WHS - Warehouse Group

[winner69]

Workers at Distribution Centre not happy

https://www.stuff.co.nz/business/126999569/more-than-280-workers-strike-at-the-warehouse

[winner69]

duplicated

[Panda-NZ-]

Workers at Distribution Centre not happy

https://www.stuff.co.nz/business/126999569/more-than-280-workers-strike-at-the-warehouse

Good on them. When young bodies are in short supply due to aging societies, physical strength/brawn should be paid more.

[Beagle]

Workers at Distribution Centre not happy

https://www.stuff.co.nz/business/126999569/more-than-280-workers-strike-at-the-warehouse

Same workers who were paid a $1,000 extra bonus in August ?

[arekaywhy]

Same workers who were paid a $1,000 extra bonus in August ?

It's never enough is it...

They do mention "cost of living" in the article, so it is interesting that they think they should get more money to do the same work, thinking this will solve the issue, without realising that it is the denarii they are swapping for their labour that is being clipped

Seem to be a common train of thought these days

Forgot to add, it seems the share price is bouncing of some sort of psychological $4.00 price...

[Panda-NZ-]

Flick em 20 bucks a week that'll sort it - boomer manager.

[Sideshow Bob]

Are we still getting a divvy tomorrow??

[Waltzing]

DIV? YEP.....

the Whale is going to pay..

[Beagle]

It's never enough is it...
Feed a duck once and...

[Sideshow Bob]

Feed a duck once and...

And then keep going until duck shooting season!! :t_up:

[Rawz]

Wage inflation is a real thing everyone needs to wake up to. Unemployment rate is 3.4% The natural unemployment rate is probably 4.5% as there is a portion of the population that are unemployable. That means some poor companies are having to hire absolute drongo's to get the job done.

WHS will need to pay up or have their workforce leave for someone else paying more elsewhere. WHS should pass on the cost to their customers via higher prices to keep profits in tact. Then the whs employees can complain about higher costs of living and demand more pay next year ;)

Only open boarders and immigration will solve this

[Panda-NZ-]

Only open boarders and immigration will solve this

Or improved efficiency which is rather low in NZ.

Automate!

[LaserEyeKiwi]

You lot have short memories - WHS laid off 600 people over the last year as the ramped up their efficiency drive.

[LaserEyeKiwi]

US retail figures reported overnight: New all time high.

And what will be news locally, the overnight Dairy Auction has resulted in the highest dairy prices in NZD terms since 2007 - a very healthy thing for regional spending.

[winner69]

US retail figures reported overnight: New all time high.

And what will be news locally, the overnight Dairy Auction has resulted in the highest dairy prices in NZD terms since 2007 - a very healthy thing for regional spending.

All good stuff eh

And don't forget that regional money finds it way into the cities reasonably quickly

So healthy for spending all round

[LaserEyeKiwi]

Too early to tell for sure, but starting to look like there is a chance we are past the peak of the container shipping cost bubble:

13227

[Sideshow Bob]

Too early to tell for sure, but starting to look like there is a chance we are past the peak of the container shipping cost bubble:

13227

Heard a while ago that more East/West space becoming available, and spot rates easing due to electricty issues affecting production and exports, and raw material supply chain issues.

Probably good for shipping, not so good for getting stock on shelves. Especially if also have a bit of argy-bargy with your distribution centre workers....;)

[cymonger]

Thank you for your consistently positive reports laserkiwi. It's a much needed breath of fresh air in the wake of the smog of these old, portly, sickly dinosaurs on here.

None of us can ever know exactly what is going to happen. But the fact that dozens of countries ahead of us in the process of Covid recovery have left us a template is hugely useful.

Their will always be scared old men who tell us "it's different this time."(They have been wrong EVERY time.) These templates will tell us otherwise. I hope readers listen to people like you who provide this important information. The recovery is well underway. I hope people will consider this in the wake of sad, reactive opinions from people who can't even get the people in their own households to accept the simple science of vaccinations.

[Rawz]

WHS be back over $4 soon. Looking forward to the divvy hitting the bank a/c

[Beagle]

Thank you for your consistently positive reports laserkiwi. It's a much needed breath of fresh air in the wake of the smog of these old, portly, sickly dinosaurs on here.

None of us can ever know exactly what is going to happen. But the fact that dozens of countries ahead of us in the process of Covid recovery have left us a template is hugely useful.

Their will always be scared old men who tell us "it's different this time."(They have been wrong EVERY time.) These templates will tell us otherwise. I hope readers listen to people like you who provide this important information. The recovery is well underway. I hope people will consider this in the wake of sad, reactive opinions from people who can't even get the people in their own households to accept the simple science of vaccinations.

Says someone who has made a whopping 71 posts in 4 years and contributed ostensibly nothing to this forum. There's is no need for this sort of nastiness. People are their own person and not everybody sees things the same way even when in a committed relationship. It is what it is and there was no need for that personal attack. This is what its like for thousands of families around New Zealand. https://www.stuff.co.nz/opinion/126988278/the-vaccine-sideeffect-thats-destroying-families
Some of the old guard on here have made many thousands of useful contribution's over the years and have decades of investment experience to share.
Nobody gets every call right. Its VERY early days to be calling this a success. Lets see how the half year financials' look shall we.
Regarding my track record "mate" I've been in the top quartile of the share pricking contest every year since I can remember it running and my portfolio is up 23% year to date in a market that's down, so stick that in your pipe and smoke it :p

[winner69]

Poll on tv news showed nearly 50% think economy going to get worse next 12 months and less than 30% say it’s goingbto get better.

Will feed through to consumer confidence I reckon ….esp if mortgage repayments go through the roof (some guru said that these payments could be more than 50% of people’s income soon)

WHS migh5 be OK up to Christmas but H2 ….hmmm

[Beagle]

Yeap...a lot of these 25-40 year old people who are supposedly going to hit the shops hard are the ones who have taken a gung-ho approach and locked themselves into mortgages of ~ $1m at ~ 2%. How much spare money will they have when that fixed interest rate rolls over to ~ 4% ? More likely to be shopping at their local $2 shop in the future ?

[Panda-NZ-]

Or make the shift from hallensteins and briscoes to the warehouse.

Kathmandu sadly becomes Kathmandon't.

[Greekwatchdog]

Yeap...a lot of these 25-40 year old people who are supposedly going to hit the shops hard are the ones who have taken a gung-ho approach and locked themselves into mortgages of ~ $1m at ~ 2%. How much spare money will they have when that fixed interest rate rolls over to ~ 4% ?

Won't that be the same for all businesses who need consumers to splash cash? This slow down if it happens will effect everyone not just these guys including your jewels HLG and TRA just to name two. You guys keep predicting the end of the world. The world will adapt as does all consumers and businesses. Look at the crystal ball predicting after 1st lockdown. You were all wrong in fact I am sure I read all sorts of dire ends. Well look at what happened. Funny everyone picks at economists for getting it wrong. You lot need to take a step back, even go plug TRA and HLG to name two with this doomsday scenarios.

[winner69]

Won't that be the same for all businesses who need consumers to splash cash? This slow down if it happens will effect everyone not just these guys including your jewels HLG and TRA just to name two. You guys keep predicting the end of the world. The world will adapt as does all consumers and businesses. Look at the crystal ball predicting after 1st lockdown. You were all wrong in fact I am sure I read all sorts of dire ends. Well look at what happened. Funny everyone picks at economists for getting it wrong. You lot need to take a step back, even go plug TRA and HLG to name two with this doomsday scenarios.


Greekwatchdog - Just a counter to you guys who are touting huge ongoing growth for TWG

We saying not HUGE but just modest growth at best after thus short term burst.

Thinking long term ….good ‘fundamental analysis’ eh

[Greekwatchdog]

Greekwatchdog - Just a counter to you guys who are touting huge ongoing growth for TWG

We saying not HUGE but just modest growth at best after thus short term burst.

Thinking long term ….good ‘fundamental analysis’ eh

W69, I have not touted anything or have I been positive out loud on this. Just highlighting that the worlds not going to end. Consumers will spend the same as they used too with what they have left. I have a small holding in WHS and MHJ and have done very well from them. All I am saying in this continual negativity highlighting on this thread is crazy when WHS and and there add on's are not the most expensive retailer out there. People will go there first for a cheap TV if that's what they can afford or clothes as that's there market

[Rawz]

Yeap...a lot of these 25-40 year old people who are supposedly going to hit the shops hard are the ones who have taken a gung-ho approach and locked themselves into mortgages of ~ $1m at ~ 2%. How much spare money will they have when that fixed interest rate rolls over to ~ 4% ? More likely to be shopping at their local $2 shop in the future ?

That is literally me lol

But remember Beagle you pointed out a few months ago that WHS sell the staples that everybody needs. You told us that story about stopping in Eketahuna to buy a hot water bottle from the WHS late at night, or something like that.

Nothing has changed, whs sell the everyday things people need. You were right all along mate. When discretionary spending falls we are all heading to the WHS- where everyone gets a bargain!

We thank you for your advice all those months ago. Thank you to WHS for the big divvy coming our way for christmas and thanks for the market pushing this back to $4 so quickly. :t_up:

[Beagle]

Won't that be the same for all businesses who need consumers to splash cash? This slow down if it happens will effect everyone not just these guys including your jewels HLG and TRA just to name two. You guys keep predicting the end of the world. The world will adapt as does all consumers and businesses. Look at the crystal ball predicting after 1st lockdown. You were all wrong in fact I am sure I read all sorts of dire ends. Well look at what happened. Funny everyone picks at economists for getting it wrong. You lot need to take a step back, even go plug TRA and HLG to name two with this doomsday scenarios.

Lets be clear here mate. Nobody on here is predicting the end of the world. This is my position "extract from post 5548"

Its not that difficult to understand why the trail has gone cold. 3-4 months ago they were $3.30, the whole country was in level 1 and humming along nicely and we were looking at $170m+ earnings for 50 cps and a forward PE of just 6.6. Its was "looney tunes" value, (and very loudly called and barked as exactly that so even the deaf could hear)... Fast forward 3-4 months and how things have changed. With the almost endless lockdown we've seen analysts trim their expectations to $126m for FY22, eps of just 37 cps forecast so the PE has expanded to ~ 11. Further, the 10 Year Govt stock has risen 100 basis points which of itself should trim about 1 PE off the forward metrics and a PE of 11 is actually fully priced for a company with very modest growth prospects. Adjusting for the far higher interest rates now prevailing the metrics on the WHS have nearly in effect doubled from where they were just a few months ago !

There are some distinct nuances in the differences between the retailers. Firstly Glassons have lots of stores overseas and also HLG are generally targeting the younger demographic who are unlikely to be homeowners yet so not affected by rising interest rates. They also have excellent online capabilities unlike some retailers.

Turners have a number of strong tailwinds I have clearly articulated in that thread and compared to other retailers have the distinct advantage that the shopping experience is in an outdoor environment. In addition more than half last years profits were from annuity income, interest and insurance. Today's result was an absolute stunner and a marked contrast to TWG subdued year to date performance. In addition HLG and TRA were growing very nicely before Covid hit and during Covid as well whereas MHJ and WHS were both performing very poorly before Covid and one wonders if that doesn't mean they are more susceptible towards reversion to the norm afterwards.

Craigs have WHS as a target price 12 months hence of $3.70. That seems about right to me. WHS were really cheap and now they're not. Clearly I am not the only one that thinks that. The low hanging fruit with this one have been picked. Its really that simple mate.

[winner69]

Maybe this WHS thread has become a proxy for where retailing in general might be heading in next year or so …rather than WHS specific.

[BlackPeter]

Maybe this WHS thread has become a proxy for where retailing in general might be heading in next year or so …rather than WHS specific.

This post got me thinking and so I looked into the correlation of WHS with KMD and HLG:

WHS: blue line
HLG: orange line

13234

WHS blue line
KMD: orange line

13235

I guess - sure, they all have this Covid dump (though in variations), but otherwise the differences seem to be stronger than the communalities.

But this time will be different, will it?

[Beagle]

5 Years is a useful timeframe to compare the relative performance of stocks and the timeframe I use most often as it really encapsulates over a meaningful length of time which business model is working the best and clearly HLG is a real winner. If the chart incorporated dividends (it doesn't), the outperformance of HLG would be even more graphically demonstrated.

[winner69]

I repost this chart of Red Sheds sales v NZ Retail sales over time which may put some recent comments in context. TWG management used to maintain similar charts for internal purposes and possibly still do.


Note:

1 - annual retail sales growth in NZ doesn't go negative (or if it does in one quarter it soon recovers)
2 - Red Shed sales growth has at times gone negative - generally when economy is not performing that well (2008-2011 and 2018)
3 - Red Shed sales growth has generally been less than total retail sales growth (ie lost share)

The chart also 'suggests' / shows that the popular thesis that when things get a bit tighter (economically) punters don't go in droves to Red Sheds)



Some have got stuck in beagle (and me) for maybe painting a doomsday scenario next year. What we've actually said is that retail could be subdued next year or so (ie low or no growth) ......and I say that Red Sheds does not always benefit when things get 'subdued' - that's a fallacy

Just as well TWG have other brands besides Red Sheds but don't forget that retailers are first to maon when sales growth slows and it generally impacts on profitability

But whatever TWG will continue to be profitable(at least on an adjusted profit basis) but whether we see another $170m year is in the laps of the gods

[Beagle]

Excellent chart, thank you Winner for sharing. I think that makes the picture clearer than ever that the real star of TWG surge in profitability since Covid has been Noel Leeming.
Its hard to come to any other conclusion than people have brought forward appliance spending under the stay at home mandates imposed by Covid.
I know we bought a giant freezer just before Covid hit and I'd wager heaps of others did the same and spending on big screen TV's and other similar appliances has received a large Covid boost. One off boosts to spending are usually not sustainable over the medium term.

[Rawz]

4 bucks. You beauty

[LaserEyeKiwi]

Boom! Auckland retail is back with a vengeance


BNZ says a week's worth of electronic card spending by its Auckland customers at Covid-19 Alert Level 3 Step 2 has lifted card spending to levels above where things were at before the Delta lockdown.

BNZ Chief Economist Paul Conway says data for the week ending Tuesday, November 16 shows Auckland card spending up 27% on the previous week. That makes it 7% higher than pre-Delta levels.


and this is without hospitality open, so spending is up 7% on pre-lockdown spending (which included everything including bars/restaurants/cinemas being open), meaning retail is up by a lot more than 7% on pre-lockdown levels.

[Beagle]

You let a bunch of people who have been treated like caged animals out they are going to run rampant for a while. Is that going to be sustained over summer though ?

[winner69]

Boom! Auckland retail is back with a vengeance



and this is without hospitality open, so spending is up 7% on pre-lockdown spending (which included everything including bars/restaurants/cinemas being open), meaning retail is up by a lot more than 7% on pre-lockdown levels.

Would have thought it would have been more than 7%

[nztx]

You let a bunch of people who have been treated like caged animals out they are going to run rampant for a while. Is that going to be sustained over summer though ?


Mixed degrees of torture have been experienced up in the northern sector IMO

Gut feeling is there may be a short flash in the pan, thereafter once gone focus returns to
carnage, Covid & what now in places .. economic signals don't appear too flash looking
forward, as the NZ Market seems to be portraying ;)

Obviously Cindy's Govt huddle will want to exit responsibility & undertaking for further long term Life Support ASAP
after the past large lolly scrambles propping up all & sundry have chalked up wholesale red on the RB Ledger ;)

[FTG]

Boom! Auckland retail is back with a vengeance



and this is without hospitality open, so spending is up 7% on pre-lockdown spending (which included everything including bars/restaurants/cinemas being open), meaning retail is up by a lot more than 7% on pre-lockdown levels.

"Nothing to see here...... move along folks". :cool:

Of course spending will be up after a brutal lockdown!

Perhaps BNZ is just trying to put a bit of a positive spin on the current situation? For any of these numbers to be truly meaningful, at a minimum, they should really be seasonally adjusted. Comparing to just pre Delta time is lazy analysis, and actually asks more questions than it answers. The press release looks like it has got the marketing department's mitts all over it.

[Panda-NZ-]

All overseas holiday destinations are closing down again.

[cymonger]

I repost this chart of Red Sheds sales v NZ Retail sales over time which may put some recent comments in context. TWG management used to maintain similar charts for internal purposes and possibly still do.


Note:

1 - annual retail sales growth in NZ doesn't go negative (or if it does in one quarter it soon recovers)
2 - Red Shed sales growth has at times gone negative - generally when economy is not performing that well (2008-2011 and 2018)
3 - Red Shed sales growth has generally been less than total retail sales growth (ie lost share)

The chart also 'suggests' / shows that the popular thesis that when things get a bit tighter (economically) punters don't go in droves to Red Sheds)



Some have got stuck in beagle (and me) for maybe painting a doomsday scenario next year. What we've actually said is that retail could be subdued next year or so (ie low or no growth) ......and I say that Red Sheds does not always benefit when things get 'subdued' - that's a fallacy

Just as well TWG have other brands besides Red Sheds but don't forget that retailers are first to maon when sales growth slows and it generally impacts on profitability

But whatever TWG will continue to be profitable(at least on an adjusted profit basis) but whether we see another $170m year is in the laps of the gods


It's a little more than that though. Beagle has been WRONG about everything to do with this stock recently, and if you listened to him you would have lost a lot of money these last couple of months. First he tells us there won't be a dividend. He sells at 4. What has happened since then? A massive dividend is now on record. But then he tells us the stock is going to tank after the dividend goes ex. And where is the stock today? 4 dollars. So if you had followed his very negative advice, you would have lost out on a huge amount of money. I appreciate you sharing charts and making your case in a respectful way. But when someone has been that wrong that about something that is so easily documented by their own quotes, their credibility with regard to that stock has to be called into question.

[Beagle]

It's a little more than that though. Beagle has been WRONG about everything to do with this stock recently, and if you listened to him you would have lost a lot of money these last couple of months. First he tells us there won't be a dividend. He sells at 4. What has happened since then? A massive dividend is now on record. But then he tells us the stock is going to tank after the dividend goes ex. And where is the stock today? 4 dollars. So if you had followed his very negative advice, you would have lost out on a huge amount of money. I appreciate you sharing charts and making your case in a respectful way. But when someone has been that wrong that about something that is so easily documented by their own quotes, their credibility with regard to that stock has to be called into question.

You're absolutely full of it. Let me put the facts on the record. I called this a screaming buy at $3.30 a few months ago. Anyone who followed that call has made A LOT of money in a very short period of time in a down market. I called it fully priced at $4.10 very recently. 80 cents profit in a few months in a falling market, WOW ! I said the dividend was a 50/50 call. Its dropped 10 cents since I called it fully priced and paid a 17 cent dividend, so that's me missing the top by a whole 7 cents net. Big bloody deal. You really are a waste of my time. If you see no value in my posts please put me on your ignore setting. You made my list that's for sure !

[bull....]

actually i called the warehouse run first and i called the top at results time so i am pleased you read my posts

[ratkin]

actually i called the warehouse run first and i called the top at results time so i am pleased you read my posts

No I called it first, first day of initial lockdown, backed up the truck at average 1.55 Am I still holding, yes. I see potential for a game changing foray into the supermarket space.

[see weed]

I would like to say thank you to all callers of WHS. Beagle, Bull and ratkin and others. I was a late starter buying in from $3.65 through to 3.90s and then buying a lot more in the $4s and then selling some in the upper 4s, kept enough for the div. Am happy with outcome so far. $6,700 profit from lot sold, $10,675 div. and the remaining shares still in the green by $9,632. Again, thank you to all callers, and as usual Beagle, oysters all round at next st meeting:t_up::cool::t_up:

[winner69]

No I called it first, first day of initial lockdown, backed up the truck at average 1.55 Am I still holding, yes. I see potential for a game changing foray into the supermarket space.

Yes ratkin, you did indeed call it first that day in the market panic

I waited until things settled down and they said the worst was over and got in when share price was in 220's last October

Not done as good as you mate but still doubled my money (with dividends) ... not complaining

Going from memory I think beagle started buying below .... thought jeez if beagle sees value WHS must be a goer

[Rawz]

Pretty sure most companies people bought during COVID crash has since doubled

(Not to steal anyones thunder)

The real legends are those that can pick the winners right now in todays market

[Beagle]

Not so much about right now in my opinion but as this year starts to draw towards a close its coming around to the time to reflect on what a tough year its been. If anyone's portfolio is up 10% plus in 2021 when the NZX50 is down 3% they should probably give themselves a really good pat on the back and put their feet up and have a beer. Up 20%+ this year ? you're a legend !

[ratkin]

Not so much about right now in my opinion but as this year starts to draw towards a close its coming around to the time to reflect on what a tough year its been. If anyone's portfolio is up 10% plus in 2021 when the NZX50 is down 3% they should probably give themselves a really good pat on the back and put their feet up and have a beer. Up 20%+ this year ? you're a legend !

The trick is not to have too many NZ stocks some of my best performers this last year or so have been some of the smartshare ETFs although they may be starting to stall a little but EUF and BOT etc have outperformed the NZ market by a good margin

The days of our market being the world's best performer have gone now

[Habits]

No I called it first, first day of initial lockdown, backed up the truck at average 1.55 Am I still holding, yes. I see potential for a game changing foray into the supermarket space.

We bought at $1.65 on the day that WHS got slammed by ardern and co for pre announcing they were essential and would be open during 2020 lockdown. Good on ya for catching the earliest wave

[Beagle]

The trick is not to have too many NZ stocks some of my best performers this last year or so have been some of the smartshare ETFs although they may be starting to stall a little but EUF and BOT etc have outperformed the NZ market by a good margin

The days of our market being the world's best performer have gone now

I agree 100% and well done for calling it first on WHS. Funny you mention that. I threw Smart shares a bone this week, and bought a few more on market for good measure, the first of many as I dollar cost average into overseas markets in 2022. I am easing into overseas markets as they have run pretty hard in 2021.
BOT got this month's bone. USS (US small cap) is next month. Probably PIE funds Australian growth fund (averaged 19% in the last decade), will get some love in Jan 2022 and I'll keep going from there. I think I'll end up about half and half managed funds and ETF's overseas. N.Z. is no longer the land of milk and honey it once was. While I have always been happy to back myself to beat the NZX and have done really well over the years in this new extreme socialist political environment I believe it is now prudent to have at least half your money invested overseas.

[Biscuit]

I agree 100% and well done for calling it first on WHS. Funny you mention that. I threw Smart shares a bone this week, and bought a few more on market for good measure, the first of many as I dollar cost average into overseas markets in 2022. I am easing into overseas markets as they have run pretty hard in 2021.
BOT got this month's bone. USS (US small cap) is next month. Probably PIE funds Australian growth fund (averaged 19% in the last decade), will get some love in Jan 2022 and I'll keep going from there. I think I'll end up about half and half managed funds and ETF's overseas. N.Z. is no longer the land of milk and honey it once was. While I have always been happy to back myself to beat the NZX and have done really well over the years in this new extreme socialist political environment I believe it is now prudent to have at least half your money invested overseas.

I'm certainly opposed to this governments interference in the markets. But, "new extreme socialist environment"? I know I haven't been locked up in Auckland, but I don't see anything extremely different from the policies of previous Labour and National governments. Always a good idea to have some money overseas although you can have some overseas exposure through many NZX companies. If NZ ever did go extreme socialist (like under National in the 70s), those companies could go offshore relatively easily these days so no worries.

[Panda-NZ-]

Australia is full of stale companies.

Though I have some ASP because the tax credits and "incentives" offered for property are legendary.

[Panda-NZ-]

I'm certainly opposed to this governments interference in the markets. But, "new extreme socialist environment"? I know I haven't been locked up in Auckland, but I don't see anything extremely different from the policies of previous Labour and National governments. Always a good idea to have some money overseas although you can have some overseas exposure through many NZX companies. If NZ ever did go extreme socialist (like under National in the 70s), those companies could go offshore relatively easily these days so no worries.

Beagle was fully in favour of business subsidies regardless of need, no problem with those.

[Beagle]

I'm certainly opposed to this governments interference in the markets. But, "new extreme socialist environment"? I know I haven't been locked up in Auckland, but I don't see anything extremely different from the policies of previous Labour and National governments. Always a good idea to have some money overseas although you can have some overseas exposure through many NZX companies. If NZ ever did go extreme socialist (like under National in the 70s), those companies could go offshore relatively easily these days so no worries.

Denial of interest deductibility on residential property investments undermines basic principles of interest deductibility that goes back over 100 years.
Interference in commercial contracts for commercial rent.

[winner69]

Queue 150 plus long to get into Kmart Petone yesterday morning ……Red Shed down road not very busy, at least not busy.

Maybe Kmart more stringent about numbers allowed in store but many punters were keen to wait even though a few just gave up

[BlackPeter]

Denial of interest deductibility on residential property investments undermines basic principles of interest deductibility that goes back over 100 years.
Interference in commercial contracts for commercial rent.

True ... but which of these arguments has any relevant impact on WHS performance?

[Beagle]

True ... but which of these arguments has any relevant impact on WHS performance?

See comment #5801 above. I was commenting in general about the outlook for the NZX.

[Panda-NZ-]

The warehouse apparently offers pet insurance (dogs, cats, horses) and home contents insurance.

They should rebrand this segment as something like platnium, protect or another catchphrase like that with "the warehouse" being in tiny font.

[Waltzing]

Now WHS has to perform in the next 6 months. T7 doing some big sales kicking off this week on bikes and other goods.

One of the Treks has been in the shop waiting for parts for 4 weeks as they have to come from AUS.

Never had a bike out of action waiting for parts for that long since NEVER.

[Habits]

Now WHS has to perform in the next 6 months. T7 doing some big sales kicking off this week on bikes and other goods.

One of the Treks has been in the shop waiting for parts for 4 weeks as they have to come from AUS.

Never had a bike out of action waiting for parts for that long since NEVER.

Stuck in MIQ :)

[Waltzing]

Stuck some where... its a choice between T7 sun beach shelters and KMD..

KMD has a nifty big wide umbrella shaped one... very cool.

[winner69]

4 bucks. You beauty

I'm getting ready to say that soon

[Rawz]

I'm getting ready to say that soon

Apparently the DCs are getting ready to ship more goods between Wed-Sat than all the weeks leading up to xmas combined. Wow thats a lot of goods.

[Waltzing]

4.0? ya? bounced to 3.86

[winner69]

4 bucks, you beauty

[Rawz]

4 bucks, you beauty

As usual, you were right W69 :t_up:

[Waltzing]

W(n) ; big range after that bounce up to 3.86....

what? 4 dollars?

[Panda-NZ-]

Some illiquidity in this stock. Though the foodstuffs sale should help with that.

[LaserEyeKiwi]

Some illiquidity in this stock. Though the foodstuffs sale should help with that.

You know what will help with liquidity a lot more? When it gets added to the NZ50 index sometime within the next 12 months…

[Waltzing]

Its in the Channel W(n) on the base line from oct 2020...

but thats not a long time frame...

Oher charts like SKL have a narrow channel with a longer time frame..

Some of these much break down soon surely.. ONeil..

[Waltzing]

Its Breaking OUT!!!! :scared:

[Waltzing]

As stated by some Leading Capital Market Investments houses 3.70 is the future target price.

NO jokes please! EVER!!!!

Please note reputation is Turned OFF on the backend database. Dont waste your bullets....


https://www.youtube.com/watch?v=SDTZ7iX4vTQ

[LaserEyeKiwi]

Talked to local Noel Leeming yesterday, they have been absolutely slammed with demand since Black Friday sale started. I was hoping to pick up a new LG OLED tv I have had my eye in for a while - all stock sold out across all of the wellington region in hours.

[JohnnyTheHorse]

Talked to local Noel Leeming yesterday, they have been absolutely slammed with demand since Black Friday sale started. I was hoping to pick up a new LG OLED tv I have had my eye in for a while - all stock sold out across all of the wellington region in hours.

Not good for WHS margins, but make sure you order everything off The Market. For black friday you'll get an extra 10% off everything (even the sale prices) and free shipping.

[LaserEyeKiwi]

Not good for WHS margins, but make sure you order everything off The Market. For black friday you'll get an extra 10% off everything (even the sale prices) and free shipping.

These particular models are still outrageously priced everywhere in New Zealand compared to overseas retail prices (The OLED C1 65” & 77” models) - even on discount the margins are no doubt massive ($1000 above the best USA prices even after currency conversion for the 65” model). They aren’t selling theses ones on TheMarket.com either unfortunately so cant get the extra 10% off (sold out online nationwide). Might get the Sony equivalent model though.

[LaserEyeKiwi]

Management discussing strategy now at the Annual Shareholders Meeting:

https://apps.computershare.com/MeetingsShareholderWeb/Meeting?Code=MK47DTJ&Locale=en

[winner69]

Ecosystem is the buzz word of the day at WHS ASM

Disappointed no mention of marketing in the metaverse

[Gecko]

Management discussing strategy now at the Annual Shareholders Meeting:

https://apps.computershare.com/MeetingsShareholderWeb/Meeting?Code=MK47DTJ&Locale=en

Lucky you can see it. Broadcast presentation won't even load for me. Thankfully I can vote though. :confused:

[LaserEyeKiwi]

Lucky you can see it. Broadcast presentation won't even load for me. Thankfully I can vote though. :confused:

had to click on Q&A tab to get a stream working.

[LaserEyeKiwi]

Nothing new in the prepared presentation/remarks, but the Q&A section was loaded with good questions and some decent answers.

[winner69]

Jeez, global trends better not come here

Black Friday shopping in stores drops 28% from pre-pandemic levels as shoppers spread spending throughout the season
https://www.cnbc.com/2021/11/27/black-friday-shopping-in-stores-drops-28percent-from-pre-pandemic-levels.html

[Grimy]

Jeez, global trends better not come here

[B] Black Friday shopping in stores drops 28% from pre-pandemic levels as shoppers spread spending throughout the season

I'm one of those. One retailer (not WHS) had an item for sale before Black Friday deals at $499.00. Black Friday starts - 10% off store-wide. Same item now $569.00. Take off the 10% and the 'special' BF price is $512.10.
Some good prices to be had, but as with everything, DYOR...........

[LaserEyeKiwi]

Jeez, global trends better not come here

Black Friday shopping in stores drops 28% from pre-pandemic levels as shoppers spread spending throughout the season
https://www.cnbc.com/2021/11/27/black-friday-shopping-in-stores-drops-28percent-from-pre-pandemic-levels.html

Not sure you read that article right - it’s saying sales are up 47.5% from same time last year. I think most retailers would love that to happen here (that’s for all sales online & in store combined).

[cymonger]

Not sure you read that article right - it’s saying sales are up 47.5% from same time last year. I think most retailers would love that to happen here (that’s for all sales online & in store combined).


Winner in the WHS thread (regarding a store that sells a large number of perishable, disposable and replaceable items) "Big sales don't mean anything. You can only sell someone something once."

Winner in the MHJ thread (regarding a store that sells $10,000 diamond rings) "RETAIL IS KING!" "LET THE GOOD TIMES ROLL!!"


I guess that, "you can only sell someone something once" thing only applies when it's in regard to a share you're not invested in.

[winner69]

Winner in the WHS thread (regarding a store that sells a large number of perishable, disposable and replaceable items) "Big sales don't mean anything. You can only sell someone something once."

Winner in the MHJ thread (regarding a store that sells $10,000 diamond rings) "RETAIL IS KING!" "LET THE GOOD TIMES ROLL!!"


I guess that, "you can only sell someone something once" thing only applies when it's in regard to a share you're not invested in.

If you trying to rubbish me try harder - I didn't say those things

[LaserEyeKiwi]

There is a possibility the “opening up” of borders is going to take longer than anticipated, given the continued new variants causing uncertainty. Consequently in that scenario, the lack of international travel may be around longer than many think, obviously would be good news for retail spending as the discretionary income continues to get diverted there.

[Rawz]

Yes LEK this new variant may put the European holiday on hold for another year.

Noel lemming will suck up those travel dollars and sell more big ticket items

[Waltzing]

YES.. not expecting to return to Europe now until 2023. However there is a silver lining as Euro stocks will be ready for another slamming if it spreads.


https://www.cnbc.com/2021/11/27/small-business-holiday-shopping-is-back-and-maybe-changed-forever.html

Investing in bullet proof vest manufactures might be next.

[Sideshow Bob]

Warehouse Mollywood confirmed to close after their "consultation" period.

The Warehouse to close in Mosgiel | Otago Daily Times Online News (odt.co.nz) (https://www.odt.co.nz/business/warehouse-close-mosgiel)

[bull....]

all the retailers not to good today .... is there rumours of black friday sales not that good?

[Habits]

all the retailers not to good today .... is there rumours of black friday sales not that good?

Black Monday sale... hlg is still up over last two days so not all gloom

[see weed]

all the retailers not to good today .... is there rumours of black friday sales not that good?
Black Friday started on Thursday with some stores eg Farmers Sylvia Park. Hallensteins Sylvia Park seems to be doing all right selling $87,000 of clothes over two days Fri. and Sat. and that doesn't include Glassons which looked to be twice as busy as Hallensteins. I didn't ask Hallensteins what they hauled in on Thursday or Sunday, but would guess over 4 days would be $160k plus.

[LaserEyeKiwi]

Ended up buying an xmas gift for my better half today - it was a designer bag that she had on her wish list. Not at all the type of thing that would ever be sold at the warehouse. On the off chance I googled the product name to see if i could get it anywhere else other than the designer store.

A link for themarket.com pops up - and it’s eligible for the 10% Black Friday sale discount - and free shipping.

I am still getting the bag from the same designer store - it just so happens they also sell through themarket.com.

I dont know the exact mechanics of what sort of commission the warehouse group gets out of this, but it appears they are now getting a cut of sales from designer stores while at the same time undercutting those same stores on price, and not even needing to handle logistics. I guess its a win-win for the designer stores who don’t like discounting in their own retail stores (it often can be seen as “cheapening” a luxury brand)

[dreamcatcher]

Yes LEK this new variant may put the European holiday on hold for another year.

Noel lemming will suck up those travel dollars and sell more big ticket items

Book your holiday in a few weeks........

"Covid symptoms linked to the new omicron variant have been described as "extremely mild" by the South African doctor who first raised the alarm over the new strain"

[LaserEyeKiwi]

Book your holiday in a few weeks........

"Covid symptoms linked to the new omicron variant have been described as "extremely mild" by the South African doctor who first raised the alarm over the new strain"

Not true at all (see image below). It is simply too early at present to know anything about the new variant, other than it is more effective at spreading than the delta variant.

13265

What is more, this is just a reminder that new variants are created constantly and is really the biggest argument to keep closed borders and/or mandatory MIQ for a lot longer than initially planned.

[Waltzing]

Bit of a fizzler today...

[dreamcatcher]

Seems UK thinks new omicron a bit of a non event as starting direct flights Tuesday to South Africa

https://www.capetownetc.com/featured/flights-said-to-resume-between-sa-and-the-uk-starting-next-week/?fbclid=IwAR2w4ZBWmKdj3OyXieFYJmqQgfsvhpHPpkoCDtlF qmkI3Qs_X_67lh-ZNpc

[LaserEyeKiwi]

quote from a news story this morning:



Jonathan Waecker, chief customer officer for The Warehouse Group, said they’ve seen an increase in sales compared to last year as Black Friday and Cyber Monday gained momentum in New Zealand.

[winner69]

Mr Waecker elaborated a bit on that. From BusinessDesk

The Warehouse Group has also seen a change in shopper habits. Waecker said this was especially noticeable during Black Friday sales.

“They’re definitely a lot more purposeful. In the past, we’ve had more people browsing versus purchasing.

"This year, we’ve seen people coming in, they’ve done the research on our website and know exactly what they’re looking for,” he said.

Waecker said these shoppers build their baskets and walk out of the store without browsing.

Sales for Black Friday may have provided a silver lining to a turbulent year, but there are still hurdles for the sector. Waecker points out the level of stimulus in the market is different this year.

“Last year, there was more money moving in. This year has been impacted by the OCR (official cash rate) increasing and less government stimulus.”

Economic factors paired with supply chain issues are likely to be around for a while yet.

https://businessdesk.co.nz/article/retail/david-v-goliath-retailers-reap-black-friday-rewards




Next month should be OK for sales but after that who knows.

[winner69]

Also in that article was this ….TWG would have done far better

Data released by Worldline on Weds says core retail merchants, including electronics, appliances, clothing, footwear, home and recreational wares, saw a 7% increase in revenue from the same four days last year ($232 million). With a total of $248.2m, spending was 11% above the pre-covid levels of 2019 ($223m).

[Rawz]

should be a '4 bucks, you beauty' soon

[Habits]

Thanks for the divie this morning mr warehouse... I will come and spend some of it in your lovely stores

[ratkin]

Thanks for the divie this morning mr warehouse... I will come and spend some of it in your lovely stores

Was a pretty impressive divi tbf

[waikare]

Thanks for the divie this morning mr warehouse... I will come and spend some of it in your lovely stores

Being a shareholder you can get a discount when you shop on Monday and Tuesdays 14th and 15th........... see below copied in part from their email.




Dear Shareholder

Thank you for your ongoing support.

To show our appreciation, we would like to invite you to our Special Shopping Days across The Warehouse Group on Monday 13th and Tuesday 14th of December 2021. We would also like to extend this offer to your family and friends.

[Habits]

Being a shareholder you can get a discount when you shop on Monday and Tuesdays 14th and 15th........... see below copied in part from their email.




Dear Shareholder

Thank you for your ongoing support.

To show our appreciation, we would like to invite you to our Special Shopping Days across The Warehouse Group on Monday 13th and Tuesday 14th of December 2021. We would also like to extend this offer to your family and friends.

Greasing the wheels of commerce ... I have a bit on those days but hoping to get along for an extra special, warehouse special price

[LaserEyeKiwi]

https://www.stats.govt.nz/information-releases/electronic-card-transactions-november-2021

November Month-on-month NZ card spending:

13311

November Year on year changes:

13312

[winner69]

Boxing Day sales started yet?

Talking of Boxing Day - once it was one of the busiest days of the year for Red Sheds as people queued up bringing back crappy presents and broken things for a refund.

[Grimy]

My sister-in-law used to work for them on the returns desk, firstly as a general staff member and later as a supervisor. The week after Christmas was one she always dreaded.....

[winner69]

In a piece by Gaynor in BusinessDesk yesterday he reminded me that ‘House price inflation in New Zealand is highly correlated with consumption growth.”

Every guru seems to be predicting house prices won’t go up much next with many saying they will fall.

Retail environment might be rather subdued this time next year …with TWG reporting little or no sales growth. The large growth numbers might be behind them

Subdued sales growth with costs affected by inflation …..lower profits?

[Waltzing]

Winner(n ), Treasury NZ says growth over 2.5 % next 3 years.

effects of HUGE GDP brought forward.

and with OMI just around the next bend can they afford to stop the support?

has the country HIT the OPEN Road ahead? Doesnt look open yet and more support maybe needed with Europe entering a Wave bigger than ever seen before.

Boasters and more Boasters for the next 2 years.

2022 is the year of the OMI and its just getting started.

[LaserEyeKiwi]

In a piece by Gaynor in BusinessDesk yesterday he reminded me that ‘House price inflation in New Zealand is highly correlated with consumption growth.”

Every guru seems to be predicting house prices won’t go up much next with many saying they will fall.

Retail environment might be rather subdued this time next year …with TWG reporting little or no sales growth. The large growth numbers might be behind them

Subdued sales growth with costs affected by inflation …..lower profits?

New Zealand property owners have experienced the largest wealth gain ever in the last 18-24 months - I would think that “wealth effect” will last for quite some time, even if house price growth plateaued or shrunk a little in 2022.

For example if someone whose property has increased in value by $300k since March 2020, will they suddenly feel less wealthy if there property has small to no gains in value gains over the next 12 months?

One has to consider that the wealth gains from property over 2020/2021 on an absolute basis have vastly overshadowed anything like that seen in the past. A 33% gain on a $900k property is an entirely different ballpark to a 33% gain on a $500k property 10 years ago.

Many people (basically anyone with a large owner occupied home in a major metro center, or those with at least one investment property) have seen a life changing difference in there personal circumstances where they are re-evaluating what the rest of their lives may be like and are making different decisions about what they are choosing to spent their discretionary income on.

Couple that with the continued lack of international travel/holiday options, and I don’t think retail has much to worry about in 2022.

The one thing in regards to housing wealth & retail spending that I think would be negative is if there was instead a significant large fall in house price values over 2022 (greater than 15%), at which point I would agree that would negatively impact retail sales to a degree.

[winner69]

I know this is a load of ****e and these times are different but Westpac reports consumer confidence continues to fall ..and more pessimists than optimist and Many households have reported their financial position has deteriorated over the past year, and a growing number expect their finances will come under pressure in the new year.

https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/New_Zealand/2021/December_2021/Q4_Consumer_conf_Dec_2021_Westpac_NZ.pdf

[LaserEyeKiwi]

I know this is a load of ****e and these times are different but Westpac reports consumer confidence continues to fall ..and more pessimists than optimist and Many households have reported their financial position has deteriorated over the past year, and a growing number expect their finances will come under pressure in the new year.

https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/New_Zealand/2021/December_2021/Q4_Consumer_conf_Dec_2021_Westpac_NZ.pdf

Interesting that consumer confidence has actually remained the same or increased in 2 of the 3 biggest population centers - Consumer confidence is up in the Auckland region & the same in Wellington. Together those 2 regions account for a very sizable fraction of NZs High income earners. Confidence also up in Otago (Dunedin/Queenstown etc).

Christchurch, Waikato & bay of Plenty had sizable falls, and its perhaps no coincidence that those regions had new covid outbreaks at the time the survey was conducted, so it may be a temporary fear panic driven result happening there.

[LaserEyeKiwi]

Record retail spending:

RECORD SPENDING
Worldline (Paymark) is reporting (https://www.interest.co.nz/sites/default/files/2021-12/WORLDLINE%20MEDIA%20UPDATE_20%20Dec%202021_NZ%20on %20track%20for%20record%20Christmas%20spend.docx) that with just five days left till Christmas, spending at retail stores is trending at record levels. While the easing of Auckland’s Covid-19-induced boundary restrictions last week allowed for more movement of people across the country resulting in higher spending on accommodation in the Bay of Plenty, Waikato and Auckland/Northland regions, the dominant pattern across the nation was the ongoing surge in spending ahead of Christmas Day.

[winner69]

Record retail spending:

RECORD SPENDING
Worldline (Paymark) is reporting (https://www.interest.co.nz/sites/default/files/2021-12/WORLDLINE%20MEDIA%20UPDATE_20%20Dec%202021_NZ%20on %20track%20for%20record%20Christmas%20spend.docx) that with just five days left till Christmas, spending at retail stores is trending at record levels. .

Good story worth bolding and getting the attraction of punters

But in reality every December sees record sales (at least in last 20 years)

December Electronic Card spend in December always higher than previous December

So we would expect a record December this year ....just like last December was also a record year

[LaserEyeKiwi]

Good story worth bolding and getting the attraction of punters

But in reality every December sees record sales (at least in last 20 years)

December Electronic Card spend in December always higher than previous December

So we would expect a record December this year ....just like last December was also a record year

So your saying lower consumer confidence & an uptick in mortgage interest rates are not enough to stop increasing year-on-year retail spending?

It appears we are in agreement then.

[winner69]

So your saying lower consumer confidence & an uptick in mortgage interest rates are not enough to stop increasing year-on-year retail spending?

It appears we are in agreement then.

Inflation helps a bit

Yes ....... an an annual basis retail in NZ retail sales never go backwards .... even when house prices collapse

[LaserEyeKiwi]

Inflation helps a bit

Yes ....... an an annual basis retail in NZ retail sales never go backwards .... even when house prices collapse

Is that true? Thanks for that, a useful thing to know.

[LaserEyeKiwi]

ANZ released its consumer confidence survey yesterday, which was to the (small) upside:


The final consumer confidence survey (https://www.interest.co.nz/sites/default/files/2021-12/ANZ-ConsumerConfidence-20211222.pdf) for the year is out, this one from ANZ Roy Morgan. It reports little change at a low level, up +1.7 points. The proportion of people who believe it is a good time to buy a major household item rose +6 points to 0, after three months in the red. Inflation expectations were little changed at 5.6%.

[LaserEyeKiwi]

Worldline (formerly paymark) reporting that NZ retail spending is up 6% on last year & up 13% on 2019 for the 6 week pre-xmas shopping period.

[Waltzing]

you forgot to put it on the Bris, MHJ and EBOS thread as well...:t_up:

who hasnt got the lot...

[LaserEyeKiwi]

Finally grabbed my new TV from Noel Leeming on Boxing Day, got one of the last two of that particular model in all the Wellington region. Fairly chuffed to get a $600 discount. Noel Leeming was absolutely packed with customers when I picked it up. Also picked up a couple of different outdoor furniture sets (from the red sheds), hard to find in-stock supply. Interesting to see how the demand/supply situation is there.

[LaserEyeKiwi]

Strong Retail spending post-xmas


Worldline, formerly Paymark, has released data for the last days of 2021 and beginning of 2022.

It covers about 70 per cent of New Zealand’s in-store electronic transactions.

The data showed that core retail merchants, excluding hospitality outlets, processed $696 million in transactions in the week to January 4. That was 7 per cent more than the same seven days a year earlier and 13 per cent higher than the pre-Covid times of the start of 2020.

[Beagle]

https://www.nzherald.co.nz/business/summer-questions-warehouse-group-ceo-nick-grayston-on-its-plans-to-tackle-global-competitors/MKNN3YZXE2YCKIHDNDFCRS4OB4/

Q&A with Nick Grayston - Paywalled

Excerpt - First question - How is your business planning to tackle 2022?

Consumer confidence is softening so all businesses will need to work hard in 2022.

Talks later about going on holiday in Aotearoa. I think the laser focus they have on all things ESG (not as extreme as Synlait but getting up towards that sort of obsessiveness) stems from the chief.

My opinion - All the low hanging fruit has been picked with this one and much of the heavy nesting expenditure during Covid, (e.g. new whiteware and other appliances) is already done and dusted.

[Greekwatchdog]

Trading update. https://www.nzx.com/announcements/385720

[Waltzing]

You beat us to it!!!!

[Beagle]

Based on actual sales for the first five months of FY22 the Group expects Adjusted Net Profit After Tax (NPAT) for HY22 to exceed $40m. This compares to $111m in HY21 and $46.2m in HY20.

1. Cost of doing business is expected to be $35m higher in the half-year, reflecting higher store labour costs, increased investment in TheMarket and an increase in digital spend. It is also expected that there will be additional costs of $10m - $12m reflecting the COVID-related impact to operations
2. Gross Profit Margin in the first half of FY21 benefited from a $10m decrease in inventory provisioning from FY20 and reduced discounting.

WOW - The ol late Friday afternoon trick to release very bad news to the market. I doubt anyone was expecting just over $40m compared to $111m last year....that's really BRUTAL !! I think its long overdue they gave up on their "themarket" fantasy which is clearly burning tens of millions per annum. Just accept its a flop and rely on your store network.

VERY pleased indeed I sold my entire shareholding late last year.

[winner69]

Trading update. https://www.nzx.com/announcements/385720

The old late Friday afternoon announcement and hoping nobody will notice trick

Jeez $40m v $111m last year ….disaster material …..when the paper says sales have been booming

[Waltzing]

Really brings home the need for retail diversification..

Auckland lock down might have hit them harder than other stores..

M10 here in the waiwaka always has good custom and the RED sheds parking full..

Though if OMI comes it tells you that lock downs hit this stock harder than others.

OCA might be a shocker next 3 months if OMI is out and about.

[winner69]

Hey Beagle …didn’t Nick buy some of your shares at $4.11

Might be able to average down next sub 3 bucks

[Greekwatchdog]

Monday could be a blood nose for shareholders. Very cynical timing of announcement considering if it had been good news it would have been announced much earlier in the day.

[Louloubell]

I got out recently as well. Curious what the SP will do next week. $3.50 is my guess.

[Waltzing]

Never over weight a retail stock.

[Beagle]

Monday could be a blood nose for shareholders. Very cynical timing of announcement considering if it had been good news it would have been announced much earlier in the day.

Quite a few critical posters in November calling me out as having lost the plot selling at $4.10. You were one of several. This is what I had to say back then

Its not that difficult to understand why the trail has gone cold. 3-4 months ago they were $3.30, the whole country was in level 1 and humming along nicely and we were looking at $170m+ earnings for 50 cps and a forward PE of just 6.6. Its was "looney tunes" value, (and very loudly called and barked as exactly that so even the deaf could hear)... Fast forward 3-4 months and how things have changed. With the almost endless lockdown we've seen analysts trim their expectations to $126m for FY22, eps of just 37 cps forecast so the PE has expanded to ~ 11. Further, the 10 Year Govt stock has risen 100 basis points which of itself should trim about 1 PE off the forward metrics and a PE of 11 is actually fully priced for a company with very modest growth prospects. Adjusting for the far higher interest rates now prevailing the metrics on the WHS have nearly in effect doubled from where they were just a few months ago !

I called it very clearly as a SELL @ $4.10 in early October 2021 and anyone who listened is going to be very pleased indeed on Monday that they did. What's absolutely clear is they are not going to make anything like $126m in FY22 and broker downgrades will also be forthcoming.

My contention is that WHS is just a cyclical and last year we hit the peak of the cycle. Its all downhill from here.

[winner69]

This bit ….an excuse for lower margins this this half v pcp. —— Gross Profit Margin in the first half of FY21 benefited from a $10m decrease in inventory provisioning from FY20 and reduced discounting

Funny they never made much of that last year when they touted the huge margin improvement.

[Beagle]

Wait for the ol normalization trick in their half year accounts. We never really made $111m in the previous corresponding period, most of that was paid out to the Govt kowtowing to ESG pressure from Cindy and her greenies, (they won't put it like that though).

Through creative accounting and other normalizations they'll try and show a profit increase at the half year mark, mark my words !

I think they've completely lost the plot with themarket.com. Its nothing but a white elephant eating more and more millions every month. Lost ~$20m last year, $40m this year ? and that's at a time with record online spending. Even bigger losses in FY23 ? Cut the cancer out and be done with it already before it gets any worse for goodness sake...

[Waltzing]

"make anything like $126m "

true but they may recover a little in the second half a little...definitely was a big reduce at its high but it will still pay a DIV. If your cost price was low enough it wont trigger a capital lose.

[Perky]

Who remembers Flying pig. Same idea…It appears 20 yrs later Pigs still can’t fly?
https://www.nzherald.co.nz/business/troubled-flyingpig-sacks-half-its-staff/7G5UJ4UBIZXHYGD4U33GOSVL4U/

[Beagle]

If they get smacked down to about $3.36, (current fair value $3.20), which is my updated 12 month price target that's probably the end of their hopes for NZX50 inclusion in the foreseeable future. I've moved further negative to this being a STRONG SELL...run for the hills while you can !
Target BUY price if you dare is $2.55 which gives a reasonable ~ 20% margin of safety to fair value which seems appropriate given readily apparent Omicron risks.

I am backing out one-off Covid costs, assuming these don't repeat, (obviously there's a real chance they will) and assuming they can make $110m in FY23 which gives ~ 32 cps. (Current average analyst target for FY23 is $130m. Obviously this will get downgraded). Put a no growth PE on that of 10.5 gives fair value of about $3.36 12 months from now.

Risks with ongoing Covid issues skew the risk-reward heavily to the downside.

[Waltzing]

"On 12 November 2021, the Group reported that sales for the first quarter of
FY22 were 14.6% below sales for the same period in FY21, with only 2 weeks of
the quarter not impacted by the COVID-19 lockdown levels."

surely expected... dont see it as dire going forward as some might suggest.

"For the first two months of the second quarter, Group sales were up 2.3% on
FY21 and 8.6% on FY20 sales for the same period."

Ok as expected ....

" This brought total Group sales for the five months ending 2 January to $1,465.9 million, a decrease of
5.7% "

ok .... not so bad...

On line increased sales equals an increase in costs of goods sold. IE the margin was lower as Expected!!!

"Gross profit margin for the first five months of FY22 was 55bps lower than
the same period in FY21 but up 132bps versus FY20."

uummm big deal.... so what...yawn! Gosh only 55 bps!

ok an improvement on Y20 but down on 21, but soooo what..

"The Group is well positioned for the remainder of summer and Back to School trading
periods."

yawn....


Ok NPAT down as being hit really hard by COVID but second quarter of the second half is expected to trade slightly above last year.

DIV might well be as less than last year.

They are saying second half year Y22 will be an on course to match 2HY21.

They then say they are facing some increased costs but these are expected across the entire retail sector and supply chain.

Ok you really cant see the future of WHS from this report you have to wait for the full year picture.

Our back room might be wrong but they usually are on the money and think 3.50 to 4 dollars is the trading range.

Come on winner run the numbers again.

[Joshuatree]

Stop press, I bought a vacuum cleaner from the warehouse,it's cheap as chips but reccoed reasonably highly by my Consumer Bible.Rush in and help your company nownownowtomorrow.

[Beagle]

Hey Beagle …didn’t Nick buy some of your shares at $4.11

Might be able to average down next sub 3 bucks

Yes he did mate and I stated at the time I was very comfortable with my sell decision despite insider buying, CFO also bought some.

Agree that sub $3 is quite plausible. Don't think our Waltzing friend has wrapped his head around the rising costs and ever increasing size of the black hole that is the market. If they're incurring ever increasing losses with that platform at a time of record ever online spending it's got to be a really serious worry going forward. Trying to be the Amazon of N.Z. could well turn out to be a flawed strategy as people keep buying off the real Amazon and other well established platforms at cheaper prices.

Nick loves throwing around that Omnichannel buzzword doesn't he but the more they sell online it seems the more they lose online and cannibalize more lucrative instore sales for "good" measure. I think your mate Nick wastes FAR too much time, energy and resources on his ESG obsession.

I'm half expecting the half year result to lead off with their ESG accomplishments...if it does, you know the numbers that follow are going to be really ugly.

[Dlownz]

When a company releases a result after close its never a good look.

[winner69]

Yes he did mate and I stated at the time I was very comfortable with my sell decision despite insider buying, CFO also bought some.

Agree that sub $3 is quite plausible. Don't think our Waltzing friend has wrapped his head around the rising costs and ever increasing size of the black hole that is the market. If they're incurring ever increasing losses with that platform at a time of record ever online spending it's got to be a really serious worry going forward. Trying to be the Amazon of N.Z. could well turn out to be a flawed strategy as people keep buying off the real Amazon and other well established platforms at cheaper prices.

Nick loves throwing around that Omnichannel buzzword doesn't he but the more they sell online it seems the more they lose online and cannibalize more lucrative instore sales for "good" measure. I think your mate Nick wastes FAR too much time, energy and resources on his ESG obsession.

I'm half expecting the half year result to lead off with their ESG accomplishments...if it does, you know the numbers that follow are going to be really ugly.

Nicks past Omnichannel beagle …yesterday’’s things to do.

He’s into metaverse marketing and other AI things.

Even said so in that piece you posted link to:

…the pace of change will accelerate exponentially. AI will become the master technology that controls all the others - this is already happening but will accelerate rapidly in 2022.

Watch this space

[Beagle]

I think he's over thinking it...much like he's over thinking all things ESG. At the end of the day they are retailers of simple products either online or in physical stores. Suppose he still collects his usual millions no matter what WHS makes so he has to come across as all high tech and fancy and make out he's ahead of the curve. Smells very much like creative corporate B.S. to me.

[Waltzing]

WHS on line trading platform could be integrated to AMAZON's API when it gets here. Our back room sees no problem if the WHS is smart enough in mapping request's to the Amazons REST API.

Now they would incur a routing charge but it would mean that the DEV costs of future development would actually reduce over time.

it will take time for WHS to determine if it is more profitable to run inventory out of AMAZON or there own system at the moment.

Sometimes its costs you more for your own service REST API and databases and some times it costs you customisation.

We are trying to find out more about the platform development they made and are making to in regards to the groups inventory management platforms.

as for the half year numbers we already know they arnt great and the BPS is down 55.

SECOND QTR sales are back on track with HY21 at the moment.

Now that may not last as MR B predicts but at the moment they are reporting back on the numbers.

DISC: yes we sold all portfolio holdings a while back except one.

[winner69]

I think he's over thinking it...much like he's over thinking all things ESG. At the end of the day they are retailers of simple products either online or in physical stores. Suppose he still collects his usual millions no matter what WHS makes so he has to come across as all high tech and fancy and make out he's ahead of the curve. Smells very much like creative corporate B.S. to me.

Nick is a rather strange creature ....and he loves those corporate slide shows .....got to keep up with the latest fads and all that stuff ... and talking about them makes him sounds impressive

Views based on a few meetings with him

[Waltzing]

The results announced today are just a republishing of the market update release in 12/11... which had most of the bad news in it already.

We dont see what the fuss is all about.

2022 will see the roll out of real time inventory management and new north island distribution solutions.

The carbon foot print for this group is significant and they have buildings that have a carbon foot print and extensive freight.

Going forward these types of operations are not going to be able to ignore carbon foot prints.

In Europe its going to be a big issue and it will get bigger here.


THE OLD BAD NEWS THATS APPARENTLY NEW..... NOT!

"Highlights:
• Group sales for 13 weeks to 31 October 2021 were $630.7 million, down 14.6% against the same quarter in FY21 and down 9.2% against the same quarter in FY20.
• Group sales were impacted due to COVID-19 lockdown levels from 18 August – including Level 4 for two weeks New Zealand wide and five weeks in Auckland, with Auckland remaining in Level 3, and Northland and Waikato switching between Level 2 and 3 for the remainder of the quarter.
• Online sales growth of 118.2%, representing 30.1% of Group sales.
• Group gross profit margin was 32.9% for FY22 Q1, a decline of 200 basis points on FY21 Q1.
• New MarketClub and MarketClub+ loyalty programmes were launched on 20 October."

[Beagle]

Try and dress it up all you want my friend but at the end of the day it doesn't matter how you try and slice and dice it ~ $40m is an absolute bloody shocker compared to $111m last year. The timing of the NZX release after market close is a classic attempt to disguise the bombshell.

[Waltzing]

Yes but we think the number has been there for a while and is not new info. They had stated it clearly well before today and the BPS was blown out ages ago and now back on track according to the lastest numbers.

Surely you cant shut stores and expect your bottom line profit to continue on as per normal.

WHS has had a HUGE year of technology roll outs and they have HIT some major milestones that have gone un noticed.

Their technology platform work has been extensive and may well position them for the rebound from the hit over COVID if thats what it was.

A Short term hit to the bottom line.

the numbers were out there long before this.

The full profit and loss audited is needed to see where the cost lay. There is a huge series of developments in bringing all these changes into place and i think we stated before bringing the legacy systems into a group interconnected platform will and will have cost a lot of money..

At some point they have to take the hits to bring themselves into the modern world and the 2021 annual report detailed the huge changes they proposed and the time frame rolling out to late 2022.

If their next QTR is on track it will be so what. If they indeed take a hit from post covid spending then it will warrant a rerating.

They are sourcing from global supply chains and they need to track component parts from source and it will need in the future to be as clean and green as they can get it.

This is a period of big change for all these retail chains across the western world. Its a big job and the scale of the changes these companies must now undertake is not simple and does not go without an investment in technology and time.

Are we post covid? No and it may go on for a lot longer as AUS is now starting to look to reintroduce restrictions.

It isnt over yet.

[LaserEyeKiwi]

Quite a few critical posters in November calling me out as having lost the plot selling at $4.10. You were one of several. This is what I had to say back then

I called it very clearly as a SELL @ $4.10 in early October 2021 and anyone who listened is going to be very pleased indeed on Monday that they did. What's absolutely clear is they are not going to make anything like $126m in FY22 and broker downgrades will also be forthcoming.

My contention is that WHS is just a cyclical and last year we hit the peak of the cycle. Its all downhill from here.

“Above $40 million” NPAT guidance is slightly worse than i was expecting for HY22, but not far below my ballpark expectations given the lockdowns and the already previously given guidance from the first 3 months of trading.

You sold at $4.10 before the 17.5c dividend was paid Beagle, so the stock would need to fall to $3.92c for anyone who held to be worse off compared to those like yourself who sold at $4.10 pre-dividend. (That’s ignoring any further tax obligation costs triggered by a sale) That might happen on Monday, but I dont think their will be much in the way of carnage.

Also seems like you are stating opinion as facts with your thoughts about the spending spree being over, which is contradicted by the facts that WHS has grown group sales year over year over the last two months, even while Covid shopping restrictions have been in place (unlike the year ago period). At the very least their is no evidence yet that retail spending at WHS properties, or the retail market in general, has started to slump. In fact all evidence suggests the opposite with retail spending continuing to increase at both WHS and retail transactions economy wide.

Given the one off impact of Covid on these results so far, and given the best ever record sales of the last two months (“For the first two months of the second quarter, Group sales were up 2.3% on FY21 and 8.6% on FY20 sales for the same period”), I dont think the market will treat the stock that harshly. Having record top line sales in an inventory restricted environment is quite the feat, and not the sort of headline that would normally collapse a stock price, especially one already trading at such a low PE ratio.

Not sure why you are so negative on a rapidly growing online sales portal (themarket.com) - when you seem so positive on other companies growing their online portals as a big part of their future success (like HLG for instance) - can you flesh out why its good for one particular retailer to be growing its online sales platform, but bad for another to do the same thing?

WHS with themarket.com, combined with its other online brands (all powered by themarket.com’s underlying infrastructure) is now New Zealands leading online retail entity by number of customers - why do you suggest they shutdown the most popular online operation in New Zealand while it is growing faster than any other platform? That seems rather short sighted. What rational is there for NZ retailers to just give up and submit to Amazon before they have even arrived in New Zealand? Do you think Glassons should just shut down their online portal as well? I cant get around your reasoning on this particular subject? I’m completely with you on HLG boosting its online presence, so am confused as to why you have an exact opposite approach on another retailer who has significantly higher online sales also continuing to invest in its online portal.

Overall I think the most important takeaway is this: Despite Covid lockdowns, large inventory transport and COGS cost increases - Gross Margin and Revenue is higher than the comparable Pre-Covid period - which bodes very well for the post-covid period.


The Warehouse Group Trading Update7/1/2022, 5:06 pm MKTUPDTEThe Warehouse Group reports positive Christmas sales, but COVID impacts remain
The Warehouse Group Limited (“the Group”) has today provided a trading update for the five months ended 2 January 2022.
On 12 November 2021, the Group reported that sales for the first quarter of FY22 were 14.6% below sales for the same period in FY21, with only 2 weeks of the quarter not impacted by the COVID-19 lockdown levels. Early in the second quarter of FY22 Auckland moved to Level 3 Step 2, which allowed the Group’s Auckland stores to reopen from 10 November and removed a significant trading constraint.
For the first two months of the second quarter, Group sales were up 2.3% on FY21 and 8.6% on FY20 sales for the same period. This brought total Group sales for the five months ending 2 January to $1,465.9 million, a decrease of 5.7% or $88.8m compared to the same period in FY21, which is an improvement on the position reported in the Q1 sales update, when sales were down 14.6% or $107.7m.
Gross profit margin for the first five months of FY22 was 55bps lower than the same period in FY21 but up 132bps versus FY20. A contributing factor to the reduction was the sudden increase in online sales which for this period increased 105% on the same period in FY21, to comprise 18% of sales. This has reduced gross profit margin through a lower margin product mix and higher freight costs associated with online sales, exacerbated by capacity constraints throughout New Zealand’s delivery network. Click and collect accounted for 50% of the online sales, which is an 89% increase on the same period in FY21.
The ongoing disruption to worldwide supply chains has made managing stock flow through the peak trading period challenging. The Group’s robust shipping and stock management controls have managed inventory levels while ensuring availability of key continuity and seasonal lines for customers. The Group is well positioned for the remainder of summer and Back to School trading periods.
Based on actual sales for the first five months of FY22 the Group expects Adjusted Net Profit After Tax (NPAT) for HY22 to exceed $40m. This compares to $111m in HY21 and $46.2m in HY20. The second quarter is expected to continue to trade at or slightly above the same quarter last year and this would result in sales for the half-year being circa $80m less than FY21. Other major impacts on HY22 NPAT versus HY21 include:
1. Cost of doing business is expected to be $35m higher in the half-year, reflecting higher store labour costs, increased investment in TheMarket and an increase in digital spend. It is also expected that there will be additional costs of $10m - $12m reflecting the COVID-related impact to operations
2. Gross Profit Margin in the first half of FY21 benefited from a $10m decrease in inventory provisioning from FY20 and reduced discounting.
Further detail will be provided with the Group’s FY22 half year results, which will be announced on Tuesday 22 March 2022.
ENDS

[Waltzing]

Yes Laser they have really taken on a big job and really not been given much credit for being bold Kiwis. When the Ikea's of the world turn up you cant just close down and roll over. Long way to go before local Kiwi business just says ok we sell out and close down. WHS and HLG and other's doing a great job giving NZ businesses to be proud of.

From the current info release you cant see inside the groups ledger to see the underlying profits versus impacted profits or the change cost of group technology platform developments.

WHS has been a technology leader for a long long time and has a big technology intellectual base to lever off and was an Amazon long before anyone else.

[winner69]

Nick in that interview in The Herald yesterday:


Q. What would you rate as your greatest success in business?

Nick. Moving The Warehouse Group to Agile - a new method of working.


Hmmm -- WHS not Agile enough to overcome challenges?

See's Operating Profit (adjusted of course) back to 2018/2019 levels - pre-Agile

[Waltzing]

WHS was agile from the get go!!

WHS was a leader in technology JIT right from the start and was a technology company and now is undertaking moving its GROUP into the age of full on line integration of MOBILE platforms to online. Its a leader in that field and always has been. Its technology base should not be underrated and no NICK agile was build into this company long before you arrived.


Dont under estimate the technology capability of this company.

[Rawz]

HLG sales first 20 weeks -10.14% vs prior year
WHS sales first 24 weeks -5.7% vs prior year

Retail is done! Quick- rotate out of retail.! Get to financials and construction!

But wait..

MHJ update in Dec; "Michael Hill delivered both sales growth and sustained margin expansion throughout November and December."

BRG; we haven't heard from them for awhile. One suspects an on par Christmas trading result or slightly up? That's what they do..

SP come Monday should be fine based on what the HLG SP did after their drop in sales update. Maybe WHS announced it at 5pm so people could get over the shock and not panic sell?

Conclusion: Some NZX retailers are executing very well in trying times due to excellent management and product range. It seems FMCG (fast moving consumer goods) which WHS an HLG sell is no good. Diamonds and food processors better.

Either way for me I wouldn't want to have money in WHS or HLG unless you were after the divvy. Its going to be a solid period of flat SP movement. HLG $7 magnet and WHS $4 magnet for 1-2 years imo

[winner69]

Try and dress it up all you want my friend but at the end of the day it doesn't matter how you try and slice and dice it ~ $40m is an absolute bloody shocker compared to $111m last year. The timing of the NZX release after market close is a classic attempt to disguise the bombshell.

Betcha you glad you sold your shares to Joan and Nick around $4.10

You did bloody well seeing you bought most of them in the low 200's a year prior .... well done

You made the most of positive sentiment towards WHS .... pity they are likely to disappoint the market again.

I think you'll be a shareholder again ..... when the price and yield are good enough. You've nailed it when you said WHS are back to making a steady $80m/$100m (adjusted of course) - then what price do you pay for 23 cents / 28 cents earnings and maybe 20 cent divie

[winner69]

WHS was agile from the get go!!

WHS was a leader in technology JIT right from the start and was a technology company and now is undertaking moving its GROUP into the age of full on line integration of MOBILE platforms to online. Its a leader in that field and always has been. Its technology base should not be underrated and no NICK agile was build into this company long before you arrived.


Dont under estimate the technology capability of this company.

Jeez - sounds like you do consulting work for them waltzing. Sharing in the zillions WHS have paid consultants over the last few years (never reported part of adjusted profit) ..... been a good gravy train for you eh

I do worry a bit when a couple of months I bought a TV in store at Noels place (none of this click and collect for me) and the nice lady punched some numbers into her phone and said 'tep we have 2 in stock' and 5 minutes later came back and said 'sorry, none in stock .... but you can take the display model'

Great tech - can't keep track of stock


But back on topic - when is NIck rolling out his metaverse stuff he keeps talking about

[mcdongle]

https://www.sharetrader.co.nz/images/misc/quote_icon.png Originally Posted by mcdongle https://www.sharetrader.co.nz/images/buttons/viewpost-right.png (https://www.sharetrader.co.nz/showthread.php?p=921696#post921696)
With the amount of empty shelves in our local Warehouse and chatting to some staff about it. Do they have enough products to sell and make money?



Headlines a few weeks ago -

Warehouse boss not concerned about Christmas

So no worries


So i may have been correct..... Winner

[LaserEyeKiwi]

https://www.sharetrader.co.nz/images/misc/quote_icon.png Originally Posted by mcdongle https://www.sharetrader.co.nz/images/buttons/viewpost-right.png (https://www.sharetrader.co.nz/showthread.php?p=921696#post921696)
With the amount of empty shelves in our local Warehouse and chatting to some staff about it. Do they have enough products to sell and make money?



Headlines a few weeks ago -

Warehouse boss not concerned about Christmas

So no worries


So i may have been correct..... Winner

Maybe you didn’t read the release yesterday? They reported record high sales over the last two months.

The negative part of yesterdays news was lower profits, not lower sales.

[LaserEyeKiwi]

Betcha you glad you sold your shares to Joan and Nick around $4.10

You did bloody well seeing you bought most of them in the low 200's a year prior .... well done

You made the most of positive sentiment towards WHS .... pity they are likely to disappoint the market again.

I think you'll be a shareholder again ..... when the price and yield are good enough. You've nailed it when you said WHS are back to making a steady $80m/$100m (adjusted of course) - then what price do you pay for 23 cents / 28 cents earnings and maybe 20 cent divie

Also have to factor in they are sitting on somewhere around $200 million cash at present also, with zero debt. So let’s hypothetically say there is a ~10% pullback in share price, that would mean an EV value (ex-cash) of around $1.05 billion.

very fair to use a current financial year NPAT well below $100 million, conservatively even below $70 million.

$1.05 billion EV / $70 million, sounds very cheap to me, especially if there are temporary one off impacts such as the case here. Dividend yield would also remain very high if they continue there strong payout ratio backed by the very strong balance sheet.

[winner69]

Also have to factor in they are sitting on somewhere around $200 million cash at present also, with zero debt. So let’s hypothetically say there is a ~10% pullback in share price, that would mean an EV value (ex-cash) of around $1.05 billion.

very fair to use a current financial year NPAT well below $100 million, conservatively even below $70 million.

$1.05 billion EV / $70 million, sounds very cheap to me, especially if there are temporary one off impacts such as the case here. Dividend yield would also remain very high if they continue there strong payout ratio backed by the very strong balance sheet.

Cash $200m eh

We'll have to wait until March to find out but I'd hazard a guess its less than the $160m they had at 1 August

Said at AGM cash 'significantly reduced' / paid dividend of $67m / f22 capex expected $130m ....... but then they might not have replaced a lot of stock which'll help

See end of March eh

[BlackPeter]

Maybe more relevant on this thread:


I've crunched the numbers already on that thread for you. I agree its not a normal year. Normal to me for them looks like $100-$110m. About 30-32 cps...choose your own PE. I'm going with a no growth PE of 10.5 because I believe most of the big nesting spending people have been doing at Noel Leeming is behind us and FY21 was indeed a one off bonanza not to be repeated. No doubt you'll see it differently.

I guess there are always different things to see, depending on whether you look at face or tail of the same coin :p;

But actually - the numbers you came up are in the same ball park as mine. Not sure, whether this is a good or a bad sign ;) . My model comes up with an average future EPS of 35 cents ... but sure, I might be a bit optimistic (I often am :) :

Just to keep the discussion as well relevant for HLG (where this discussion started) ... projected average EPS in my model for HLG would be 58 cents ... which means that both shares end up with a quite similar forecasted PE (though Warehouse is still a bit cheaper). Obviously - if you think HLG will grow faster, than by all means, stay with them.

We somewhat disagree in our view on the market.com platform. While I don't know, whether it is the best possible implementation of an online market ... It is better than the original warehouse online platform - and a working online platform is crucial these days. Apart from that - I actually started using this platform (as customer) some months ago and it does work for me.

Started buying more stuff using this platform and find it much faster than amazon, kogan or any of the Chinese candidates ... and hey - saves me plenty of time driving into town. Probably not the best online platform, but it well might be good enough and has clearly potential. Shutting this platform down would be in my view a cardinals mistake ... but obviously - they need to have a plan to make it profitable :) ;

[Panda-NZ-]

We somewhat disagree in our view on the market.com platform. While I don't know, whether it is the best possible implementation of an online market ... It is better than the original warehouse online platform - and a working online platform is crucial these days. Apart from that - I actually started using this platform (as customer) some months ago and it does work for me.

Another way to sell items from their stores without it being too obvious that its from noel leeming, torpedo 7 etc.

[mcdongle]

Maybe you didn’t read the release yesterday? They reported record high sales over the last two months.

The negative part of yesterdays news was lower profits, not lower sales.

On 12 November 2021, the Group reported that sales for the first quarter of FY22 were 14.6% below sales for the same period in FY21, with only 2 weeks of the quarter not impacted by the COVID-19 lockdown levels. Early in the second quarter of FY22 Auckland moved to Level 3 Step 2, which allowed the Group’s Auckland stores to reopen from 10 November and removed a significant trading constraint.
For the first two months of the second quarter, Group sales were up 2.3% on FY21 and 8.6% on FY20 sales for the same period. This brought total Group sales for the five months ending 2 January to $1,465.9 million, a decrease of 5.7% or $88.8m compared to the same period in FY21, which is an improvement on the position reported in the Q1 sales update, when sales were down 14.6% or $107.7m.

Overall sales were lower......

[FTG]

Overall sales were lower......

Yip, and lest not forget that this is during a period where CPI has gone the other way (ramped + 5%pa)! Just a tad concerning.

As we know, the long-term success of a company significantly hinges on its Revenue profile.
More specifically:

-How much revenue it is generating (determined by # of units sold and avg price per unit)
-The medium to long-term growth profile of the revenue, and...
-The actual profitability (GP) generated from that revenue.

In the case of WHS, with this latest update it appears at least a couple of those touch points have now fired warning signals.
But granted, "one cold day doesn't necessarily maketh a winter".

When weighing up what to do, sometimes it's beneficial to reflect on some 1st principles for running a "successful enterprise"...

BROAD QUESTION: Does WHS have wide economic moats?

(Part) Answer: Mmmmm, across its various mastheads, WHS doesn't strike me as being a "price maker". They are probably more in the "price taker" camp?

Q: Does WHS have sort after products/services, for which demand exceeds supply?
A: During the last 18 mths (Covid times), yes. But during standard times, NO.

Q: Does WHS enjoy economies of scale?
A: Broadly speaking yes, but there are some threats on the horizon?

Q: Are WHS benefiting from Network Effects?
A: Yes to a point, but I would suggest consistent execution of the supporting strategies (e.g. themarket.com) is yet to be demonstrated.

Q: Does WHS offer products that have a high cost of switching, making customers reluctant to change & hence "sticky"?
A: Definitely NOT. The trusted brands held in their product suite are ubiquitous in the market. Whereas WHS "house brands" are NOT highly sort after and have a low cost of switching for the customer.

Q: Does WHS have high quality intangible assets; such as strong intellectual property, patents and the like, that competitors struggle to offer the same or higher quality solutions?
A: Possibly - as Waltzing alluded to previously, one could include their ERP and the online platforms & presence. BUT, I would suggest that the jury is still out to whether they have found and consistently executed the "special sauce recipe" with these assets.

Q: Is WHS (and its stable of mastheads) a powerful brand, enhancing its ‘spread’ above costs and hence Gross Margin?
A: Yes, and some good runs on the board have been achieved through synergising between the different brands (rather than as previously, cannibalising from each other!). BUT, is this recent slippage in GP a warning sign of bigger (company & market) headwinds?

Q: Does WHS have a persistent process enhancement path embedded?
A: Yes I think so, they certainly aren't afraid to give it a good crack!

Q: Does WHS nurture innovative opportunism? (This question really starts to get under the hood, addressing the ethos of the company)
A: Mmmmmm, I'll take the 5th amendment. What do you think??

In summary, WHS has made some good progress over the last couple of years, albeit aided to a degree by Covid related retail spending tailwinds. IMHO, most of the low hanging fruit has been picked for now. Both for the company and investors who are looking for continued meaningful share price appreciation.

Arguably, now the real work starts. Consistent execution of a well considered strategy is the key!

[Beagle]

The Market launched 1/8/2019 and in its first year they sold $58.1m on the platform and lost $14.7m (Source 2020 annual report)
In its second year despite the massive rise in online spending readily observable by all other retailers reports and despite lengthy lockdowns, sales through that channel reduced 17% to just $48.2m and the loss increased to $20.7m. WOW !! (Source 2021 annual report).
Yesterday they signaled "Increased investment in the market and an increase in digital spend. Hmmm

Perhaps it s a little early to call it a white elephant but relative to the extraordinary online growth by all other retailers the significant reduction in turnover and increased loss is certainly cause for real concern because in a Covid environment that prevailed in FY21 and only for a modest part of FY20 when there's been an extraordinary jump in online shopping one could reasonably have expected the market would have gained significant traction from its existing customer base and attracted new customers, not lost significant momentum.

Its certainly off to an inauspicious start and the loss of momentum suggests early platform adopters were most unimpressed. Yesterday's announcement suggests they are doubling down on their "themarket" bet. One of the reasons I sold out in early October is I was concerned that the market is going backwards...that's deeply concerning to me in the prevailing circumstances.

But hey...lets keep throwing tens of millions of dollars at it, double down and boost our digital spend by tens of millions more...what could possibly go wrong... Hmmm

Winner is right to remind us that their cash position was clearly noted by the company last year as being materially compromised by the lockdown and the subsequent payment of a ~ $60m dividend in November when the current half earnings are well south of there, together with increased capex spend means the cash on hand at the half year point will be a very long way south of the $160m they held as at balance date.

Capex spend is an interesting subject of itself. $85m in FY21 but this from the 21 annual report caught my eye. Guidance of $115m - $135m for FY22 and at that level in future years.

All the low hanging fruit has been picked. My view on valuation remains as articulated yesterday. $3.20 is where I see fair value at this point.

[Beagle]

Betcha you glad you sold your shares to Joan and Nick around $4.10

You did bloody well seeing you bought most of them in the low 200's a year prior .... well done

You made the most of positive sentiment towards WHS .... pity they are likely to disappoint the market again.

I think you'll be a shareholder again ..... when the price and yield are good enough. You've nailed it when you said WHS are back to making a steady $80m/$100m (adjusted of course) - then what price do you pay for 23 cents / 28 cents earnings and maybe 20 cent divie

Thanks Winner. Some have observed that by selling @ $4.10 I missed the 17.5 cent dividend in November but I clearly stated I had recycled that capital back into HLG at ~ $7 and picked up the 24 cent dividend there in December so it all comes out in the wash and you are absolutely right mate, I am very pleased indeed I sold.

Only time will tell if they can get critical mass with themarket. I think the fact that sales volume was going backwards in FY21 when online retail generally was going ballistic is a very ominous sign for the future. I doubt you'd ever see someone like Tim Glasson suggesting throwing around tens and tens of millions on this sort of punt...I suppose that's one of the key differences between WHS and HLG. HLG has the owners eye on it and now Stephen Tindall is no longer involved the WHS doesn't.

Its easy to bet ~ $100m, (a rough guess of the total investment and losses of themarket by FY23), on a big punt when its not your money you're betting with eh ;) Despite the millions he's paid every year he has less shares that I held so I don't really consider his stake of 70,000 shares to be especially meaningful in the context of his huge annual salary of ~ $2.4m last year http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/WHS/380420/356330.pdf Suppose if it doesn't work they could throw another $100m at it in FY24 and FY25 and see what happens ? Nick probably enjoys big punts like that...hope shareholders do too :eek2:

Others will see it differently and that's fine.

[Waltzing]

If investment in technology for WHS is far bigger than just the market. As outlined on the FA report back last year this goes out far into Y2022 and the scope of this cant be seem by a casual glance at a report.

The market is only one part of that strategy and this group is far more complex in its product mix than a clothe retailer. To compare the 2 companies on anything other than yield is not comparing the same fruit types.

WHS is a much more complex operation from an inventory perspective and really comparing the 2 can only be done in the light of yield.

Underlying profit may well be impacted from the market but until the full year performance is in a definitive answer wont be apparent.

Which is why we reduced the position back a long way about the same time as MR B.

They can always get rid of the market but their main thrust is on enhanced global chain product management going forward and for a group like WHS thats a good thing.

[winner69]

Yes Beagle - as per AR TheMarket.com revenue in 2021 was $54.455m down from $62.520min 2020

But i've always been intrigued by the footnote -

TheMarket includes 1-day sales of $49.8 million (2020: $61.1 million) and an operating loss of $4.5 million (2020: nil)

I have no idea what this really means but if 1-day is separate from TheMArket then can you assume that TheMarket revenues were only $4.7m in 2021 and a loss of $16,5m

Then complicating matters in the sales reporting is inter-segmental elimination $13.4m - presumably sales between brands.

Not all that transparent to me

Maybe ignorance is bliss

[winner69]

wonder how their chocolate factory sales are going?

[Waltzing]

The market should really be spun off before to long and i imagine the board will be considering it pretty soon.

It should be high on the boards cup of tea and cakes soon. Unless it support whs in a way a third party cant then really they have no reason to keep it.

[winner69]

The market should really be spun off before to long and i imagine the board will be considering it pretty soon.

It should be high on the boards cup of tea and cakes soon. Unless it support whs in a way a third party cant then really they have no reason to keep it.

With the current metrics TheMarket.com is probably worth $1 billion to anybody who appreciates what it's capable off :)

[Beagle]

They started the year with $160.5m.
They had this to say at the time of the annual result.
The Group’s cash deposits have reduced significantly since balance date as a result of the decreased
sales but the Group’s bank debt facilities remain undrawn. The mere fact they saw fit to mention the fact that debt facilities were undrawn suggests the impact on cash was very significant.
What does "reduced significantly" really mean is anyone's guess but lets have a guess at $70m seeing as lockdown clearly hit them hard and they choose not to take Govt support. That takes us to $90m as a guess.
The dividend paid in November of 17.5 cps took $60.7m so we're down to $29.3m but we have earnings of about $40m + will have recovered the $70m but against that capex for the year of $115 - $135m, (assume mid point of $125m for the year and suppose half expended this half = $62.5m.
Crunching all that takes cash on hand down to $76.8m at the half year point from $160.5m at the beginning, (assuming no material change in stock held).
Gosh, that's a HUGE reduction in their financial strength. I think our laser eyed friend is in fantasy land thinking they have circa $200m cash.
In fact, I think from the tone of yesterday's announcement about increased digital spend and increased spend on the market that capex could be more front end loaded this year so could have materially less than $76m.

Not really the company they were 6 months ago are they ! But they did take on a new loan with special ESG terms so I suppose all is forgiven :D

[Waltzing]

Dont know what its worth winner but if it has some value and its not tightly API'd to the new inventory platforms they are developing then i sure the board wont be just steering at the glass ceiling..

SELLING IT AT SOME POINT or spinning off would be high on the list if they arnt tied to it by pure code and even if they are they could always tie it up in a legal agreement that they have access to the REST API.

I dont think people understand that these days your can abstract your platform away from static code and you can therefore generate the connection at runtime.

It really should not matter what platform they use if they can abstract it away from static compiled Code.

If they have they are free to do anything they like!

It no longer a STATIC world where you cant move a new strategy into place.

Business are not static and therefore any valuations placed on them are historic only.

its the future that matters not the past.

[Beagle]

What a loss making company is worth is the subject of a major downward rerating on the NASDAQ at present as I am sure you know Waltzing. I would respectfully suggest loss making online companies who have revenue in decline and losses expanding in the current explosive growth environment for online sales have very little value, if any. Right there, I think that's the key difference between how you see the company and I see it.

[winner69]

Retail is done! Quick- rotate out of retail.! Get to financials and construction!

…….


Conclusion: Some NZX retailers are executing very well in trying times due to excellent management and product range. It seems FMCG (fast moving consumer goods) which WHS an HLG sell is no good. Diamonds and food processors better.

Either way for me I wouldn't want to have money in WHS or HLG unless you were after the divvy. Its going to be a solid period of flat SP movement. HLG $7 magnet and WHS $4 magnet for 1-2 years imo

You’ve outlined your views on the outlook for NZ retail

You could well be right …..there were signs of weakness in NZ retail sales in June and July ( which was pretty August lockdowns.) and I have an inkling that as dust settles soon that weakness will continue.

But remember retail sales in NZ have never declined this century ….it’s just no or little growth in sales will hurt retailers.

Be interesting to see what eventuates

[Muse]

WHS on line trading platform could be integrated to AMAZON's API when it gets here. Our back room sees no problem if the WHS is smart enough in mapping request's to the Amazons REST API.

Now they would incur a routing charge but it would mean that the DEV costs of future development would actually reduce over time.

it will take time for WHS to determine if it is more profitable to run inventory out of AMAZON or there own system at the moment.

Sometimes its costs you more for your own service REST API and databases and some times it costs you customisation.

We are trying to find out more about the platform development they made and are making to in regards to the groups inventory management platforms.

as for the half year numbers we already know they arnt great and the BPS is down 55.

SECOND QTR sales are back on track with HY21 at the moment.

Now that may not last as MR B predicts but at the moment they are reporting back on the numbers.

DISC: yes we sold all portfolio holdings a while back except one.

I doubt Amazon will ever expand in earnest to New Zealand - we are just to small, and they have another half decade at least of building out amazon.com.au.

But jeesh how good is mightyape. Talk about excellent execution and customer service. I hope kogan (who purchased them last year) don't muck them up with too many kogan house products. but i see they have smartly branded some of them as mighty ape in this market. Just can't let the quality suffer as unlike other domestic eretailers (fishpond, the nile) they have done a fine job of keeping supplier product quality high.

Mightyape has a pretty great range and are light years ahead of the warehouse in ecommerce

[winner69]

From 2021 Annual Report

Value of Computer Software on books is $94m (Cost $196m less accumulated impairment and amortisation of $102m)

They spent $45m on new stuff in 2021

I have no idea whether is reasonable or not but it seems an awful lot of money for a relativity simple retail business.

Hope NL have found the 2 TV's the system said they had but weren't physically there

[Balance]

Price action tomorrow in response to the profit downgrade is going to come down to what the market expected vs what is now expected to be the full year's results?

Certainly don't see buyers stepping up to buy any shares but shorters & traders will be out in force.

[Beagle]

https://www.marketscreener.com/quote/stock/THE-WAREHOUSE-GROUP-LIMIT-6491364/financials/ $126m for FY22 was the average of analysts.
$90m for FY22 seems more plausible now, (assuming no more lockdowns which is by no means a safe assumption).

[Waltzing]

"relativity simple retail business"

dont ever remember inventory being simply... nightmare...all western government are now under pressure for supply chains to go detail green.

The cost in software to supply chain management software is not just a matter ive.. OK lets add a few fields in an SQL database declaration statements on our fully cloud base fully distributed backend databases. Those days of simple adjustments to data dictionary backends are long gone..

about 2 decades ago.

oh dear .......

[Balance]

https://www.marketscreener.com/quote/stock/THE-WAREHOUSE-GROUP-LIMIT-6491364/financials/ $126m for FY22 was the average of analysts.
$90m for FY22 seems more plausible now, (assuming no more lockdowns which is by no means a safe assumption).

Downgrades come in threes.

Be interesting to see what analysts come up with as the new forecasts.

[winner69]

I've closely followed TWG since its early days - mainly as part of my day job but to some extent from an 'investment' point of view. Over time I've also had several interactions with TWG management. I must admit interest in TWG since I retired has been a bit of morbid fascination than anything else

I've seen the Red Sheds grow until it reach market saturation in NZ in the early 2000's, seen a short foray into Australia and seen it being keen on doing consumer finance stuff. Over the years they've gone into Stationery, acquired Noel Leeming and Torpedo7 and now have grand dreams with TheMarket.com.

Since 2006 group sales have grown at 4.4% pa (and that includes the new businesses). This essentially is saying that they have not grown market share in that time.

over the same time (not counting F21) profits have ranged from $57m to $97m. A bit up and down but reasonably consistent. Of course they made $171m in F21 but probably be below $100m this year - in other words this years profits could will be less than what they made in 2006 and 2007.

I've come to the conclusion that:


F2021 was a windfall year never to be repeated. In other words not an indication of future performance.
Confirmed in my own mind TWG culture does not drive any real change. Maybe they are just too big and have no real desire to change.
The $100m plus spend on restructuring, Agile etc over the last five years has kept them in the game - ie survival rather than setting the platform for growth.
After a windfall year I see things settling down and reverting to the past norm - sales growing in line with the economy and hopefully making $80m to $100m a year.



Just for interests sake the chart below is WHS profits over the year. I've put $90m in for this year and the box is where I reckon E23 and F24 profit will fall.

That's how I see it anyway .... might be a shareholder again if the share price looks attractive

[Rawz]

Great post W69

[percy]

Great post W69

Certainly was.Thanks W69.
One picture worth a thousand Sharetraders' posts..

[Maverick]

Fabulous post Winner! Beautifully summed up.

Understanding WHS as well as you do, do you have an opinion on this being the first of many more retail stocks eventually downgrading too ( settling back to pre-covid normality) such as KMD,BRG, HLG and MHI ?

[Beagle]

$90m = 25.95 cps. 10 year Govt stock now at 2.5% so no growth PE is now 10. OMG - fair value is really only $2.60 !
I'd wager serious money that themarket.com will end the same way as their foray into Australia...a train wreck. I seriously wonder how many people on here realized that the platform had gone backwards in its second year before I posted the detail ?
Only one person on here (against a fairly strong tide of criticism), had the courage of their convictions to call it a SELL at $4.10

[Southern Lad]

What are everyone’s picks for tomorrow’s first trade and average price?

I’ll go with first trade at $3.58 and average price tomorrow of $3.63.

[Rawz]

Was talking to a mate that works at one of the WHS DC's today. He said shipping containers of Christmas decorations and summer stuff (BBQs etc) turned up after the 25th. Bugger.

From what he can tell The Market has been designated as the future of the group and everything they are doing now is so that all WHS group brands are sold via The Market. What an exciting future.

So a bit of bad luck and great eye for the future. All good. Why so glum?

Even if they do $90m in FY22 that will be a 5 year CAGR of 8.5% Not bad for a fairly defensive stock! Dividend yield going to be 6-7% Whats not to like?

When HLG announced its downgrade the price dropped from $7.10 ish to $6.50 ish but quickly recovered back to $7. Probably see similar for WHS. Drop to $3.60 i reckon then be back towards 4 bucks in a month or two.

Disc. Not holding or buying WHS. Not buying retail in general. Hold a few MHJ diamonds thou.

[Habits]

A couple of months back the positive talk and shareholder outlook was WHS inclusion in NZX50 and take up by passive funds following foodstuffs selldown...

Last sept, the company was going gangbusters and the prospect of $7 SP was very real. Yes the better announcements did not immediately come through, still am slightly confused by the complete change in sentiment

[Rawz]

A couple of months back the positive talk and shareholder outlook was WHS inclusion in NZX50 and take up by passive funds following foodstuffs selldown...

Last sept, the company was going gangbusters and the prospect of $7 SP was very real. Yes the better announcements did not immediately come through, still am slightly confused by the complete change in sentiment

Beware the sharetrader vs the share investor

[Habits]

Beware the sharetrader vs the share investor

Makes sense... upramping and downramping by traders. Results in 2 months will be worth the wait

[LaserEyeKiwi]

On 12 November 2021, the Group reported that sales for the first quarter of FY22 were 14.6% below sales for the same period in FY21, with only 2 weeks of the quarter not impacted by the COVID-19 lockdown levels. Early in the second quarter of FY22 Auckland moved to Level 3 Step 2, which allowed the Group’s Auckland stores to reopen from 10 November and removed a significant trading constraint.
For the first two months of the second quarter, Group sales were up 2.3% on FY21 and 8.6% on FY20 sales for the same period. This brought total Group sales for the five months ending 2 January to $1,465.9 million, a decrease of 5.7% or $88.8m compared to the same period in FY21, which is an improvement on the position reported in the Q1 sales update, when sales were down 14.6% or $107.7m.

Overall sales were lower......

We already knew the results from the first 3 months (it was in their 1st quarter market update on November 12th 2021). The last 2 months have seen record sales for TWG - not quite sure why you are trying to dispute something that is a black and white fact in the very text you quoted:


For the first two months of the second quarter (November & December), Group sales were up 2.3% on FY21 and 8.6% on FY20 sales for the same period

So, obviously WHS indeed had nothing to worry about for Christmas sales wise.

[LaserEyeKiwi]

What a loss making company is worth is the subject of a major downward rerating on the NASDAQ at present as I am sure you know Waltzing. I would respectfully suggest loss making online companies who have revenue in decline and losses expanding in the current explosive growth environment for online sales have very little value, if any. Right there, I think that's the key difference between how you see the company and I see it.

I think you are conflating two different suspects of Warehouse online operations: Its total online sales vs its themarket.com sales of 3rd party retailers (which excludes sales from other warehouse owned brands),

The Warehouse Group online sales in the five months covered by Fridays trading update were ~$264 million (18% of $1465.9 million sales).

All of that $264 million in online sales went through the same online sales infrastructure that powers themarket.com, but only a fraction of it registers as themarket.com revenue.

Themarket.com is now a key integrated customer platform for the WHS, and it is highly unlikely they would want to sell it or spin it off.

[ratkin]

A couple of months back the positive talk and shareholder outlook was WHS inclusion in NZX50 and take up by passive funds following foodstuffs selldown...

Last sept, the company was going gangbusters and the prospect of $7 SP was very real. Yes the better announcements did not immediately come through, still am slightly confused by the complete change in sentiment

The loud ones on this forum will scream Seven dollars when it is going up, and as soon as they sell they start screaming Two dollars. They create a lot of noise, best to just ignore them most of the time,, although they can be useful to use for reading short term sentiment.

[alokdhir]

WHS is one of the picks of Sharetrader Forum for 2022 ....It will be very interesting to see where it ends . My money is on downside .But I must admit I was never a fan of this company ...Even $ 4 plus was a bonus IMHO

Retail is always a very tricky business ...Briscoes is doing it well ...HLG is doing it steady ...WHS has too many ups and down ...so makes them risky ...maybe because of what they sell and to whom they sell ... From recent report it suggests that AKL is very important to their business .

Also it was mentioned before that this time out of lockdown it wont be full on retail therapy for people ...as now they need worry more about future savings ...its not a done deal that pandemic is ending soon ....

[Balance]

Key to where sp settles today will be what the institutions who took the $100m+ placement at $3.20 from Foodstuffs last year do.

If they decide that the turnaround story is intact, they could see this as a top up opportunity.

If they decide otherwise, then $3.50 is the first stop on the way down.

[mcdongle]

We already knew the results from the first 3 months (it was in their 1st quarter market update on November 12th 2021). The last 2 months have seen record sales for TWG - not quite sure why you are trying to dispute something that is a black and white fact in the very text you quoted:



So, obviously WHS indeed had nothing to worry about for Christmas sales wise.

We will have to agree to disagree then...:)

[Balance]

What are everyone’s picks for tomorrow’s first trade and average price?

I’ll go with first trade at $3.58 and average price tomorrow of $3.63.

Not too far off - first trade $3.64.

Wait for the institutions to show their hands - $3.50 looks like it is on the card.

[Muse]

Not too far off - first trade $3.64.

Wait for the institutions to show their hands - $3.50 looks like it is on the card.

You were only 4 minutes off balance - not bad. sinking like a lead balloon

[maclir]

Not too far off - first trade $3.64.

Wait for the institutions to show their hands - $3.50 looks like it is on the card.

Already there.

DISC: Not holding

[Sideshow Bob]

Somebody going all out.....there is a bid in for 1 share at $0.60.....:cool:

[Balance]

You were only 4 minutes off balance - not bad. sinking like a lead balloon

Learnt the hard way over the years to never touch a stock on a downgrade cycle.

WHS has some serious work ahead of it to restore credibility to its turnaround strategy.

[Rawz]

Learnt the hard way over the years to never touch a stock on a downgrade cycle.

WHS has some serious work ahead of it to restore credibility to its turnaround strategy.

I love this advice and could be the best thing I learnt on share trader. ATM *cough cough*

Is WHS in a downgrade cycle thou?

Or

Just reverting to the mean after FY21 outlier year?

[LaserEyeKiwi]

Put my money where my mouth is and increased my holdings by 50%, at $3.51.

Totally prepared for the “told you so” if I’m wrong on this, but for the moment I see this as an excellent bargain price.

Hopefully this isn’t a case of “Everyday Low Price” rather than “New Years Sale!”

[Waltzing]

It will only be a case if the drain keeps going on P&L. IT Capx should be capitalised. Its the next QTR reports on the bottom line that will tell. If MR B is right then NPAT will continue to come under pressure.

It appears there is not the a HUGE dump today with only 200 G dumped .

If it pops back to 3.70 then your in the money and we think it now more a trade and then investment.

But then think all retail is a trade.

[Balance]

I love this advice and could be the best thing I learnt on share trader. ATM *cough cough*

Is WHS in a downgrade cycle thou?

Or

Just reverting to the mean after FY21 outlier year?

Good point.

Up to each to decide and that’s why we have a market.

[Waltzing]

Be very interesting to see what the DIV will be.. it will be down but by how much is the question.

DISC: we try not too.

[winner69]

Be very interesting to see what the DIV will be.. it will be down but by how much is the question.

DISC: we try not too.

my guess ..... 11 cents interim and 9 cents final .... about 8% yield (gross) at $3.50

Seems a good guess doesn't it waltz .... or am I being too bullish

That's why LEK bought 50% more this morning

[Waltzing]

Back room said it would bounce after sell off..

if it makes those numbers at 3.50 then its a big buy at 3.30...

remember MHJ?

hes a tear away that man...

Must admit would need to see the next QRT results.

But the market doesnt operate that way any more.. the SHAZ are buying already on their shaz'y account...

They just probably think its goverment supported and just BUY BUY BUY...

old fashioned metrics dont mean a thing to them...

let hope BRISC is a go go.

up 3.55 already so much for 3.20...or below... never happened.

[Rawz]

Back room said it would bounce after sell off..

if it makes those numbers at 3.50 then its a big buy at 3.30...

remember MHJ?

hes a tear away that man...

Must admit would need to see the next QRT results.

But the market doesnt operate that way any more.. the SHAZ are buying already on their shaz'y account...

They just probably think its goverment supported and just BUY BUY BUY...

old fashioned metrics dont mean a thing to them...

let hope BRISC is a go go.

up 3.55 already so much for 3.20...or below... never happened.

Be back to 4 bucks soon Waltz no worries. LEK is going to make a killing

Remember when MHJ was 80 cents back in the good ole days

[Waltzing]

4 dollars!!!

it better not be...

Dont even mention MHJ... yes we have it mostly at .90 and some at 114 but really should have dumped all of WHS and put it all in MHJ.

The shaz poeple (sharies) dont even know Financial reports exists... they just go DIP BUY!

And MR B is right to state where it could well be but the SHAZ arnt reading here.

4 dollars better not be else i will never hear the end of it from the backroom IT.

[Panda-NZ-]

Nice recovery this afternoon.

disc: tiny holding.

[newbieinvestor]

Put my money where my mouth is and increased my holdings by 50%, at $3.51.

Totally prepared for the “told you so” if I’m wrong on this, but for the moment I see this as an excellent bargain price.

Hopefully this isn’t a case of “Everyday Low Price” rather than “New Years Sale!”


Suspect LEK is going to make a killing...:)

Unfortunately don't know enough to take a informed punt either way...

[winner69]

good to see that they expect January sales to be more than 3% up on last year ......all back on track

[Habits]

"SHAZ arnt reading here"

Waltzing that is not true, this WHS thread had 3000 views since last night and 16000 over the last week. One of the most popular, all are wanting to get the good oil

[Waltzing]

Ok Habits, stand corrected... well it did not seem to trigger a sell off to 3 dollars... because if MR B is right the NPAT is going to take hit as the market losses mount up. In fact was hoping they would and turn the stock into a trade able pattern but with the likes of LEK around you have to very very quick!!!!

Should retest the sell off lows and then rebuild....

Ive got shouting over ZOOM... Tech people... they dont panic... ive decided its because they dont live in the real world.

March 22 will reveal all if the financials are detailed enough... its going to be a big read...

[Southern Lad]

What are everyone’s picks for tomorrow’s first trade and average price?

I’ll go with first trade at $3.58 and average price tomorrow of $3.63.

First trade $3.64, VWAP $3.582, last trade $3.55, volume 636,381.

Overall conclusion is sell off was slightly greater than my prediction. Guess tomorrow will tell another story.

[winner69]

Be back to 4 bucks soon Waltz no worries. LEK is going to make a killing

Remember when MHJ was 80 cents back in the good ole days

Remember when WHS was sub 2 bucks last yesr

[Waltzing]

There you go winner... crunch the numbers...

https://www.stuff.co.nz/business/127463161/shopper-numbers-drop-as-customers-reticent-about-venturing-out-first-retail-group-says

They wont be back!

Sorry ... they will be back ! soon... else the share prices of retail wont be back to there 21 highs...in fact it unlikely in the case of WHS..There is something lurking in the P&L that need a look at ... That was one big hole...

[winner69]

There you go winner... crunch the numbers...

https://www.stuff.co.nz/business/127463161/shopper-numbers-drop-as-customers-reticent-about-venturing-out-first-retail-group-says

They wont be back!

Sorry ... they will be back ! soon... else the share prices of retail wont be back to there 21 highs...in fact it unlikely in the case of WHS..There is something lurking in the P&L that need a look at ... That was one big hole...

But they’re spending more than last year

Spending through core retailers in Worldline NZ’s payments network reached $696 million over the seven days to January 4, following the traditional New Year sales.This is up 7 per cent on the same seven days a year ago and up 13 per cent on the pre-Covid levels.

TWG doing OK this month

[Waltzing]

Well hoping for an HLG shocker and it will be impossible to buy , shares of HLG at below 6.90 hens teeth...

hoping for a sub 3.50 here...and then when the FIN HYTD comes out BEAGLE can bounce again scaring the SHAZ for half a day before they do an AIR..

[Leemsip]

Hey Waltzing. On your earlier comment on ICT development should be Capex. PWC and other big 4 starting to recommend opex treatmemt for ALL ICT spend if you are hosted on cloud. Cos you don't own it.
Anyway my company is switching to opex. Will have an impact on the p&l for a few years as existing assets depreciate and we opex ongoing development.

[Leemsip]

That kind of crap is why I ignore accounting profit and just look at cash flow (and adjust it for inventory etc)

[Beagle]

https://www.nzherald.co.nz/business/market-close-nz-stocks-tumble-after-a-patchy-start-to-new-year-trade/ITZUMU67AOZZ4KMGH364J7S5EE/ Paywalled
Excerpt :- Matt Goodson, managing director of Salt Funds Management, said The Warehouse has just been through "the best of times for them" but this appears to be over. A stand-out feature has been the shift to online sales particularly click and collect - which now make up 18 per cent of total sales - and profit margins are lower and freight costs higher. "It sounds like The Warehouse is struggling to manage inventory levels given the shipping delays," said Goodson.

[LaserEyeKiwi]

There you go winner... crunch the numbers...

https://www.stuff.co.nz/business/127463161/shopper-numbers-drop-as-customers-reticent-about-venturing-out-first-retail-group-says

They wont be back!

Sorry ... they will be back ! soon... else the share prices of retail wont be back to there 21 highs...in fact it unlikely in the case of WHS..There is something lurking in the P&L that need a look at ... That was one big hole...

It’s all relative: despite the National lockdown and extended Auckland lockdown, first half net profit at “above $40m” is on par with first half 2020 adjusted earnings ($46m), and well above first half 2020 actual net profit ($29m) of which had basically no COVID impact.

Without the COVID lockdowns and COVID impacts on COGS, net profits would have surely been a lot higher.

The question an Investor needs to ponder is how likely will similar COVID impacts occur in the future, and whether one has the stomach to hold through those periods for conditions (& profits) to return to normal.

[Waltzing]

Well they did publish the BPS but really public accounts are as MR B as said can be difficult to near impossible to unravel.

Just whats really going on at the sub ledger level in which system who knows..

The numbers do indicate some digging is required but you cant really ever get to the bottom of these things unless they publish very very detailed information well set out in a fashion where you dont need a PHD in accounting to make sense of it..

And sometimes they just dont want you to know!!!

If it turns our MR B is correct hes never going to not remind this thread ....:eek2:

[Beagle]

It’s all relative: despite the National lockdown and extended Auckland lockdown, first half net profit at “above $40m” is on par with first half 2020 adjusted earnings ($46m), and well above first half 2020 actual net profit ($29m) of which had basically no COVID impact.

Without the COVID lockdowns and COVID impacts on COGS, net profits would have surely been a lot higher.

The question an Investor needs to ponder is how likely will similar COVID impacts occur in the future, and whether one has the stomach to hold through those periods for conditions (& profits) to return to normal.

Covid has given Noel Leeming in particular a huge one off boost as people have spent up large on nesting but every rose has it thorns and as we saw on Friday they can hurt a lot. I believe on a look through Covid basis WHS profitability will return to very similar level's as before Covid. Others including yourself clearly see it differently and that's fine.


On the other hand HLG was growing strongly for several years before Covid and I believe that will continue in due course. Its all about sifting the wheat from the chaff. MHJ another one currently benefiting hugely from people's desperation to spend on shiny things to boost their fragile mental health...but I don't believe it will last.

[Rawz]

Remember when WHS was sub 2 bucks last yesr

Last year? Low was $2.84. Look, we all know which nzx retailer posted the best gains last year... :)

Sub 2 bucks was 2020.
But MHJ was sub 30 cents. Wow crazy times huh

WHS did a little over double
MHJ did 5x

[Waltzing]

Rawz your rubbing it in .:eek2:.. time to move to european retail soon anyway..

[Onion]

Hey Waltzing. On your earlier comment on ICT development should be Capex. PWC and other big 4 starting to recommend opex treatmemt for ALL ICT spend if you are hosted on cloud. Cos you don't own it.
Anyway my company is switching to opex. Will have an impact on the p&l for a few years as existing assets depreciate and we opex ongoing development.

Cloud hosting will be opex. Compared with traditional investment in hardware (capex)

Software development costs are often capitalised however as you create an asset. You own the software you have developed.

[Greekwatchdog]

For Bar update.

OUTPERFORM
The Warehouse Group's (WHS) trading update for the five months ended 2 January 2022, highlights positive sales
momentum through the Christmas period but increasing costs of doing business. The company provided Adjusted Net
Profit After Tax (NPAT) guidance for 1H22, which is expected to exceed NZ$40m, hampered by ~NZ$35m of non
COVID-19 cost increases over the prior period. Total group sales for the first five months of trading (NZ$1.47bn) are now
~-6% down on FY21, an improvement on the ~-15% reported after a COVID-19 impacted first quarter. WHS expects
second quarter trading to remain at or above last year's levels and believes it is well positioned for the remainder of the
summer and Back to School period. WHS is scheduled to report its half year results on 22 March 2022. We make material
changes to our earnings estimates to incorporate higher costs and reduce our target price to NZ$3.85 (from NZ$4.35).
Trading at ~12x one-year forward PE we retain an OUTPERFORM rating but recognise near-term risks with inflationary
pressures and the potential impact of the COVID-19 Omicron variant in New Zealand.
What's changed?
Cost of doing business rising
Based on the results from the first five months of 1H22, WHS expects 1H22 Adjusted Net Profit After Tax (NPAT) to exceed NZ$40m,
(compared to 1H21 Adjusted NPAT of NZ$111m and NZ$46m in 1H20). The company highlighted three main contributors to the
decrease in expected 1H22 NPAT compared to the prior period:
1. Sales are expected to be ~-NZ$80m (~-4%) less than 1H21 due to COVID-19 restrictions in 1Q21.
2. Cost of doing business is NZ$35m higher attributed to higher store labour costs, increased investment in TheMarket, higher digital
spend, in addition to an estimated NZ$10m–NZ$12m of COVID-19 related costs.
3. Gross profit margin in 1H21 benefitted from an NZ$10m decrease in inventory provisioning from FY20 and reduced discounting.
Online sales increasing but weighing on gross profit margin
WHS has continued to experience higher online sales levels, growing +105% on FY21 and representing 18% of total sales. The
increase in online purchases contributed to a reduction in gross profit margins (down -55bps on the prior year) with higher costs
associated with freight and online sales lower-margin product mix. That said, gross profit margin was +132bps ahead of the same
period of FY20. Click and collect represented 50% of online sales, an increase of +89% on the prior year.

[Waltzing]

Can imagine the Retail Investment community after the FOOBAR outperform will have something to say about that... can hear loud barking in yonder hills...:scared:

[Snow Leopard]

....
can hear loud barking in yonder hills...:scared:

The yonderer the better.

[Beagle]

The yonderer the better.

I'm glad the snow leopard lives in the Himalayan mountains :p


Total group sales for the first five months of trading (NZ$1.47bn) are now ~-6% down on FY21,

Inflation to 30/9/2021 was 4.9% and some economists forecast it to be running at close to 6% for calendar year 2021 so in real inflation adjusted terms sales year to date are down ~ 12%. Why is it important to adjust sales for inflation ? Clearly the cost of doing business is rising rapidly.

The ~ $90m they might make in FY22 is really only ~ $85m in inflation adjusted terms which will be only half what they made last year.

[Waltzing]

INFLATION ..... pardon... NOOOoooo cant be right..

the Shaz wont take any notice ... back to 4 dollars.. ...but first can we go to 3.45...

if OMI gets out in a big way the mind set of the country might get a little bit jittery because its not war hardened yet.

3.55 should hold..only professionals will do the numbers the SHAZ wont..

AIR is still above the clouds... numbers dont seem to matter much anymore..

[winner69]

Obviously the $100m odd TWG have spent over the last five years on restructuring, Agile and Rise hasn’t helped them out when they face a few challenges …..not agile / resilient enough and they fall back to the old norm.

[Waltzing]

Winner you can see the SHAZ buying..

we dont know how far through they are or more likely over budget.

[Beagle]

I've closely followed TWG since its early days - mainly as part of my day job but to some extent from an 'investment' point of view. Over time I've also had several interactions with TWG management. I must admit interest in TWG since I retired has been a bit of morbid fascination than anything else

I've seen the Red Sheds grow until it reach market saturation in NZ in the early 2000's, seen a short foray into Australia and seen it being keen on doing consumer finance stuff. Over the years they've gone into Stationery, acquired Noel Leeming and Torpedo7 and now have grand dreams with TheMarket.com.

Since 2006 group sales have grown at 4.4% pa (and that includes the new businesses). This essentially is saying that they have not grown market share in that time.

over the same time (not counting F21) profits have ranged from $57m to $97m. A bit up and down but reasonably consistent. Of course they made $171m in F21 but probably be below $100m this year - in other words this years profits could will be less than what they made in 2006 and 2007.

I've come to the conclusion that:


F2021 was a windfall year never to be repeated. In other words not an indication of future performance.
Confirmed in my own mind TWG culture does not drive any real change. Maybe they are just too big and have no real desire to change.
The $100m plus spend on restructuring, Agile etc over the last five years has kept them in the game - ie survival rather than setting the platform for growth.
After a windfall year I see things settling down and reverting to the past norm - sales growing in line with the economy and hopefully making $80m to $100m a year.



Just for interests sake the chart below is WHS profits over the year. I've put $90m in for this year and the box is where I reckon E23 and F24 profit will fall.

That's how I see it anyway .... might be a shareholder again if the share price looks attractive

I think you summed it up really well there and with your bar chart. The only value that I can add is that we're in a new inflationary environment and just repeating the same result they did in 2007 of ~ $100m is not going to cut the mustard in 2023 because to even match 2007 numbers in 2022 real inflation adjusted terms means earning ~ $132m. (Source Reserve Bank inflation calculator) - available here https://www.rbnz.govt.nz/monetary-policy/inflation-calculator/

My main point is that if earnings revert back to the "norm" (and I agree with your prognosis and think its highly likely they will), those earnings are really a lot less than they used to be.

I also agree that all the fancy talk and spend on agile this, metaverse that and A.I. the other is nothing but stay in business expenditure and they'd get steamrolled if they didn't try and keep up. (One supposes that you have to give the appearance of being ahead of the curve and intelligent when being paid $2m+)

If I were a shareholder my biggest fear would not be omicron, it would be Nick keeping on doubling down again and again on themarket and burning ever increasing tens of millions per annum and the platform going nowhere.

Given the way profits are likely to be a lot lower in real terms than they used to be the question becomes is there any point being a shareholder again ? Maybe at a no growth PE of 10 = $2.60 as a yield thing ? Other than getting down pretty close to there...I am quite content to sit on my hands...

[Waltzing]

Never assuming anything about their back end or where its up to.

You cant see inside a black box... even if its a black hole...

and then its a profitable trade...one way or another...

the SHAZ arnt listening they are buying..

[winner69]

WHS H1 profits going to be about 60% less than pcp

Same time frame (6 months to Jan) Briscoes are going to be 18% to 43% down on pcp (guidance)

Hmmm

[LoungeLizzard]

WHS H1 profits going to be about 60% less than pcp

Same time frame (6 months to Jan) Briscoes are going to be 18% to 43% down on pcp (guidance)

Hmmm

Some seem determined not to read the writing on the wall. Inflation/interest rate rises/increased supply costs/move to online buying (less margin) are bringing the retail cycle to an end and the wise will take their profit, invest elsewhere or sit it out. Demand from the gullible won't replace insto's once they start moving out.

[Waltzing]

yes winner ...exactly ...but who cares... OMI hasnt come Homie yet...who knows the sticking plaster might hold out a bit longer...

and you just dont know how much they are going to shop over the next 2 months... it might well be limited groups partying on that new deck... triple vaccinated friends over only..

new deck chairs and sun sails...

..especially when its sunny and time to get out there and get as much UV and Vit D as they can...

[Ferg]

Was the downgrade already priced into the SP given the recent low PE ratio based on the last annual result? In other words, maybe the market saw the last annual result as unsustainable, hence the fall in SP is considerably less than the fall in future profit.

[Waltzing]

Yeah market thinks the div wont be cut too far and NPAT will not have farther big hits, or rather hopes.

[amalgam]

Yeah market thinks the div wont be cut too far and NPAT will not have farther big hits, or rather hopes.
Have been keeping up to date over the last few days with doom & gloom comments from people who are obviously not or no longer shareholders. Perhaps this drop in sales over the lockdown was already priced in?
If the new norm is about $100 m so what……it has a positive turnover which has been reliable in the past during recessions & times of high inflation.
There has been an improvement in the presentation & quality of product.
There are many far worse shares on the NZX.

[Waltzing]

Look if anyone keep mentioning a number a Dog will dump on the thread and the price will go down again and LEK will buy the off load...

ssshh..no numbers... if it bounces back LEK make sure no one hears the end of it... for months!! or will haunt the thread..declaring this is how you trade a chart that goes vertically Down.

if LEK buys more it will create momentum and then that's what makes a stock interesting. You have to say retail investors on platforms such as SHAZ have created more liquidity and it good for trading and investing.

[LaserEyeKiwi]

Look if anyone keep mentioning a number a Dog will dump on the thread and the price will go down again and LEK will buy the off load...

ssshh..no numbers... if it bounces back LEK make sure no one hears the end of it... for months!! or will haunt the thread..declaring this is how you trade a chart that goes vertically Down.

if LEK buys more it will create momentum and then that's what makes a stock interesting. You have to say retail investors on platforms such as SHAZ have created more liquidity and it good for trading and investing.

wont be buying anymore WHS now except for reinvesting dividends - reached my exposure limit for any one kiwi stock.

All my NZ funds are in div paying stocks now - as bank interest rates make it a terrible solution for parking NZ cash - while NZ residential property (my previous preferred option for NZ investing) is even worse now with its cashflow negative returns, so dividend stocks were the best option when parking cash in NZ now (for me at least). All my serious very long term growth funds remain in US names.

[Waltzing]

"US"

as buffet says

dont bet against the US.....