merge with their existing operations"

COULD BE TRUE?

Its school holidays...no further comment.

Speaking of no comment, welcome to the forum. I agree 100% with what Balance has said above. Read back through the last ~ 10 pages of this thread. Therein you'll see what a number of us think might be fair value.

[bottomfeeder]

WHS has lost nearly a third of its market capitalisation over last six weeks or so. 350 mill is quite a bit. Must have been oversold. Mentioning Amazon was a bit facetious. But I would expect that any interested parties looking at WHS must see the current shareprice as being attractive.

[Leftfield]

Newsflash "Amazon makes takeover bid for the Warehouse to secure warehousing and infrasructure base in New Zealand, and proposes expansion into Australia to merge with their existing operations"

COULD BE TRUE?

Fake news until you can post some evidence IMHO.

[Balance]

Not a good fit. Warehouse owns or leasees a huge amount of expensive retail space (and parking space) in shopping malls to facilitate customers (in the flesh) coming through their doors.

Amazon however would only need storage capacity with good truck access but without the need to cater for foot (or vehicle traffic) from customers. They would look for large buildings in industrial parks, not in shopping malls.

Warehouse would need a suitor with very deep pockets in the brick and mortar retail industry. Something like a big foreign discounter trying to break into the comfortable NZ supermarket duopoly like e.g. Aldi. Wouldn't hold my breath though, and doubt that any single suitor would be interested in the whole lot (including Blue sheds, Noel Leeming, ...).

Amazon business model could not be more different from the Warehouse!

[nocomment]

thanks roger. yeh i see morningstar has been wildly wrong in the past - like any share tips i guess they have to be regarded with a fair amount of skepticism - or maybe its used to manipulate the mum & dad investors? who knows.

[Ogg]

http://money.cnn.com/2017/04/22/news/credit-suisse-retail/index.html


Brokerage firm Credit Suisse said in a research report released earlier this month that it's possible more than 8,600 brick-and-mortar stores will close their doors in 2017.

[Beagle]

thanks roger. yeh i see morningstar has been wildly wrong in the past - like any share tips i guess they have to be regarded with a fair amount of skepticism - or maybe its used to manipulate the mum & dad investors? who knows.

You're welcome. Moaningstar as some of us like to refer too them has a bit of a reputation for all the wrong reasons.
One of their most infamous calls was to consistently hold a negative rating for many years on RYM when they more than quadrupled in price when almost all other analysts had a more positive / balanced view. I believe most of their analysts are based offshore so they're probably at a natural disadvantage to local analysts anyway.
I find doing the opposite of what Moaningstar recommends more often that not is a winning strategy :) I can't help wonder if they currently have a buy / accumulate recommendation on RYM after getting it wrong for so long.

[Balance]

Newsflash "Amazon makes takeover bid for the Warehouse to secure warehousing and infrasructure base in New Zealand, and proposes expansion into Australia to merge with their existing operations"

COULD BE TRUE?

http://www.smh.com.au/business/property/amazon-looks-at-goodman-facility-for-first-warehouse-20170420-gvoka6.html

[bull....]

WAREHOUSE categories will be destroyed, they will be left with big half empty stores there is no way they will be able to compete against amazon - they do not have the buying power of amazon.

AMAZON HAVE STATED THEY WILL DESTROY YOU and anyone else that gets in the road.

[Baa_Baa]

Warehouse imo is a poor illustration of a potential buyout for Amazon as the Warehouse do not own their properties, which they have sold off over past years to bolster earnings in order pay shareholder dividends, in lieu of real earnings for many years. The owners of the properties, that the Warehouse now lease, are a better prospect for the likes of Amazon who require large footprint distribution centres. But I don't think any of the Warehouse leases would come close to the 'really large footprint' distribution centres that Amazon would be looking at.

[westerly]

WAREHOUSE categories will be destroyed, they will be left with big half empty stores there is no way they will be able to compete against amazon - they do not have the buying power of amazon.

AMAZON HAVE STATED THEY WILL DESTROY YOU and anyone else that gets in the road.

Australia's population 25m. NZ population about 5m. Why would Amazon bother with NZ when the shipping of most items could easily be done from Australia?

westerly

[Meextr]

I was just last night thinking the NZ market is too small to set up in and they would just send from Australia. Cost of shipping may take the edge off the keen prices though.

[Balance]

I was just last night thinking the NZ market is too small to set up in and they would just send from Australia. Cost of shipping may take the edge off the keen prices though.

One can buy stuff via EBay from Hong Kong and China now and have them shipped to NZ for less than NZ$5 a parcel!

Example - Lego set which costs $65 at Warehouse and Farmers can be bought online for $35 plus $5 PP. Simply a matter of setting up an account.

Requires a bit of forward planning as shipment can take up to 3 weeks to arrive so will not suit impulse purchases.

[percy]

I was just last night thinking the NZ market is too small to set up in and they would just send from Australia. Cost of shipping may take the edge off the keen prices though.

The biggest book wholesaler in NZ is Penguin/Random,whom I deal with.
All books are airfreighted from Australia.
Delivery is very fast,usually under a week.

[bull....]

Australia's population 25m. NZ population about 5m. Why would Amazon bother with NZ when the shipping of most items could easily be done from Australia?

westerly

They dont need to come to NZ everyone will go to them in Australia cause it be cheaper even with shipping cost
included.

Retailers Are Going Bankrupt at a Record Pace

https://www.bloomberg.com/news/articles/2017-04-24/retailers-are-going-bankrupt-at-a-record-pace

[Balance]

They dont need to come to NZ everyone will go to them in Australia cause it be cheaper even with shipping cost
included.

Retailers Are Going Bankrupt at a Record Pace

https://www.bloomberg.com/news/articles/2017-04-24/retailers-are-going-bankrupt-at-a-record-pace

WHS will not go broke imo but underlying profits will decline year on year for at least the next decade.

No compelling reason to invest in the stock.

[winner69]

WHS will not go broke imo but underlying profits will decline year on year for at least the next decade.

No compelling reason to invest in the stock.

WHS020 bonds currently 4.0%

Punters see no default risk at this yield - safe as houses

WHS not going broke