WHS - Warehouse Group

[jimdog31]

They have cherry picked some highlights here.

"Torpedo7 recorded sales of $37.4 million. This represented growth of 9.4%
compared to FY22 Q1 and sales growth of 57.1% compared to FY20 Q1
(pre-COVID), with three new stores opening in the last 12 months in Petone,
Invercargill and Whangarei taking total stores to 24"

The fy20 q1 figures didn't have several stores Napier, Tauranga, Westfield, Northlink, Rotorua in them , so comparing 24 stores turnover to the base of 16 you would expect it to be higher, but how it reads makes it seem amazing.

TheMarket.com continues to grow with 47 million online sessions in the last
12 months - up 8% from the preceding 12 months. TheMarket.com range has
continued to expand with 5 million active products and over 6,700 brands on
offer from over 1,100 merchants. The launch of Marketplace onto
www.thewarehouse.co.nz (http://www.thewarehouse.co.nz/) is an exciting new channel for TheMarket.com that
will drive ongoing Gross Merchandise Value growth this year.

Are they still measuring the Market on visits & products? Surely they need to start advising $$, Margin & Bottom line. 8% growth in the last 12 months when the underlying loss is massive is only going to mean an even bigger hit to bottom line this coming year.







Circling back here. https://announcements.nzx.com/detail/404808

A bit sneaky dropping this on the 29th December, when they've done the update on the 7th of Jan last few years.

Must be real bad.

[bull....]

Circling back here. https://announcements.nzx.com/detail/404808

A bit sneaky dropping this on the 29th December, when they've done the update on the 7th of Jan last few years.

Must be real bad.

its bad now
wait till 2nd half next yr :scared:
my prediction is a retest of $2 some day

[jimdog31]

its bad now
wait till 2nd half next yr :scared:
my prediction is a retest of $2 some day

Yep. I predict T7 & Market full year losses will be $30-$35m. And it doesnt look like Noels & WHS are going to make up that difference.

[Muse]

Not good.

If only this wasn’t painfully obvious ages ago.

The WHS thread together with the retail thread over the last year make for rather interesting reading.

[winner69]

Really bad

H1 Gross Profit $s about the same as pcp but CODB up $25m means PBT down $25m

H122 PBT was $68m so H123 about $43m

Disaster stuff

[jimdog31]

Really bad

H1 Gross Profit $s about the same as pcp but CODB up $25m means PBT down $25m

H122 PBT was $68m so H123 about $43m

Disaster stuff

Off course most people are on holiday so you wont see an immediate reaction to the share price but it deserves to go under $2. What are the forward prospects?? Like I've said over and over they need to abandon themarket.com that's a huge drain on the overall profitability of the group and there is zero upside to come from that after years of over investment in the platform. Its 2023, any retailer worth their salt have their own selling platforms, why do they need to be with an aggregator that's going to cannabilize sales at a huge commission.

[alokdhir]

Really bad

H1 Gross Profit $s about the same as pcp but CODB up $25m means PBT down $25m

H122 PBT was $68m so H123 about $43m

Disaster stuff

Mr Orr will be happy that his medicine working ...leading indicators are looking ominous ...which shud be actually good for sharemarkets in next few months ...let market catch up with this theme ...it takes time to wake NZ market participants as they keep looking for clues from overseas without realising that our rates started going higher much earlier then others so we shud be reaching inflection point sooner ....June onwards it will be clear to all ...imo

[Muse]

Guess its not a counter cyclical staple.

Didnt get to 5 bucks last xmas and certainly didnt hit 7 this year either.

[winner69]

So H123 sales going to be about $110m more than H122

But after all that effort they make $20m less after tax ...$26m before tax.

Increased sales impact $38m additional margin all gone from reduced margin %. That much improved margin they gloated about over last couple of years all gone.

And then costs up say $25m

Npat will be about $30m ...not much eh

Reduced margins and increasing costs not a good combo

[FTG]

Lower NZD chickens starting to come home to roost? Feeding through to higher COGS (hence deteriorating GM).

SMT will be keeping their fingers crossed that the rebound in the kiwi (from Oct) continues.

[Balance]

So H123 sales going to be about $110m than H122

But after all that effort they make $20m less after tax ...$26m before tax.

Increased sales impact $38m additional margin all gone from reduced margin %. That much improved margin they gloated about over last couple of years all gone.

And then costs up say $25m

Npat will be about $30m ...not much eh

Reduced margins and increasing costs not a good combo

Rather grim when HY22 results already showed reduced margins and increased CODB.

So this HY23 follows on an already poor result in HY22.

Market is going to react badly to this update.

[Muse]

Lower NZD impacts, (primarily showing in COGS), starting to come home to roost?

A wee bit sure but the full fx impact on cogs/gp% still to come in my view

At the end of september they noted they were 69% hedged (circa 8 months forward cover) at 67c, so that crucially covered the Q2. The uncovered position would have hurt no doubt.

But if they stayed true to their fx hedge policy they would have been taking forward positions in the mid and high 50c range, locking those rates into cogs in about 8 month time. I’d imagine many tranches of cover at varying rates (both good and bad) rather than one bulky purchase (like what pumpkin patch did during the gfc).

Spot fx is 64c so in any event the fx outlook for the WHS (and other retailers) likely to get worse on a realised effective basis for about the next 8 months on the back of these cover mechanics.

The erosion in gp more likely due to mix of product (more nil margin groceries) and eroding gp margins as part of the down cycle. Previous 2 years had very high sell thru with minimal need to discount, that has reversed. As volumes fall tiered based rebates fall and increase cogs.

Will be interesting to watch inventory and stock turn. A true warning sign in retail is when retailers at the end of a cycle keep buying high levels to obtain rebates which causes further issues down the line. An interim provision for stock obsolescence usually provided at half year.

[Ferg]

Nice one FTG and FM. Those USD rates in the second half of this year were a right pain for importers. Do we know the min/max for the WHS FX policy? In my experience when rates go South as they have, companies tend to meet the minimum requirement and take their chances on floating rather than lock in losses.

It also depends on the stock turn of the relevant items. Longer stock turns allows more time to jack up prices and recoup higher input costs. One needs to be on the ball much faster regarding costs and pricing for items with a much shorter stock turn. I can't imagine they will sit on their hands for long to wear margin erosion due to NZD/USD fluctuations.

As you say FM, the mix of sales will likely by a significant contributor where they have been selling relatively more of the lower margin products, as evidenced by the various grocery anecdotes. Not an easy task juggling prices and margins in this environment. High stock levels (if any) may also be a function of longer lead times and shipping disruptions over the past 24 months - some businesses had to increase safety stocks greatly to stay in business, albeit with some cashflow and storage pain.

[winner69]

They could headline the half year result announcement - Record first half sales for Warehouse Group

[Muse]

Nice one FTG and FM. Those USD rates in the second half of this year were a right pain for importers. Do we know the min/max for the WHS FX policy? In my experience when rates go South as they have, companies tend to meet the minimum requirement and take their chances on floating rather than lock in losses. It also depends on the stock turn of the relevant items. Longer stock turns allows more time to jack up prices and recoup higher input costs. One needs to be on the ball much faster regarding costs and pricing for items with a much shorter stock turn. I can't imagine they will sit on their hands for long to wear margin erosion due to NZD/USD fluctuations. As you say FM, the mix of sales will likely by a significant contributor where they have been selling relatively more of the lower margin products, as evidenced by the various grocery anecdotes. Not an easy task juggling prices and margins in this environment.

I’m not au fait with WHS’ hedging parameters other than what is in my post. Probably some notes in the AR or investor relations page.

But I totally agree with you in that when there are sudden swings in fx best laid plans are set aside or managed at bare limits. Above plan / mega purchases at spikes and de minimus purchases at lows. Probably depends a bit on the personalities involved and governance structures and how keen the board are at staying in line with board mandated hedging policies and I could only speculate how that dynamic plays out here

But being hedged at 67c during Q2 pretty respectable. Thats a level retailers can work with. But if they took out cover which I reckon they did that’ll be a headwind for the remainder of the year, as will the spot rate, relative to the last few quarters.

Good point re stock turn and fx relation. Redsheds has a v high stockturn and is their highest margin brand. Probably requires the most cover. T7 the lowest stockturn by memory.

Anyway thats it from me - a road trip beckons.

[winner69]

Guess its not a counter cyclical staple.

Didnt get to 5 bucks last xmas and certainly didnt hit 7 this year either.

The idea that WHS (mainly Red Sheds) are counter cyclical is a fallacy. What punters think should happen and what does happen in reality are poles apart.

Red Sheds sales tend to underperform total NZ retail sales in ‘tougher’ times …..during GFC was best example

[Panda-NZ-]

People won't give up their KFC though.. the poor chickens don't get a break.

RBD could be another value play ?

[FTG]

This latest trading update is a timely reminder for us that most, if not all, the WHS Group members operate in the 'high volume, low margin' sandpit. Put simply, The Red Sheds, Stationery, The Market, and for most product categories at NL & T7, operate as 'price takers', rather than 'price makers'.

I also ponder on whether the Red Sheds deciding to re-enter the FMCG sector (but only really tinkering at the edges at this stage?) is WHS just chasing another 'Nirvana mirage'? Once again the SMT thinking the easiest & fastest route to grow top-line is by 'being all things to all customers".

The financial health of a 'High Volume, Low Margin' enterprise tends to be very good when volumes are strong & growing (of course, a key caveat being that good operational & financial management disciplines are in place). However, once these 'price taker' enterprises find themselves in the position of sales starting to flat line, or worse falling, then look out!

Certainly not predicting WHS's demise, as they have been through a few economic cycles now, so one would expect them to be battle ready.

But success is not assured either. Retail is a cut throat industry and can't be run on auto-pilot.
J.C Penney, Nordstrom, Sears, Stein Mart.....

[nztx]

I’m not au fait with WHS’ hedging parameters other than what is in my post. Probably some notes in the AR or investor relations page.

But I totally agree with you in that when there are sudden swings in fx best laid plans are set aside or managed at bare limits. Above plan / mega purchases at spikes and de minimus purchases at lows. Probably depends a bit on the personalities involved and governance structures and how keen the board are at staying in line with board mandated hedging policies and I could only speculate how that dynamic plays out here

But being hedged at 67c during Q2 pretty respectable. Thats a level retailers can work with. But if they took out cover which I reckon they did that’ll be a headwind for the remainder of the year, as will the spot rate, relative to the last few quarters.

Good point re stock turn and fx relation. Redsheds has a v high stockturn and is their highest margin brand. Probably requires the most cover. T7 the lowest stockturn by memory.

Anyway thats it from me - a road trip beckons.


Wouldn't FX exposure valuation movements be provided for in each period though .. rather than being delayed
until later when the forward cover is used/applied for purchases ?

Volatility in rates could result in larger inter-period gain & losses in FX position valuations IMO

If I'm not wrong a deteriorating rate move in valuation of end of period cover should be being booked in each
reported period, including interims

In any case the market didn't seem to like the announcement, closing -20c (-7.14%) @ $2.60

[winner69]

1st quarter sales up 21.2% on pcp

YTD sales to December up 6.4% on pcp

If momentum continues through January wonder what 1st half sales growth will look like

They obviously think it’s going to be a +ve number because gross profit $s are going to be about same even gp% is down.

[nztx]

1st quarter sales up 21.2% on pcp

YTD sales to December up 6.4% on pcp

If momentum continues through January wonder what 1st half sales growth will look like

They obviously think it’s going to be a +ve number because gross profit $s are going to be about same even gp% is down.


Supply chain issues, sourcing issues, particularly with a Covid avalanche up in Asia will continue to feature

Domestic economic pressures similarly - wage increases and increasing costs also will likely feature going ahead

Medium term light at the end of the tunnel or digging a deeper trench ? ;)

[Muse]

Wouldn't FX exposure valuation movements be provided for in each period though .. rather than being delayed
until later when the forward cover is used/applied for purchases ?

Volatility in rates could result in larger inter-period gain & losses in FX position valuations IMO

If I'm not wrong a deteriorating rate move in valuation of end of period cover should be being booked in each
reported period, including interims

In any case the market didn't seem to like the announcement, closing -20c (-7.14%) @ $2.60

More or less depending on how they account for fx. And thats the point - with stock purchased at previously higher fx rates than spot, and cover at 67c again well above spot and the the prevailing rage through the quarter, the company benefited in this period from hedges. As you say, the poor result could even include unrealised gains on the fx contracts, masking the even worse underlying result

As previous tranches of fx are ustilised the weighted average hedge book could temporarily dip given purchases in the 50c and low 60c range (before eventually rising again). Now that the kiwi has climbed a bit to 64c and if it keeps climbing a bit you could actually see unrealised losses in subsequent periods due to the ineffectiveness of hedges. Still a good thing having the kiwi climb 100%. I almost always look at results excluding unrealised gains and losses on fx and derivatives for this reason.

[Muse]

The idea that WHS (mainly Red Sheds) are counter cyclical is a fallacy. What punters think should happen and what does happen in reality are poles apart.

Red Sheds sales tend to underperform total NZ retail sales in ‘tougher’ times …..during GFC was best example

Agreed.

And some of the brands particularly Noel Leeming, TP7, and some of the subcategories at redsheds arent staples as egregiously argued by one just a few months ago - its clear they are closer to hypersonic cruise cyclicals.

[winner69]

Something wrong at Noel Leeming methinks

Might have been bright star a few years ago but sales now not much ahead of pre-covid levels

Maybe the WHS ‘culture’ has finally caught up with Noel Leeming …where doing OK is great and the ability to do their own thing has been taken away from them ….sucked up by the the fantastic ecosystem Nick has created.

[jimdog31]

Something wrong at Noel Leeming methinks

Might have been bright star a few years ago but sales now not much ahead of pre-covid levels

Maybe the WHS ‘culture’ has finally caught up with Noel Leeming …where doing OK is great and the ability to do their own thing has been taken away from them ….sucked up by the the fantastic ecosystem Nick has created.

Nah its just a bump in the road, Noels will be fine. Noels isn't the concern IMHO

[percy]

Nah its just a bump in the road, Noels will be fine. Noels isn't the concern IMHO
I agree.
Yet I went to buy a replacement Panasonic portable radio for the wife.
As I get Leemings' email specials I looked at their price first $36.99.
I then googled Panasonic portable radios and found Harvey Norman had it for $24.00.

[winner69]

I agree.
Yet I went to buy a replacement Panasonic portable radio for the wife.
As I get Leemings' email specials I looked at their price first $36.99.
I then googled Panasonic portable radios and found Harvey Norman had it for $24.00.

Thats one reason why NL are showing share to Harvey Norman anf JB Hifi

[BlackPeter]

People won't give up their KFC though.. the poor chickens don't get a break.

RBD could be another value play ?

Don't forget that NZ has now a significant egg shortage. Wouldn't you need eggs to produce chicken?

[Panda-NZ-]

Sounds like some alterations are needed to the colonel's original recipe.

50% chicken, 50% other.

[winner69]

I posted this back in 2004 -

Amazing that WHS price is still the same as it was 5 years ago

Imagine some poor fella called Sid who went bush for 5 years in November 1999 happy that his WHS shares were $3.80 and came out today and found they were still about $3.80.

Sid asked his sharebroker what has happened to the WHS over the last 5 years - his sharebroker told him

**** Store numbers have increased from 87 to 351
**** Sales are nearly 2 1/2 times what they were - increased from $0.9 billion to $2.2 billion
**** Net assets have more than doubled - from $170M to $357M
**** Now have 15,877 empoyees - 10.262 more than 5 years ago
**** Spent $500M on capital expenditure

So Sid replies 'Thats impressive, they must be making heaps now'

Oh no his sharebroker told Sid - their profit has only increased from $54M to $61M in those five years ... and the earnings per share has gone from 19cents to 20 cents.

Poor Sid - he's incredulous. All that investment and all those extra staff and they are only making the same as they were 5 years ago.

Who does he blame? He can't blame investor sentiment because WHS is still trading at 20X earnings - it hasn't been rerated downward. Sid says to himself that is just as well as if they had been rerated down they might have only been worth $2-$3. At least he still has his capital and he has had a few piddly dividends put in his bank account but inflation has taken care of those.

Sid asks his sharebroker 'Have the WHS really stuffed up somewhere along the way?'

Sid's sharebroker tells him 'No not really. They are investing for the future and all should be right in few years and your WHS shares should be worth $10 each in 5 years'

Sid thinks thats good and decides going bush for another 5 years might be the caper

What will Sid's sharebroker tell Sid when he comes back to civilisation in 5 years time?

And followed it up a few months later -

Sid's brother died and Sid came out of the bush for the funeral. While at the funeral he asked his sharebroker how his WHS shares were going ... must be heading back to $10 by now he asked.

No the sharebroker told Sid .. they are actually worth about 20% less than when you came out of the bush last November

But don't fret said the sharebroker. They are changing the way they do business in NZ, going to go into groceries and think that Woolworths coming into NZ could be good for everybody. The shareprice will go back up to the old heights of old ... it just keep keep going down down down ....

And Sid has gone back to the bush happy as Larry his nest egg is going to grow ....

[BlackPeter]

I posted this back in 2004 -

Amazing that WHS price is still the same as it was 5 years ago

Imagine some poor fella called Sid who went bush for 5 years in November 1999 happy that his WHS shares were $3.80 and came out today and found they were still about $3.80.

Sid asked his sharebroker what has happened to the WHS over the last 5 years - his sharebroker told him

**** Store numbers have increased from 87 to 351
**** Sales are nearly 2 1/2 times what they were - increased from $0.9 billion to $2.2 billion
**** Net assets have more than doubled - from $170M to $357M
**** Now have 15,877 empoyees - 10.262 more than 5 years ago
**** Spent $500M on capital expenditure

So Sid replies 'Thats impressive, they must be making heaps now'

Oh no his sharebroker told Sid - their profit has only increased from $54M to $61M in those five years ... and the earnings per share has gone from 19cents to 20 cents.

Poor Sid - he's incredulous. All that investment and all those extra staff and they are only making the same as they were 5 years ago.

Who does he blame? He can't blame investor sentiment because WHS is still trading at 20X earnings - it hasn't been rerated downward. Sid says to himself that is just as well as if they had been rerated down they might have only been worth $2-$3. At least he still has his capital and he has had a few piddly dividends put in his bank account but inflation has taken care of those.

Sid asks his sharebroker 'Have the WHS really stuffed up somewhere along the way?'

Sid's sharebroker tells him 'No not really. They are investing for the future and all should be right in few years and your WHS shares should be worth $10 each in 5 years'

Sid thinks thats good and decides going bush for another 5 years might be the caper

What will Sid's sharebroker tell Sid when he comes back to civilisation in 5 years time?

And followed it up a few months later -

Sid's brother died and Sid came out of the bush for the funeral. While at the funeral he asked his sharebroker how his WHS shares were going ... must be heading back to $10 by now he asked.

No the sharebroker told Sid .. they are actually worth about 20% less than when you came out of the bush last November

But don't fret said the sharebroker. They are changing the way they do business in NZ, going to go into groceries and think that Woolworths coming into NZ could be good for everybody. The shareprice will go back up to the old heights of old ... it just keep keep going down down down ....

And Sid has gone back to the bush happy as Larry his nest egg is going to grow ....

Stories are important. Here are some other companies you could write much more moving stories about: FBU, RYM, ATM, SML, ANZ, KMD, TRA. They all went down (some more, some less) in a 5 year window.

And actually - based on my highly unscientific method to check the trend based on the first 12 companies which came into my mind (and yes, I had some great punch yesterday ...) it looks like 58% of the companies went down and only 42% up in the 5 year window.

Here are the winners of this tough contest: SPK, CNU, PEB, HLG, GNE

Who would have thought?

Anyway ... WHS hunting in the pack, but clearly above average. This is good :t_up:

[Perky]

Mr Winner…. a man of your knowledge and experience and the producer of cool charts …it doesn’t strike me as Whs shares would be one you would own….but might be one you would trade?

I felt sorry for Sid..broker sold him a pup. I’m sure he asked to grow his nest egg whilst he was in the bush…particularly as interest rates rose from 5 to 9 % for the first 5 years he was in the bush!

And Sid has gone back to the bush happy as Larry his nest egg is going to grow ....

Since the markets are closed today…we need to look at alternative asset markets to grow wealth today… If Sid is not in the bush he could go all in on Race 5 Te Rapa …I notice there is a horse called Nest Egg running in Race 4…must be a sign.

A quick peruse of the field I found some other horses that could represent the whs share performance since 2004.

Race 5: sea the light
Race 9: white noise
Race 10 civil unrest

I just hope Sid doesn’t get too excited and try and make up for his poor financial return and go all in
on
Race:3 Bitcoin

Remember Sid:
Gamble responsibly…only bet money you can afford to lose.

[Ferg]

Wouldn't FX exposure valuation movements be provided for in each period though .. rather than being delayed
until later when the forward cover is used/applied for purchases ?

In short the answer is "yes" plus what FM said.

Hedge accounting is complex, but in a nutshell with a falling NZD vs USD relative to the original transaction date, unpaid FX bills at the end of a reporting period (like year end or half year) will be revalued upwards for a loss. Any related FX cover will have the opposite effect to give a gain. How much of the loss is covered by the forward FX contract gain depends on the contract FX rate relative to the spot rate for the reporting period end, and the percentage of the bill that was covered.

Hedge accounting further complicates matters in that effective vs ineffective cover can end up in different parts of the P&L. I believe this is what FM is referring to when he talks about ignoring some hedge accounting adjustments in comprehensive income.


Volatility in rates could result in larger inter-period gain & losses in FX position valuations IMO

Absolutely it could. But where you have perfect cover (as in with cross rates and FX $ values) then the effect should be zero. Perfection is impossible, hence there are usually residual gains and/or losses. For instance partial hedging results in some exposure to FX rate fluctuations -> gains and losses. Full hedging often comes at a cost, especially if you want to have a strike rate closer to what you want like a budget FX rate. So either it way it hurts - there is no escaping the higher cost unless one *gambles* with excess cover in the good times. But even when FX rates were very high (and good for importers), often the forward rates can be lower than you want....so it's hard to lock in such contracts in the expectation you have picked the top of the cycle and you *might* use the cover.


If I'm not wrong a deteriorating rate move in valuation of end of period cover should be being booked in each
reported period, including interims
Correct.

Edit: BUT FX revaluations can be (mostly) solved if an importer pays the FX bill up front ASAP and is not exposed to an unpaid bill. There is then plenty of opportunity to look at unit pricing before the stock arrives on-shore. Trade finance facilities are often used by importers to pay for such purchases and can either be kept in foreign currency (which adds FX exposure) or converted immediately to NZD thereby locking in the spot rate of the day. It's a juggling act.

[winner69]

Perky …Nest Egg is in Race 4 and a good bet I reckon ..currently $10 so good value

The insiders (owners/trainers etc) apparently agree and are into it big time ….they tell me insiders buying is a good sign

Cheers

[winner69]

Perky ..you like a Craig’s guru analyst …tempting punters into havingba go

So today as place odds quite good some multis (all up for initiated)


Bitcoin 2.20 / Nest Egg 2.70 / Sea the Light 2.30 / White Noise 2.70 / Civil Unrest 6.40

$10 Multi on all 5 possible return $2,360

And on the first 4 (no civil unrest) $369

And one leaving Bitcoin out

Could be a good day

[winner69]

Perky …well Bitcoin sone motherless last …… performed just like BTC over the last year

[Perky]

Perky …well Bitcoin sone motherless last …… performed just like BTC over the last year

That Bitcoin didn’t jump at the gate and ran last all the way…probably buy it at paknsave petfood isle next year for 99 cents a can.

Nest egg..Sids original pick….tried hard in a close race.
I lost $1 on an each way on the egg..I did it for Sid.

So at this stage Sids investment in that donkey called Whs on the NZX still looks good.
At least he still owns it.

With the market shut I’m trying alternative investments..I have no idea what I’m doing soa bet in $1 amounts as an entertainment value I’m prepared to lose.

Put my $20 into TAB and after race 4 im worth $27.10 plus a bonus bet. Got a $16.10 trifecta on race 3. If I was smart I could quit for a 30% return

The guru punters who do the race picks are having a shocker..there’s always a roughie sticking it’s nose in the race where it’s not wanted.

Horse racing is crazy…I much prefer the share market:scared:

If I have anything left by Race 10 ..I’m all on Civil Unrest…a likely macro economic trend for 2023.

[nztx]

https://www.nzherald.co.nz/business/the-warehouse-group-cops-downgrade-in-ominous-sign-for-sector/A4KPBKFPMNHOZBOFEA5Y35EXJA/

The Warehouse Group cops downgrade in ominous sign for sector

(Premium)

Looks like one of our favourite brokers has sharpened the scalpel ;)

[winner69]

And Jarden goes UNDERWEIGHT

BusinessDesk reports

Investment advisory firm Jarden has downgraded its rating for The Warehouse Group from neutral to underweight following a Christmas slump.

In an update published on Monday, analyst Guy Hooper said sales momentum slowed over the holiday period, with group sales falling 5.5% compared to the eight weeks to December the previous year.

With rising cost pressures and dampened consumer confidence, Jarden was forecasting a 4.4% decline in year-on-year sales over the remainder of the 2023 financial year.

Shares in the group dropped 7% on Dec 30 after it disclosed its quarter two results, ranging from a 1.3% drop in sales for The Warehouse to 11.8% for Noel Leeming.

The Warehouse Group shares were trading at $2.63 on Monday morning.

Taking into account factors like earnings guidance and consumer confidence, Hooper revised down the 12-month target price for the shares from $3.15 to $2.45.

“In our view, [The Warehouse Group] is most exposed in the sector to a broader slowdown given the degree of operating leverage in the business and its net debt balance.”

[Muse]

And Jarden goes UNDERWEIGHT

BusinessDesk reports

Investment advisory firm Jarden has downgraded its rating for The Warehouse Group from neutral to underweight following a Christmas slump.

In an update published on Monday, analyst Guy Hooper said sales momentum slowed over the holiday period, with group sales falling 5.5% compared to the eight weeks to December the previous year.

With rising cost pressures and dampened consumer confidence, Jarden was forecasting a 4.4% decline in year-on-year sales over the remainder of the 2023 financial year.

Shares in the group dropped 7% on Dec 30 after it disclosed its quarter two results, ranging from a 1.3% drop in sales for The Warehouse to 11.8% for Noel Leeming.

The Warehouse Group shares were trading at $2.63 on Monday morning.

Taking into account factors like earnings guidance and consumer confidence, Hooper revised down the 12-month target price for the shares from $3.15 to $2.45.

“In our view, [The Warehouse Group] is most exposed in the sector to a broader slowdown given the degree of operating leverage in the business and its net debt balance.”


welcome to the party jard - pity it came rather late for people who focus on such reports

w69 you do your datamine tables for dec yet?

have been reviewing some of my australian positions today. rather interesting findings

[winner69]

FM - RetailWatch data for December month came out today

Would have to say the numbers are pretty gloomy looking - core sectors down v December 2021 and verall sales only up from travel and entertainment things. Even clothing was down

I did the old comparison to 2019 trick -- even then the % increases are pretty small when you think it's over 3 years

[winner69]

Jeez. ...... hope Nick getting really worried

They said a few weeks ago Noel Leeming sales were DOWN 11.8% compared to the same period last year — basically Nov/Dec period

JB HiFi have just reported their Q2 NZ were UP 9.8% on pcp. (That's Oct/Dec period)

Seems JB HiFi taking Noel Leemings to the cleaners.....gaining big chunks of market share

Should Nick be worried?

Didn't a Noel Leemings man go and join JB HiFi —— hmmmm

[BlackPeter]

FM - RetailWatch data for December month came out today

Would have to say the numbers are pretty gloomy looking - core sectors down v December 2021 and verall sales only up from travel and entertainment things. Even clothing was down

I did the old comparison to 2019 trick -- even then the % increases are pretty small when you think it's over 3 years

Cheers - interesting, but depressing! Looks like Liquor shops would have been the best place to invest :ohmy:!

[nztx]

Cheers - interesting, but depressing! Looks like Liquor shops would have been the best place to invest :ohmy:!


if you could ones that didn't attract ram raiders and other light fingered cretlins :)

[BlackPeter]

if you could ones that didn't attract ram raiders and other light fingered cretlins :)

Good point ... though the stats captured the increase in revenue. I suppose ram-raiders and other thieves don't contribute to that, do they?

[Habits]

FM - RetailWatch data for December month came out today

Would have to say the numbers are pretty gloomy looking - core sectors down v December 2021 and verall sales only up from travel and entertainment things. Even clothing was down

I did the old comparison to 2019 trick -- even then the % increases are pretty small when you think it's over 3 years
Travel and accomm up 100 percent ish, what a leap. I thought that we were all out and about last summer doing the local travel stuff

[nztx]

https://www.nzherald.co.nz/business/warehouse-group-proposes-cutting-190-jobs-in-auckland/NHQHAEA7UZFBTOVS5B5U27KML4/

Warehouse Group proposes cutting 190 jobs in Auckland



The Warehouse Group has confirmed “approximately 190 roles” will be cut across its six retail brands in Auckland in a restructure proposal announced yesterday.

They said these roles are part of their support teams based in Auckland and will not affect retail staff.

The move is a response to “challenging market conditions” forecasted for the year ahead and comes after Stats NZ released inflation figures at their highest in 32 years.

The company released a statement today regarding the restructure:

“Yesterday we shared a proposal with The Warehouse Group team members based at support offices in Auckland, to make some changes to our structure.


There you have it - even a bargain is challenging in the current difficult economic times ;)

Stakeholders will be waiting to see what sort of bargain they get dealt .. if they haven't already exited ..

[bull....]

https://www.nzherald.co.nz/business/warehouse-group-proposes-cutting-190-jobs-in-auckland/NHQHAEA7UZFBTOVS5B5U27KML4/

Warehouse Group proposes cutting 190 jobs in Auckland





There you have it - even a bargain is challenging in the current difficult economic times ;)

Stakeholders will be waiting to see what sort of bargain they get dealt .. if they haven't already exited ..

in the same note

Forsyth Barr analyst Andy Bowley said the impact of Costco was a factor.
“It’s just one factor. The macroeconomic environment is the much larger challenge,” Bowley said.

Bowley and colleague Margaret Bei cited weakening consumer demand, margin pressure and continued higher costs of doing business in a January 5 research note.
“Christmas sales were below our expectations as revenue fell across all brands (from -1 per cent to -12 per cent) for the second quarter period from November 1 to December 26.
“While this is off a strong base, as the comparable prior year period benefitted from post-lockdown pending, the year ahead looks to be increasingly difficult for retailers.”

guess same issue's will become apparent for many retailers as yr goes on

[Sideshow Bob]

Construction of the Warehouse in Wanaka is well underway - believe the scheduled opening is April sometime. Noel Lemming coming, but have had a Torpedo7 for a long time.

Dunno where they are going to get the X number of staff to run it - I understand Warehouse pay the living wage, but still may struggle for staffing.

[bull....]

k mart results were impressive up 113% , having a effect on whs ?

[Rawz]

k mart results were impressive up 113% , having an effect on whs ?
Yes lol………

[Entrep]

k mart results were impressive up 113% , having a effect on whs ?

Yep, I reckon. We get a ton of stuff from K-Mart, especially for kids, and so, so cheap!

Remarkable comeback from K-Mart over the years.

[winner69]

Haven’t heard from WHS since the sad story put out just after Christmas

Half year result next Thursday..wonder what’ll be

Last they told us was H123 Gross Margin $s broadly in line with pcp but CODB and depreciation to be $20m-$25m higher.

H122 NPAT was $48m so that ‘guidance’ suggests H123 NPAT will be around $32m ……down 33%

Hope it’s no worse than that because being 33% down is pretty bad

But no worries as Market Club membership must be approaching 1 million by now ….that’s cool!

[nztx]

Haven’t heard from WHS since the sad story put out just after Christmas

Half year result next Thursday..wonder what’ll be

Last they told us was H123 Gross Margin $s broadly in line with pcp but CODB and depreciation to be $20m-$25m higher.

H122 NPAT was $48m so that ‘guidance’ suggests H123 NPAT will be around $32m ……down 33%

Hope it’s no worse than that because being 33% down is pretty bad

But no worries as Market Club membership must be approaching 1 million by now ….that’s cool!


Got to get past the auditor too by looks:



The Warehouse Group Limited (“Group”) is pleased to advise details of an audio teleconference following the announcement to the NZX of the Group’s unaudited results for the half year ended 29 January 2023


Please note that the interim results release date has been updated from Tuesday, 21 March 2023 to Thursday, 23 March 2023.


Will it be a dividend flagged or here's a few cents to make do with on the fly job ? ;)

[BlackPeter]

Got to get past the auditor too by looks:


You realize that half year results don't get audited?

What is your point?

[nztx]

You realize that half year results don't get audited?

What is your point?


Apologies BP .. No warning signs displayed to suggest that WHS was another sacred cow ;)

Wonder if Foodstuffs want to buy back in at these levels ?

[BlackPeter]

Apologies BP .. No warning signs displayed to suggest that WHS was another sacred cow ;)

Wonder if Foodstuffs want to buy back in at these levels ?

No sacred cows ... but I really despise misleading posts. Too much misinformation around, no need for anybody to add to that.

[nztx]

No sacred cows ... but I really despise misleading posts. Too much misinformation around, no need for anybody to add to that.


Nothing misleading about about results having to get past the Auditor - BP

WHS stated that it was unaudited .. some outfits even have the checker of the figures
have a look at interim reports as well :)

Did something get to your morning coffee without you noticing ? :)

[BlackPeter]

Nothing misleading about about results having to get past the Auditor - BP

WHS stated that it was unaudited .. some outfits even have the checker of the figures
have a look at interim reports as well :)

Did something get to your morning coffee without you noticing ? :)

It is sad ... instead of acknowledging your mistake you are just doubling up. Trumpesk.

Instead of continuing to spout nonsense I suggest you just show us a handful of NZX listed companies who you think get their half year results audited. I doubt you will find many (or any), unless they just changed their reporting period or have some other special reason.

The legal requirement as well as the NZX requirement is clearly an annual audit. While their is no law against more frequent audits, shareholders should clearly complain if any company is doing that without good reason more often, because it is a pretty expensive and time consuming exercise.

In case you don't find any I suggest you apologize and withdraw. Easy as that, no need to continue spreading misinformation.

[winner69]

WHS results out on the 27th .. a few days before they have to do it

But I do admire Briscoes …always get their results out pretty quick …this year the 15th

Probably an indicator of relative performance in most areas of each operations.

FBU pretty good as well …..mid month and not end of the month

[nztx]

It is sad ... instead of acknowledging your mistake you are just doubling up. Trumpesk.

Instead of continuing to spout nonsense I suggest you just show us a handful of NZX listed companies who you think get their half year results audited. I doubt you will find many (or any), unless they just changed their reporting period or have some other special reason.

The legal requirement as well as the NZX requirement is clearly an annual audit. While their is no law against more frequent audits, shareholders should clearly complain if any company is doing that without good reason more often, because it is a pretty expensive and time consuming exercise.

In case you don't find any I suggest you apologize and withdraw. Easy as that, no need to continue spreading misinformation.


Reread post 7054 and you'll recognise your mistake :)

[jimdog31]

Only a few more minutes till we see how bad the losses from the market will be…. i predict bad.

[Sideshow Bob]

Sales are up - thats nice......:scared:

https://www.nzx.com/announcements/408784

• Sales growth to $1.8bn – up 4.8% on prior period1
• Gross profit $592.4m – a decrease of 1.2% from $599.6m in prior period
• Gross profit margin 32.7% - down from 34.7% in FY22 H1 due to category mix andincreased promotional spend including MarketClub
• Cost of doing business increased 3.5%, but reduced as a percentage of sales comparedto FY22 H1 from 31.4% to 31.0%
• Unusual expenses of $6.3m in relation to restructuring
• Reported Net Profit After Tax (NPAT) $17.4m - down 60.9% against Reported NPAT of$44.4m in FY22 H1
• No interim dividend declared. Dividend decision reserved to year end

[jimdog31]

$16m half year loss for market & $6.5m for torpedo7. Thats a half year loss

[winner69]

Real disaster eh Bob

Even back to ‘normalising’ result doesn’t help

AND NO DIVIDEND …….that’ll piss many off

[bull....]

heading back under 2 ?

[jimdog31]

Can someone please explain to me how you can have $14m of unallocated loss across the business units? how can anyone actually say what units are profitable and unprofitable?

[alokdhir]

Real disaster eh Bob

Even back to ‘normalising’ result doesn’t help

AND NO DIVIDEND …….that’ll piss many off

All forward looking economy signals including so called staples and low end retail is showing signs of downtrend and recession becoming deeper and deeper

Seems year end rate cuts chances are increasing from 0% to 25% imo

[Toddy]

Very scary read if you look at it from an economic point of view.

The average kiwi has started to pull back on spending. And the Warehouse Group managed sound very concerned where it is all heading.

[bull....]

Very scary read if you look at it from an economic point of view.

The average kiwi has started to pull back on spending. And the Warehouse Group managed sound very concerned where it is all heading.

this headline today sums it up

Rising living costs set to 'significantly dent household budgets', economist says


https://www.rnz.co.nz/news/business/486502/rising-living-costs-set-to-significantly-dent-household-budgets-economist-says


February sees record high for rent prices across Aotearoa - Trade Me
https://www.newshub.co.nz/home/money/2023/03/february-sees-record-high-for-rent-prices-across-aotearoa-trade-me.html

[Rawz]

is it the economy or is it Kmart, Farmers and co just killing WHS..?

[whatsup]

WHS is doing to themselves what WHS did to the backbone Mums and Dads small retailers through N Z over the last 30 years, is there any hope for WHS , not when you look at the shi! that they sell , its a cash flow retailer as imo most of their product does not last very long !!

[777]

Customers spent all their money in Costco. None left for Warehouse.

[Toddy]

Also competing for the discretionary dollar with the likes of KFC and McDonald's. As prices go up, the dollar does not spread as far.

[Baa_Baa]

Customers spent all their money in Costco. None left for Warehouse.

"We have 260+ retail stores, online stores as well as distribution centres throughout New Zealand."

Costco have one.

[ralph]

"We have 260+ retail stores, online stores as well as distribution centres throughout New Zealand."

Costco have one.

I Know all gets a bit silly this backstabbing of companies when they are down baa baa ! not even competing for the same customers

[Panda-NZ-]

You have a model right there with Walmart, all that needs to be done is copy and paste.

With tightening budgets the warehouse should actually be doing much better. Nick needs to shape up or ship out.

[850man]

You have a model right there with Walmart, all that needs to be done is copy and paste.

With tightening budgets the warehouse should actually be doing much better. Nick needs to shape up or ship out.

Nick should go, that is an abysmal result

[BlackPeter]

You have a model right there with Walmart, all that needs to be done is copy and paste.

With tightening budgets the warehouse should actually be doing much better. Nick needs to shape up or ship out.

Well, yes - his body language on the supplied photo (arms crossed) looks a bit defensive, doesn't it?

While sh*t happens, and ERP implementation always costs more than planned ... one still wonders why e.g. Torpedo 7 pulled the short straw when Kathmandu is doing so well (I know, the world is their oyster, but still ..).

Noel Leeming sort of lost traction as well. Not sure I've been in one of them over the last 6 months, but they never seem to have what I am looking for. On the other hand - bought some IT stuff last year using the market, wondering why they don't make money with that ...

Warehouse Group used to have for a long time one lame contributor under their roof (WHS Stationary), but it appears they are now breeding them. Not good, unless they can sell their sick puppies ...

Overall: times are tough and it always costs money to invest, but still start to wonder whether they use shareholders money in the best way they could.

Nick, do you listen?

[clearasmud]

Seems to be the Warehouse everyone gets a bargain except the shareholders.
Management seems asleep at the wheel.
The company isn't making money and going backwards by the looks.

[Fortunecookie]

The market is an interesting concept. They are trying to direct traffic to the site. But there is this thing called the internet, or more specifically Google. You can type in a search for what you want, so why be bound to just one site. From I can gather there is no real price differential from buying from their site to another other.

I think it was setup at a time when building ecosystems was popular to replicate the success of likes of Alibaba and Amazon. They are now trialing the sales of perishable goods (I'm thinking there is alot of wastage). Personally I think they need to look at the average shoppers shopping list, focus on the non perishable items and decide whether pricing and the number of items warrant a shoppers second trip to them(perhaps they are already doing this). I do think they have abit of an identity crisis at the moment. It doesn't help economic factors are putting pressure on margins.

Not trying to be negative. Just an observation.

[Toddy]

My family buys alot of stuff from NL and T7.

Service is usually pretty good and prices competitive.

Only ever pop into the WH if the kids are grabbing a sports drink or the likes.

Good Company. But like every business out there. It's tough with inflationary pressures everywhere.

[nztx]

Seems to be the Warehouse everyone gets a bargain except the shareholders.
Management seems asleep at the wheel.
The company isn't making money and going backwards by the looks.

their monthly management accounts should have shown this unfolding too ..

that would have been starting months ago

Was there any market update eluding to stiff headwinds in interim ?

[jimdog31]

The market is an interesting concept. They are trying to direct traffic to the site. But there is this thing called the internet, or more specifically Google. You can type in a search for what you want, so why be bound to just one site. From I can gather there is no real price differential from buying from their site to another other.

I think it was setup at a time when building ecosystems was popular to replicate the success of likes of Alibaba and Amazon. They are now trialing the sales of perishable goods (I'm thinking there is alot of wastage). Personally I think they need to look at the average shoppers shopping list, focus on the non perishable items and decide whether pricing and the number of items warrant a shoppers second trip to them(perhaps they are already doing this). I do think they have abit of an identity crisis at the moment. It doesn't help economic factors are putting pressure on margins.

Not trying to be negative. Just an observation.

It was at a time where amazon/alibaba were seemingly unstoppable and it was only a matter of time before they (amazon) were setting up here etc etc.

But instead of getting better at what they do to protect market share, theyve shot themselves in the foot trying to be a mini amazon, to the tune lf $30-40 million bucks a year.

Biggest own goal IMO

[nztx]

Update 29 Dec 2022:

https://www.nzx.com/announcements/404808



29/12/2022, 5:08 pm MKTUPDTE

The Warehouse Group – FY23 Q2 year to date trading update

The Warehouse Group (“the Group”) has today provided a trading update for the FY23 second quarter period to date from 31 October to 26 December 2022.

On 11 November the Group announced FY23 Q1 sales up 21.2% compared to FY22 Q1. For the FY23 Q2 period to date from 31 October to 26 December 2022 total Group sales have decreased 5.5% compared to the same period in FY22. (The comparable period was an unusual trading period in FY22, as Q1 and Q2 sales were impacted by COVID-19 lockdown levels which were in place from 18 August 2021, with Auckland the last region to re-open stores from 10 November 2021).

FY23 sales for the Q2 period to 26 December 2022 by brand:
• The Warehouse sales were down 1.3% compared to the same period last year
• Warehouse Stationery sales were down 9.2% compared to the same period last year
• Noel Leeming sales were down 11.8% compared to the same period last year
• Torpedo7 sales were down 8.5% compared to the same period last year

Year to date Group sales in FY23 were $1,506m compared to $1,414m in the same period in FY22, an increase of 6.4%.

Group gross profit margin for the FY23 Q2 period to date was down approximately 300 basis points compared to the same period in FY22. Year to date Group gross profit margin in FY23 is down approximately 200 basis points on the same period in FY22.

The Warehouse brand continues to bear most of this decrease due to the continued strength of lower margin grocery and the current mix of seasonal sell through. Increased promotional activity has also impacted margin, in particular due to purposeful investment in the Group’s MarketClub membership programme, which has now generated more than 900,000 active members.

“With cost of living pressures impacting discretionary spend, we are focused on providing the best value essentials for Kiwi families at the lowest prices,” said Group CEO Nick Grayston.

“We’ve continued to see the relative strength in The Warehouse as customers seek out value, however we haven’t had sales momentum across our other brands. We’ve seen softer trading at Noel Leeming after a strong couple of years and some categories like bike and water at Torpedo 7 have not performed at the level we would expect at this time of year.”

“For FY23 H1 we expect gross profit dollars to be broadly in line with FY22 H1, however cost of doing business (“CODB”) including depreciation, to be $20m - $27m higher than FY22 H1. The higher CODB and depreciation largely reflects the investment in core systems and digital platforms the Group is currently undertaking and will continue to be monitored relative to trading conditions.”

The Group’s FY23 half year result will be released on Tuesday 21 March 2023.

[winner69]

Nztx .. you’d have to say the half year result is actually worse than what they alluded to in that Dec update

[winner69]

In analysts call Chair Joan said final dividend being considered …but reading between lines one not be forthcoming.

[Fortunecookie]

It was at a time where amazon/alibaba were seemingly unstoppable and it was only a matter of time before they (amazon) were setting up here etc etc.

But instead of getting better at what they do to protect market share, theyve shot themselves in the foot trying to be a mini amazon, to the tune lf $30-40 million bucks a year.

Biggest own goal IMO

Exactly. It's a huge investment and unfortunately can't see any payoff.

To be fair other outfits have been trying to apply this approach. I think Woolworths and CBA in Oz were trying and I think still are. Perhaps the difference I'm guessing is the strength of balance sheet.

[nztx]

Nztx .. you’d have to say the half year result is actually worse than what they alluded to in that Dec update


And another two months trading now past the the period end reported today - wonder if that is any worse ?

Inflationary & other market pressures may likely have not improved

[Muse]

is it the economy or is it Kmart, Farmers and co just killing WHS..?

It's not the Warehouse banner (Redsheds) that is impacting the group results - it's just all the other 4 divisions lol (stationary, NL, TP7, the markets). First half group sales growth of 4.8% doesn't sound too bad at the headline level, but given 1Q FY22 was lockdown impacted (and naturally 1Q FY23 was up significantly in year on year % terms) it's not a flash result, and in my view Q2 this yr vs last yr much more indicative of underlying trends as both clean results.

Red continues to travel okay but momentum really slowed in the 2nd quarter (sales per ave. store up only 2.6%, negative real growth). Blue down 5.6%, NL down 5.9%, and TP7 down a whopping 18.2% (remember when it was argued these were consumer staples lol)

Predictably enough tp7 has reverted back into loss making mode. Was surprised they continue to grow the store count, even adding 1 during the quarter. The worry with these expensive store roll outs is when they struggle to make coin when things are booming, and then revenue starts falling, is you are left with a large and sticky overhead base....rents and wages continue to rise from inflationary pressure, but your volumes are down which in turn reduces the rebates you get (driving cogs up), increases promotion costs and inventory obsolesce costs. Following the traditional retail cycle stores then need to get closed and expensive to exit leases. All these things compound each other at the bottom line.

Personally think it's madness to persist with the whole markets venture. Even from just a human perspective, those losses could underwrite people's jobs if they didn't persist with it, let alone the shareholder perspective.

Big change in net debt, woeful cashflow.

The ugly results that I had anticipated are arriving in earnest, which I take no satisfaction in for shareholders or effected staff.

[777]

340 jobs to go.

[Muse]

340 jobs to go.

necessary but very sad. Hopeful that these employees will be able to find other employment given unemployment remains so low (for now I suppose).

[Out to lunch]

Themarket.com reported a loss of $16m in the half year. Lost $25m in fy22, $21m in fy21, $15m in fy20 and $6m in fy19.

Paying a lot to try be Amazon NZ. When do you give up? If they turned it off then they wouldn’t need to cut their cloth.

Also have you seen the amount of staff on above 200k, it’s about 160 people. I need to get in to retail!

[samjaynz]

I've never really been able to work out The Market. I'm not a genius, but I'd like to think I'm not an idiot either. All it seems like to me is a poorly advertised, not-so-good Amazon with the same stuff that you find in The Warehouse (and other group stores including the dumping ground that is 1 Day) but sold through a different channel and brand.

Am I missing something? Certainly if the Market disappeared tomorrow I wouldn't miss it. On the other hand, I buy heaps of stuff from Amazon.com because even with shipping and tax it's cheaper than buying here.

In terms of Noel Leeming, anecdotally the last few times I've gone in to the stores in my area they have all been quieter than I have seen in the past. Lots of staff twiddling their thumbs and not doing much.

The Warehouse/red shed is the only group brand I really like, primarily because the big one near my house will often have some decent deals on large packs of baby wipes, dog biscuits (I blend the cheap sawdust kibble with the wallet-wounding, Ebos shareholder-enriching Blackhawk stuff from Animates - the hound loves it) and massive bags of house brand coffee beans for cheap ... if you drink it straight out of the espresso machine while it's boiling hot you can't notice the average taste and it still perks you up. The fresh fruit and veg area in the store looked very sad though.

[Filthy]

Also have you seen the amount of staff on above 200k, it’s about 160 people. I need to get in to retail!

yeah, and about ~55 over 300K as well. I wonder what they all do?

14520

[Panda-NZ-]

Make powerpoint presentations and use words like omni-channel

ChatGPT can do both now virtually free.

[Sideshow Bob]

yeah, and about ~55 over 300K as well. I wonder what they all do?


Plus 6 over $1.2m.

Where do I sign up??

Can't do any worse......

[nztx]

Plus 6 over $1.2m.

Where do I sign up??

Can't do any worse......


I'll take the vacant desk alongside you :)

[BlackPeter]

I've never really been able to work out The Market. I'm not a genius, but I'd like to think I'm not an idiot either. All it seems like to me is a poorly advertised, not-so-good Amazon with the same stuff that you find in The Warehouse (and other group stores including the dumping ground that is 1 Day) but sold through a different channel and brand.

Am I missing something? Certainly if the Market disappeared tomorrow I wouldn't miss it. On the other hand, I buy heaps of stuff from Amazon.com because even with shipping and tax it's cheaper than buying here.

...



I think you do.

We do live further away from the next red shed ... and the market allows us to get not just everything you could buy in the Warehouse, but as well plenty of other stuff for no added cost (with membership and a minimum order of $50). Most orders (from NZ/ Australia) arrive within one week (sometimes next day), sure - orders from India / China / UK take longer.

Hardly buy anything physical from amazon (we do buy e-books from them) - but anything they need to put into a parcel takes ages to arrive and the cost for P&P are substantial.

It is possible (and we use them) to get through the market plenty of useful and reasonably priced goods from the e.g. the UK, China, India, without the need to worry about dealing with somebody in a foreign jurisdiction and without the need to worry over taxes / import and goods arriving (though admittedly - if its from overseas it sometimes takes as well its time) - the market is the only point of contact and actually they track the goods coming from overseas for you.

I found it good value - and good service ... but admittedly (like just now) when the Warehouse splits an order of $56 into two separate parcels and delivers them for free (as part of the membership), then I am sometimes wondering, how they can make money this way.

In summary, I do see customer groups for whom the market can be quite attractive ... but I think as well that they would need to review their processes to make sure the market makes them money instead of costing them money.

[samjaynz]

I'll take the vacant desk alongside you :)

Thirded. I'm starting to wish I'd stayed at my role in "The Group" many years ago as I could be one of the lucky six.

[jimdog31]

Yep. I predict T7 & Market full year losses will be $30-$35m. And it doesnt look like Noels & WHS are going to make up that difference.

Apologies to quote myself here, but i think i may have undercooked this back in Dec.

Based on todays HY update Where T7 & Market are $22.5m in losses, and Id hazard a guess that the $14m of unallocated would actually be proportionally attributed higher to these 2 .....

My back of envelope loss prediction machine tells me to revise my forecast to $40-$45 of losses (market $30, T7 $15). Ill crunch some actual numbers soon and see where i land.

[jimdog31]

Circling back here. https://announcements.nzx.com/detail/404808

A bit sneaky dropping this on the 29th December, when they've done the update on the 7th of Jan last few years.

Must be real bad.

Dec 29 2022

"the Market continues to grow"

HY
2023 $22m 2022 $33m 2021 $49m

Remember they "merged" 1 day into the market so that shows in the comparatives.

From their own lips, the "themarket is still in its infancy"

It's been going for 3 years and they have Hy turnover of $20m and a loss of $16m

There is no opportunity here!! what will they get to being bullish? $50m? for a loss of what?

[jimdog31]

It gets better....

"In August 2022 the Group also acquiredthe remaining 3% minority interest in TheMarket.com for a consideration of $0.7 million. "

They spent some more money acquiring the toilet theyve been flushing money down the last 3 years!!

[trader_jackson]

I'm not quite sure what they mean by "20% volume", in terms of number of orders perhaps?
Looking over the financial statements, TheMarket revenue (half year on half year) grew from $29.3m to $33.0m - an increase of 12.6%, but operating losses grew 30.4% (from $9.2m to $12.0m)... if these sorts of growth in operating losses continues, TheMarket looks like it will lose close to $30m this year (it was $20.7m last year)... and if Winner says FY NPAT is around $80m, $30m is alot to be 'gambling away' at TheMarket... ie NPAT could be $110m without TheMarket, and this would be a big jump on winner's $80m estimate.

A year on from posting this and its been confirmed just how bad "TheMarket" strategy is... operating loss (for the half year) is now -16 million for The Market and revenue has dropped off a cliff too... not good... I imagine full year adjusted NPAT might not even get over the $30m mark... a huge, borderline unimaginable, drop from the $176m in FY21.

[winner69]

Asked if The Warehouse had expected the stock’s share price to fall by so much, Grayston told BusinessDesk that the group tried “very hard to control what we can control”.

“We are telling our story,” he said. “People will make their judgments, no question. It's a difficult environment and a difficult result.”

[jimdog31]

Asked if The Warehouse had expected the stock’s share price to fall by so much, Grayston told BusinessDesk that the group tried “very hard to control what we can control”.

“We are telling our story,” he said. “People will make their judgments, no question. It's a difficult environment and a difficult result.”


Youll find this story in the horror section at all good book stores

[BlackPeter]

Youll find this story in the horror section at all good book stores

Hmm ... maybe we are overdoing it here a bit.

A horror story is Russia's dirty war against Ukraine. A horror story is humanities lame reaction against climate change. An economical horror story was e.g. the crash of CDI insurance or of Wynyard. The Warehouse story is so far just the story of a profitable company being somewhat less profitable by investing (rightly or wrongly) into at this stage unprofitable ventures. And hey, it still might work out, or it might not.

Business leaders make every day decisions to invest into ventures which may or may not be profitable.

If this is already horror for you, than I suppose your life is pretty scary ...

[jimdog31]

Hmm ... maybe we are overdoing it here a bit.

A horror story is Russia's dirty war against Ukraine. A horror story is humanities lame reaction against climate change. An economical horror story was e.g. the crash of CDI insurance or of Wynyard. The Warehouse story is so far just the story of a profitable company being somewhat less profitable by investing (rightly or wrongly) into at this stage unprofitable ventures. And hey, it still might work out, or it might not.

Business leaders make every day decisions to invest into ventures which may or may not be profitable.

If this is already horror for you, than I suppose your life is pretty scary ...

Geez BP, lighten up! I know what I meant.

[Sideshow Bob]

A bit of levity required for Friday afternoon.....:cool:

"Derek, not going to lie, that was an absolute banger". Great rework of the old Warehouse classic.

https://www.tiktok.com/@jammylammyofficial/video/7204717311289199874

[jimdog31]

The Share price reminds me of a Nelly song.

[Rawz]

Ride Wit Me

Hey must be the money!!

[nztx]

Is it Bargain time yet ? ;)

[jimdog31]

Is it Bargain time yet ? ;)

Has it hit $1.50 already?!?

[Recaster]

The $35m pre-tax movement (loss) in hedge reserves booked through comprehensive income for the interim period catches the eye.

It's enough to wipe out profit twice over. Enormous.

If the figure went through the income statement and was split between unrealised and realised income, then after tax the company lost around $10m rather than the $17m profit claimed.

In fairness, in the pcp there was a profit in the same account and this was booked as a reserve also.

Bottom line, the company is sitting on very large derivative losses in HY23.

Take a look also at the Statement of Movements in Equity. At the start of the interim period equity was $421m. By the end of the interim period it was $376m. Dividend declared and paid of $35m of course.

Doesn't look like a $17m gain for shareholders does it?

[nztx]

Has it hit $1.50 already?!?


Less than 7 days away, if today's downwards spiral continues at the same rate ..

Poor old Stephen must be wondering if the tide readings in his coffee mug are correct

[Out to lunch]

The $35m pre-tax movement (loss) in hedge reserves booked through comprehensive income for the interim period catches the eye.

It's enough to wipe out profit twice over. Enormous.

If the figure went through the income statement and was split between unrealised and realised income, then after tax the company lost around $10m rather than the $17m profit claimed.

In fairness, in the pcp there was a profit in the same account and this was booked as a reserve also.

Bottom line, the company is sitting on very large derivative losses in HY23.

Take a look also at the Statement of Movements in Equity. At the start of the interim period equity was $421m. By the end of the interim period it was $376m. Dividend declared and paid of $35m of course.

Doesn't look like a $17m gain for shareholders does it?

Smoke and mirrors.

Read note 16. it is because they've got forward USD cover at .62 and spot at reporting date was .65
Given FX rates now are around .62, this movement wouldve been reversed/probably in-the-money.

[Toddy]

Unless they are planning on unwinding derivative contracts because of a stressed capital raise (FBU, RYM come to mind) then the derivative valuations are just that, valuations. Well run company's hedge for their day to day risk and let the hedge run its course as it was designed too.

The accounting around these hedges and marking to market is just a distraction from the real world.

[samjaynz]

The Share price reminds me of a Nelly song.

It certainly is a bit of a Dilemma for Mr Grayston. Happy shareholders are only Just A Dream at this point ... the company's performance certainly isn't Hot In Herre.

[whatsup]

How many times has the WHS been rejigged over the last 10 years !!! are we due for another one ?

[nztx]

Another fall today -


The Warehouse Group Limited

$1.900 -$0.040 / -2.06%

[jimdog31]

How many times has the WHS been rejigged over the last 10 years !!! are we due for another one ?


WOuldnt you say its overdue!

[Sideshow Bob]

How many times has the WHS been rejigged over the last 10 years !!! are we due for another one ?

Time for the board to be re-jigged??

[winner69]

Couldn't even make a go of running a finance business ....tried that and gave up after a few years

[BlackPeter]

Couldn't even make a go of running a finance business ....tried that and gave up after a few years

Yep, this was the Golden Age of the warehouse: Finance business, travel insurance, takeover of Australia and they didn't really know what else to do with all the money they made. Share price from memory above $6, wasn't it?

In Germany they have a saying: If an ass feels too well it goes out on the ice ...

Translated for the warehouse: "if a company does too well, it is taking unnecessary risks"

But I guess The Warehouse is not the only company being that foolish ...

[Fortunecookie]

I have been seeing ads for Bargain Chemist. Looks like they are direct competitor to Chemist Warehouse. It got me thinking, why don't the Warehouse get into the pharmacy game. They could rollout a pharmacy in each of the store locations. It would probably occupy on average 1/10 of a store.

In terms of capex, relatively speaking it would be minimal. Initial cost to hold inventory, perhaps advertising. No need to lease brand new stores. The return per square metre be a lot higher compared to fruit/vege I imagine.

I know they got fingers in alot of pies. One may argue they need to do less. But I see that they have an advantage over Bargain Chemist that's getting started, but also a platform to compete against Chemist Warehouse from I understand is doing well here and Oz.

This probably has no relevance with respect to investing as they are not actually doing it. Just a thought regarding company direction.

[winner69]

I have been seeing ads for Bargain Chemist. Looks like they are direct competitor to Chemist Warehouse. It got me thinking, why don't the Warehouse get into the pharmacy game. They could rollout a pharmacy in each of the store locations. It would probably occupy on average 1/10 of a store.

In terms of capex, relatively speaking it would be minimal. Initial cost to hold inventory, perhaps advertising. No need to lease brand new stores. The return per square metre be a lot higher compared to fruit/vege I imagine.

I know they got fingers in alot of pies. One may argue they need to do less. But I see that they have an advantage over Bargain Chemist that's getting started, but also a platform to compete against Chemist Warehouse from I understand is doing well here and Oz.

This probably has no relevance with respect to investing as they are not actually doing it. Just a thought regarding company direction.

Tried that once before and it didn’t work out

Don’t forget about their current relationship with Zoom Pharmacy

[Fortunecookie]

Tried that once before and it didn’t work out

Don’t forget about their current relationship with Zoom Pharmacy

True. I wasn't even aware of their previous attempt and current relationship with zoom.

I just thought they could replicate the same business model as chemist warehouse i.e low cost seller/high sales turnover and leverage off their existing store network.

Oh well back to the drawing board haha.

[BlackPeter]

I have been seeing ads for Bargain Chemist. Looks like they are direct competitor to Chemist Warehouse. It got me thinking, why don't the Warehouse get into the pharmacy game. They could rollout a pharmacy in each of the store locations. It would probably occupy on average 1/10 of a store.

In terms of capex, relatively speaking it would be minimal. Initial cost to hold inventory, perhaps advertising. No need to lease brand new stores. The return per square metre be a lot higher compared to fruit/vege I imagine.

I know they got fingers in alot of pies. One may argue they need to do less. But I see that they have an advantage over Bargain Chemist that's getting started, but also a platform to compete against Chemist Warehouse from I understand is doing well here and Oz.

This probably has no relevance with respect to investing as they are not actually doing it. Just a thought regarding company direction.

Pretty crowded market segment currently with all the new discount pharmacies. Every Supermarket has now its own discounters plus the two new chains you mentioned. Doubt that another one pushing as me too into this space is likely to add lots of additional earnings. Cost however would rise - lots of compliance costs for pharmacies (yes, you do need qualified staff) and everybody gets a smaller slice of the same cake.

Might have been a good idea 5 (or is it now 10?) years ago, before Countdown started with their discount pharmacies - but now?

[Fortunecookie]

Pretty crowded market segment currently with all the new discount pharmacies. Every Supermarket has now its own discounters plus the two new chains you mentioned. Doubt that another one pushing as me too into this space is likely to add lots of additional earnings. Cost however would rise - lots of compliance costs for pharmacies (yes, you do need qualified staff) and everybody gets a smaller slice of the same cake.

Might have been a good idea 5 (or is it now 10?) years ago, before Countdown started with their discount pharmacies - but now?

I totally get it. Even pK n save, no chemist but alot of what is stocked in chemists are available in aisles in their supermarket. W69 made a good point as well that they have made an attempt in the past but also have a current relationship with zoom. Suggest it is a tough market to crack. I was perhaps taking a simplistic view without considering the compliance cost and looks to be getting more crowded.

[winner69]

JB HiFi NZ sales Jan/March period up 10.8% on pcp

Their YTD (July/mar) sales up 14.8% pcp

Noel Leeming nowhere near achieving these growth rates ...Noel Leeming being taken to the cleaners

Interesting NZ sales much stronger than in OZ ...OZ sales flat in Jan/March

[winner69]

Compared to recent WHS announcements this latest quarterly update is a boomer of one

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/WHS/411305/394194.pdf

[winner69]

JB HiFi NZ sales Jan/March period up 10.8% on pcp

Their YTD (July/mar) sales up 14.8% pcp

Noel Leeming nowhere near achieving these growth rates ...Noel Leeming being taken to the cleaners

Interesting NZ sales much stronger than in OZ ...OZ sales flat in Jan/March

Noel Leeming sales Feb/April DOWN 3.4% on pcp ……compared to JB HiFi UP 10.8%

Not exactly same three month periods but jeez big difference

Get your act together Noel Leeming

[BlackPeter]

Compared to recent WHS announcements this latest quarterly update is a boomer of one

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/WHS/411305/394194.pdf

Always interesting to read the things they don't talk about.

No mention at all of the market? I really expected another two digit increase of registered customers?

[jimdog31]

Always interesting to read the things they don't talk about.

No mention at all of the market? I really expected another two digit increase of registered customers?

geez I wonder why they left that out…..

[winner69]

Always interesting to read the things they don't talk about.

No mention at all of the market? I really expected another two digit increase of registered customers?

Or groceries ....hmmmm

[jimdog31]

Fascinating article on themarket https://businessdesk.co.nz/article/retail/themarket-whats-happening-to-the-warehouses-12m-solution-to-amazon (paywalled)

The retailer also reported that TheMarket had 400,000 active customers – a 19.5% drop from the previous corresponding year.

When asked by BusinessDesk when TWG expected TheMarket to start making a profit, the retailer said it couldn’t comment, due to it being too close to its year-end to provide an update on strategy or performance.

It also said it couldn't comment or respond to questions about future investment, performance expectations, challenges, and if TheMarket’s net loss was expected to widen further.'

She added there was a question mark on how The Warehouse would report the division going forward, now TheMarket had been brought into TWG’s group operating structure.
“Historically, it's been split out, but if we don't see that split out to a degree, it'll be quite hard to understand.”

[BlackPeter]

Or groceries ....hmmmm

They might allow them to die a slow death. My wife used to frequent for a while as well the local Warehouse on her weekly grocery round, but she stopped that. Says most of the items she is after are either sold out, or the price is now matching the price of the nearby supermarkets.

[winner69]

They might allow them to die a slow death. My wife used to frequent for a while as well the local Warehouse on her weekly grocery round, but she stopped that. Says most of the items she is after are either sold out, or the price is now matching the price of the nearby supermarkets.

They got their own label butter now BP

In Te Reo as well if you need it …Pata Totengia

Hope they got the Te Reo bit right ….not like the notebooks that had the Maori version of ‘have a beer’ emblazoned on the front.

[BlackPeter]

They got their own label butter now BP

In Te Reo as well if you need it …Pata Totengia

Hope they got the Te Reo bit right ….not like the notebooks that had the Maori version of ‘have a beer’ emblazoned on the front.

Always good to hear how well prepared the Maori where. No mammals they could milk, but already a word for "butter"!

My google says however it is just "pata", not sure what the Totengia stands for.

According to the Maori dic means pata however as well: to drop, drop, manuka - Oops, don't tell that the Comvita guys ... so manuka might be a foreign word?

.... I better stop now before somebody finds out that I am diverging :) ;

[winner69]

Always good to hear how well prepared the Maori where. No mammals they could milk, but already a word for "butter"!

My google says however it is just "pata", not sure what the Totengia stands for.

According to the Maori dic means pata however as well: to drop, drop, manuka - Oops, don't tell that the Comvita guys ... so manuka might be a foreign word?

.... I better stop now before somebody finds out that I am diverging :) ;

BP maybe totengia means salted?

It’s $5 a block …..cheap?

[Balance]

Would not touch WHS (or any of the departmental type retailers like Briscoes) until their results or next earnings updates are out.

Was talking to a freight forwarding agent (big company) yesterday and he said that freight movements into NZ have slowed dramatically in the last 3 months as companies reacted to big built up of stock due to slow sales.

I asked what sectors in particular and he said the slow down is pretty across the board but particularly noticeable in big ticket items.

Looking at all the sales taking place in whitegoods and home appliances/entertainment systems especially big screen TVs, I would be particularly concerned about how Noel Leeming is faring.

Anyway, it's just one freight forwarder I was talking to so take it for what it is worth!

[BlackPeter]

BP maybe totengia means salted?

It’s $5 a block …..cheap?

Salt is "te tote"- so, maybe ... must have missed this lesson at school, and they are still not on Duolingo :) ;

$5 sounds good. Need to ask my better half, but I suppose it might be one of these items which always tends to run out just before she enters the shop.

[Fortunecookie]

Would not touch WHS (or any of the departmental type retailers like Briscoes) until their results or next earnings updates are out.

Was talking to a freight forwarding agent (big company) yesterday and he said that freight movements into NZ have slowed dramatically in the last 3 months as companies reacted to big built up of stock due to slow sales.

I asked what sectors in particular and he said the slow down is pretty across the board but particularly noticeable in big ticket items.

Looking at all the sales taking place in whitegoods and home appliances/entertainment systems especially big screen TVs, I would be particularly concerned about how Noel Leeming is faring.

Anyway, it's just one freight forwarder I was talking to so take it for what it is worth!

I concur. Freight rates in general down 85% from the peak. It is easy to forget alot of companies bought additional inventory during the peak of the the supply constraint. The reduced freight rates reflect companies getting rid of current excess inventory.

[BlackPeter]

Would not touch WHS (or any of the departmental type retailers like Briscoes) until their results or next earnings updates are out.

Was talking to a freight forwarding agent (big company) yesterday and he said that freight movements into NZ have slowed dramatically in the last 3 months as companies reacted to big built up of stock due to slow sales.

I asked what sectors in particular and he said the slow down is pretty across the board but particularly noticeable in big ticket items.

Looking at all the sales taking place in whitegoods and home appliances/entertainment systems especially big screen TVs, I would be particularly concerned about how Noel Leeming is faring.

Anyway, it's just one freight forwarder I was talking to so take it for what it is worth!

You may or may not be right re Warehouse ... but in general I'd say your freight forwarder should be worried. If his business is down, than it looks like the competition is eating his lunch.

Last ANZ Truckometer published in June did show even a light increase (+1.8%) for heavy traffic for the month. For the quarter they call it "flat" - not really the drastic slump you are describing.

https://www.anz.co.nz/content/dam/anzconz/documents/economics-and-market-research/2023/ANZ-Truckometer-20230623.pdf

Unlikely they drive empty trucks around just to make the numbers look good :) ;

[steveb]

You may or may not be right re Warehouse ... but in general I'd say your freight forwarder should be worried. If his business is down, than it looks like the competition is eating his lunch.

Last ANZ Truckometer published in June did show even a light increase (+1.8%) for heavy traffic for the month. For the quarter they call it "flat" - not really the drastic slump you are describing.

https://www.anz.co.nz/content/dam/anzconz/documents/economics-and-market-research/2023/ANZ-Truckometer-20230623.pdf

Unlikely they drive empty trucks around just to make the numbers look good :) ;

I think BP that Balance is talking about imports into NZ,not truck movement around the country.The heavy traffic could be moving fruit and veg for all we know.
My company imports products from China,and have been heavily hit by covid and the recession,consquently we have been running stock levels down,in fact we have not imported anything since January.

[BlackPeter]

I think BP that Balance is talking about imports into NZ,not truck movement around the country.The heavy traffic could be moving fruit and veg for all we know.
My company imports products from China,and have been heavily hit by covid and the recession,consquently we have been running stock levels down,in fact we have not imported anything since January.

I guess it is the problem with all these indices that they don't measure what we really want to know.

Don't want to stand up here for the Warehouse, but for all we know - they might make a steal selling down their inventory while not needing to import anything into NZ.

Actually - many companies need currently to reduce their inventory - and finally realise the profits they hoped to make already earlier.

[winner69]

This won’t help WHS growth aspirations. Noel Leeming been losing share the last year or so without this.

JB-Hifi eyes significant growth in New Zealand market

JB-Hifi is gearing up again to push heavily into the New Zealand market after a long dormant period.

The entertainment, electronics, and homewares retailer has planned to open 38 new stores in five years across the country, starting with a store in Hamilton at the end of this week.

The new store will be relocated from central Hamilton to the shopping precinct on the edge of the city, Te Awa, also known as The Base.

https://www.nbr.co.nz/retail/jb-hifi-eyes-significant-growth-in-new-zealand-market/

[Sideshow Bob]

3 WHS stores to close at Northwood Chch

https://www.rnz.co.nz/news/national/494252/the-warehouse-looks-to-close-three-christchurch-stores?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Monday+24+J uly+2023

[Entrep]

How about they close down TheMarket too

[ronaldson]

3 WHS stores to close at Northwood Chch

https://www.rnz.co.nz/news/national/494252/the-warehouse-looks-to-close-three-christchurch-stores?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Monday+24+J uly+2023

Interesting article. It seems the Centre last sold in March 2019 for $81.7m to ChCh investor Miles Middleton. Covers 7.35ha and has 33062m2 of lettable space.

The WHS stores will have occupied quite an area of the available space and will not be easy to replace with quality tenants which will further exacerbate any reduction in retail turnover being experienced. Closure coinciding lease expiry is an economic outcome for WHS - I wonder if they negotiated for an extension and didn't get a satisfactory deal or simply wished to exit regardless.

However it is it tells quite a tale regarding the decline in retail spend due to current circumstances and may point to similar issues at other locations nationally. And I thought things were relatively buoyant in ChCh compared to some other parts of NZ.

[percy]

Interesting article. It seems the Centre last sold in March 2019 for $81.7m to ChCh investor Miles Middleton. Covers 7.35ha and has 33062m2 of lettable space.

The WHS stores will have occupied quite an area of the available space and will not be easy to replace with quality tenants which will further exacerbate any reduction in retail turnover being experienced. Closure coinciding lease expiry is an economic outcome for WHS - I wonder if they negotiated for an extension and didn't get a satisfactory deal or simply wished to exit regardless.

However it is it tells quite a tale regarding the decline in retail spend due to current circumstances and may point to similar issues at other locations nationally. And I thought things were relatively buoyant in ChCh compared to some other parts of NZ.

The new motorway North bye passes Northwood.

[Habits]

Interesting article. It seems the Centre last sold in March 2019 for $81.7m to ChCh investor Miles Middleton. Covers 7.35ha and has 33062m2 of lettable space.

The WHS stores will have occupied quite an area of the available space and will not be easy to replace with quality tenants which will further exacerbate any reduction in retail turnover being experienced. Closure coinciding lease expiry is an economic outcome for WHS - I wonder if they negotiated for an extension and didn't get a satisfactory deal or simply wished to exit regardless.

However it is it tells quite a tale regarding the decline in retail spend due to current circumstances and may point to similar issues at other locations nationally. And I thought things were relatively buoyant in ChCh compared to some other parts of NZ.

Massive loss of rent for owner and a huge space to fill. If he/she has a plan then no worries

[winner69]

Massive loss of rent for owner and a huge space to fill. If he/she has a plan then no worries

Last year Spotlight said they were going to open superstore out that way

[Habits]

Last year Spotlight said they were going to open superstore out that way

That's a Speedy Az answer cheers

[LaserEyeKiwi]

The new motorway North bye passes Northwood.

Ah yes, that makes sense.

[LaserEyeKiwi]

Also, I’m sure Costco will be evaluating these sort of potential sites.

[ronaldson]

Also, I’m sure Costco will be evaluating these sort of potential sites.

That's a good comment. Not sure thou if the Warehouse stores were contiguous spaces in Northwood. Costco would require a sizeable area.

But will be very interesting where Costco goes next now that the Westgate/Norwest store is up and running. I shop there occasionally, but use the service station much more regularly to fuel up as it is miles cheaper than other local options and I pass by a couple of times a week so no need to go out of my way to visit. Well worth the membership for that alone.

[winner69]

Probably WHS working on how they can use AI to their advantage

One bright spark said for a start we could replace Nick with AI …save zillions and likely to improve the company.

[winner69]

Maybe a guide as to how Noel Leeming performing is JB HiFi in Nz

They have a June year / WHS is July year

Over the year JBH sales have been -

Q1 +27.7% on pcp
Q2 +9.8%
Q3.+10.8%
Q4 +1.4%
Full Year +11.3%

But July month sales were +10% so Noel Leeming might have had a boomer end to financial year.

All in all JBH NZ sales were $292m and reported Underlying EBIT loss of $2.2m

Hope Noel Leeming have done better

[LaserEyeKiwi]

Maybe a guide as to how Noel Leeming performing is JB HiFi in Nz

They have a June year / WHS is July year

Over the year JBH sales have been -

Q1 +27.7% on pcp
Q2 +9.8%
Q3.+10.8%
Q4 +1.4%
Full Year +11.3%

But July month sales were +10% so Noel Leeming might have had a boomer end to financial year.

All in all JBH NZ sales were $292m and reported Underlying EBIT loss of $2.2m

Hope Noel Leeming have done better

Yes JB hifi probably the closest comparable to Noel Leeming in terms of product offering and nationwide network. With Interest rates the way they are I would be surprised if large discretionary purchases have held up.

[Fortunecookie]

Electronic goods generally have a lifecycle of around 12 months. They become obsolete with the introduction of next years model. If they cannot get rid stock there will be plenty of discounting.

[nztx]

https://www.nzherald.co.nz/business/the-warehouse-workers-to-go-strike-this-friday-after-union-says-small-and-disgusting-pay-rise-offered/GSANDX6DDVEOBF7V2OXS72PYE4/

The Warehouse workers to go on strike tomorrow after union says small and ‘disgusting’ pay rise offered


When the company is still coming out with "challenging environment" narratives, it tends to not look very exciting in short term forward

[winner69]

Some would say sack the lot if they unhappy

wHS AR used to show median pay of all workers and that as % of Nickscrem ….don’t seem to do that now

[Rawz]

Some would say sack the lot if they unhappy

wHS AR used to show median pay of all workers and that as % of Nickscrem ….don’t seem to do that now

Once worked at a company and a very senior leader said openly, "if you dont want to work here, leave!" made the plebs (i was one) kinda stop complaining lol

[winner69]

No news from WHs for a while is probably a case of no news is good news ….and things are all hunky dory

Hanging in there in Q3 so year result to end of July looking like it is going to be pretty good …..against expectations that is

[Sideshow Bob]

https://www.nzx.com/announcements/419007

Strong sales at The Warehouse in a challenging year
Highlights
• Group sales of $3.4 billion, up 3.2% on prior year, including record sales result for The Warehouse of $1.9 billion, up 9.6% on prior year
• FY23 gross profit margin decreased 190 basis points compared to FY22 but an improvement on FY23 H1
• Reported Net Profit After Tax of $29.8 million – down 66.6% on prior year
• Adjusted Net Profit After Tax of $37.5 million – down 56.2% on prior year
• Operating cash flow improved 103.2% from FY22 to $214.2 million in FY23
• Net debt of $48.1m and available liquidity of $421.9 million as at FY23
• Final dividend of 8.0 cents per share declared

[Rawz]

Big margin squeeze

[winner69]

Profit better than covid hit year F20 outside of that worst year in last 15 if not this century

Well done Nick and team

[Sideshow Bob]

Market & T7 both big drags on performance. Each of them having and "operating profit" of -$22m. :scared:

[bull....]

outlook statement looks like they are expecting more margin squeeze and tough trading conditions to come similar to other retailers statements

sales rose because prices are higher for items

[Filthy]

Market & T7 both big drags on performance. Each of them having and "operating profit" of -$22m. :scared:

need to just get rid of them both really eh....

[winner69]

need to just get rid of them both really eh....

Can’t do that …T7 and TheMarket vital cogs in the much touted ecosystem

Sorry it’s an integrated ecosystem

Mentioned 5 times in preso

[BlackPeter]

Can’t do that …T7 and TheMarket vital cogs in the much touted ecosystem

Sorry it’s an integrated ecosystem

Mentioned 5 times in preso

.... and from a customer perspective it probably really is. If I look at our personal experience - we spent the last 2 years significantly more money with the market and with Torpedo 7, than with any other Warehouse entity.

But yes, I can see why shareholders would baulk at these 2 business units. Not sure, though what it would mean for the rest of the warehouse group to remove them. Maybe its just losing a loss of $40m pa, which would be good, but maybe its losing as well additional revenue and earnings (particularly through the market).

Tough.

[bull....]

weetbix no longer to be supplied at warehouse .... looks like the supermarket duopoly flexing there muscle ? restricting competition .... weetbix a big draw apparently

https://www.stuff.co.nz/business/133024778/sanitarium-drops-weetbix-from-the-warehouse-blaming-supply-issues

[peat]

That’s terrible !!!
I wouldn’t have thought it mattered to Sanitarium what price their product retailed at? So why not sell some to everybody - if my thinking is true then it smacks of collusion/coercion


weetbix no longer to be supplied at warehouse .... looks like the supermarket duopoly flexing there muscle ? restricting competition .... weetbix a big draw apparently

https://www.stuff.co.nz/business/133024778/sanitarium-drops-weetbix-from-the-warehouse-blaming-supply-issues

[Fortunecookie]

"During the year, we sold the Royal Oak property which was one of our owned store sites. The sale proceeds were $30.5 million under a sale-and-lease-back arrangement with the proceeds being used to reduce debt"

I wonder how they funded the divie.

[ralph]

"During the year, we sold the Royal Oak property which was one of our owned store sites. The sale proceeds were $30.5 million under a sale-and-lease-back arrangement with the proceeds being used to reduce debt"

I wonder how they funded the divie.

Not good fortune cookie

[Fortunecookie]

Debt increased from $66m to $76m. My only guess is that they are referring to lease interest cost?


They seem to be all in on their strategy. I wonder how long they can maintain it.

[winner69]

Debt increased from $66m to $76m. My only guess is that they are referring to lease interest cost?


They seem to be all in on their strategy. I wonder how long they can maintain it.

Debt would have been $106m if they hadn’t used the sale proceeds to ‘reduce’ debt?

[winner69]

Nick took a pay cut this year and only got $3.224m

That’s 57 times what the median employee rem was

Some might say the group got more value out of a ‘median’ employee on $56k than Nick

[Fortunecookie]

Debt would have been $106m if they hadn’t used the sale proceeds to ‘reduce’ debt?

Thanks for the explanation W69. It makes more sense now.

[winner69]

Hey Cookie, if you recast the WHS Cash Flow statement to reflect how cash came and went it looks like this …..last years divies paid by selling a building it seems

Whatever worst thing is that on a day to day basis WHS didn’t generate any free cash flow (negative $3m)

Anyway look at this …excuse the formatting

Reported Operating Cash Flow $214m
Less lease/Rent payments. -$101m
Adjusted Operating Cash Flow $113m

Less Capex. -$116m

Gives Free Cash Flow $-$3m

Less Dividends paid. -$35m

Total Cash consumed. -$38m

Funded by sale of property $31m and $10m debt (with a little extra in petty cash tin)

[Muse]

Hey Cookie, if you recast the WHS Cash Flow statement to reflect how cash came and went it looks like this …..last years divies paid by selling a building it seems

Whatever worst thing is that on a day to day basis WHS didn’t generate any free cash flow (negative $3m)

Anyway look at this …excuse the formatting

Reported Operating Cash Flow $214m
Less lease/Rent payments. -$101m
Adjusted Operating Cash Flow $113m

Less Capex. -$116m

Gives Free Cash Flow $-$3m

Less Dividends paid. -$35m

Total Cash consumed. -$38m

Funded by sale of property $31m and $10m debt (with a little extra in petty cash tin)

that's exactly the case.

one of the things I found amusing was the continuation of 'restructuring costs' and being excluded from management's adjusted NPAT.

Dating back to 2017 (over 7 years, the longest I have looked back), WHS has booked restructuring costs and excluded it from earnings every year bar one. For a grand total of $107.7m, an average of 15.4m pa.

[Fortunecookie]

Hey Cookie, if you recast the WHS Cash Flow statement to reflect how cash came and went it looks like this Â…..last years divies paid by selling a building it seems

Whatever worst thing is that on a day to day basis WHS didnÂ’t generate any free cash flow (negative $3m)

Anyway look at this Â…excuse the formatting

Reported Operating Cash Flow $214m
Less lease/Rent payments. -$101m
Adjusted Operating Cash Flow $113m

Less Capex. -$116m

Gives Free Cash Flow $-$3m

Less Dividends paid. -$35m

Total Cash consumed. -$38m

Funded by sale of property $31m and $10m debt (with a little extra in petty cash tin)

Nice breakdown W69. So the divie wasn't generated from cashflow.
The capex is concerning and if I am not mistaken I think it's primarily related to their ecosystem strategy.

A few months ago I had a look at Amazon how they operated in the early days. To try and see what to look for, hints for the making of a great company.
Obviously they had exponential revenue growth, but at the at the same time they were getting hammered with their capex.
Stepping back I realised that Amazon's capex was all about building the infrastructure/ ecosystem or future moat that drove further growth. It became like this positive reinforcing cycle.

But back to the Warehouse. As a consumer what benefit do I get if I visit their website directly. The easy alternative is to google search. I just don't see a case for it, therefore I don't believe in their overall strategy.
I think it would be a different story if there was a high probability they would capture a huge loyal fan base. I just don't think that is the case.

A potential problem is that if they struggle to generate future cashflow. If they do, then they made need to sell one of the brands within the group which would put a dent in their overall strategy.
I recognise retail is a tough business especially in this environment. Perhaps their is pressure to innovate.

[winner69]

Cookie …..a hint about F24 cash flows and dividend in them saying limiting capex to $80m v $116m this year

Obviously hoping to have enough cash for a divie without borrowing much more or selling buildings

[BlackPeter]

Nice breakdown W69. So the divie wasn't generated from cashflow.
The capex is concerning and if I am not mistaken I think it's primarily related to their ecosystem strategy.

A few months ago I had a look at Amazon how they operated in the early days. To try and see what to look for, hints for the making of a great company.
Obviously they had exponential revenue growth, but at the at the same time they were getting hammered with their capex.
Stepping back I realised that Amazon's capex was all about building the infrastructure/ ecosystem or future moat that drove further growth. It became like this positive reinforcing cycle.

But back to the Warehouse. As a consumer what benefit do I get if I visit their website directly. The easy alternative is to google search. I just don't see a case for it, therefore I don't believe in their overall strategy.
I think it would be a different story if there was a high probability they would capture a huge loyal fan base. I just don't think that is the case.

A potential problem is that if they struggle to generate future cashflow. If they do, then they made need to sell one of the brands within the group which would put a dent in their overall strategy.
I recognise retail is a tough business especially in this environment. Perhaps their is pressure to innovate.

Just to bring a customer perspective for the market.

Actually, I don't really remember how I became a member (might have been through my Vodafone contract), but anyway, it didn't cost me money.

I get free delivery for any order over $50 from NZ and most from overseas ... So, this might be e.g. 2 packs of wheetbix, some moisturizer for the lady, a shirt from India and a spare for a gardentool. No need to buy it all from one supplier within the market. You would not get this with any other order from the Internet.

The other advantage is - I can order from overseas sites, the market does all the checking for me (does the order arrive in time and stuff like that) and if there are any issues I don't need to negotiate with somebody in China or India or in Australia or in the UK, but I can talk to somebody in NZ, and NZ consumer law applies.

Again - I can see as well, that the market so far does not seem to make money, but it clearly does have benefits for customers you won't get anywhere else.

[Fortunecookie]

Just to bring a customer perspective for the market.

Actually, I don't really remember how I became a member (might have been through my Vodafone contract), but anyway, it didn't cost me money.

I get free delivery for any order over $50 from NZ and most from overseas ... So, this might be e.g. 2 packs of wheetbix, some moisturizer for the lady, a shirt from India and a spare for a gardentool. No need to buy it all from one supplier within the market. You would not get this with any other order from the Internet.

The other advantage is - I can order from overseas sites, the market does all the checking for me (does the order arrive in time and stuff like that) and if there are any issues I don't need to negotiate with somebody in China or India or in Australia or in the UK, but I can talk to somebody in NZ, and NZ consumer law applies.

Again - I can see as well, that the market so far does not seem to make money, but it clearly does have benefits for customers you won't get anywhere else.

Appreciate the comment BP. It gives me a better understanding on how they operate.
It kind of feels similar to Amazon- product dependent of course. I am curious how they make or will make money.
For all the investment they have made, I do wonder if it was money well spent.

[Fortunecookie]

Cookie …..a hint about F24 cash flows and dividend in them saying limiting capex to $80m v $116m this year

Obviously hoping to have enough cash for a divie without borrowing much more or selling buildings

It will be interesting to see if the capex tapers off W69.
I just wonder if was the right strategy from the outset, therefore what is the opportunity cost. Should have they returned excess funds to shareholders through divies or share buybacks.
Retail has certainly morphed since Tindall started the Warehouse.

[Entrep]

Not good https://reddit.com/r/auckland/s/WZV8dcEunF

[bull....]

jb hifi say today in AUS they rolling out heaps more store's in NZ and upgrading the NZ website. more competition for noel leaming

[winner69]

OMG this Kmart going gangbusters

Just file accounts for NZ for year ended June 2023

Sales up from 713m in F23 to 919m …wow

NPAT up from 49m to 70m

Make more than WHS but sales are only 27% of what WHS sales are

[Entrep]

Kmart is KILLING IT in my household at least. Amazing turnaround.

[LaserEyeKiwi]

Sounds great - but I think the writer hit the nail on the head when he said it all sounds a bit like a theranos type hype machine, with all the talk of “exclusive tech” in the grocery storage warehouse, and wanting to be “the Netflix of Grocery”. The CEO is pulling out all the CEO hero tropes (The Bezos style desks made out of a door and trestles, the Elon musk style “sleeping on the floor/in the car”).

Now that is not to say it isnt a great business, but at present based on that one article it raises a couple of red flags.

I bloody knew it. (The above was regarding Supie back in April last year - which went under today - the whole thing sounded like little more than a scam with the intention of running it at a loss to achieve large growth rate before either being acquired or listing as an IPO - either way as a way for founders to cash out)

[LaserEyeKiwi]

OMG this Kmart going gangbusters

Just file accounts for NZ for year ended June 2023

Sales up from 713m in F23 to 919m …wow

NPAT up from 49m to 70m

Make more than WHS but sales are only 27% of what WHS sales are

being a subsidiary of a large Australian multinational, means they have much less corporate overhead and tech infrastructure/R&D costs.

[percy]

Went to WHS Blenheim Road store for an item they had "in stock", according to their website.
Surprise surprise the store was "out of stock".
Trust WHS are not getting as bad as The Chemist Warehouse.?

[samjaynz]

Not sure if it's been covered here already, but apparently The Warehouse is moving soon to a model where you'll have to be a Market Club member (and show your club code/QR scan) in order to be able to get any form of special/discount in store.

I personally don't think the deals are good enough to warrant giving up more personal data ... your mileage may vary.

[Entrep]

Not sure if it's been covered here already, but apparently The Warehouse is moving soon to a model where you'll have to be a Market Club member (and show your club code/QR scan) in order to be able to get any form of special/discount in store.

I personally don't think the deals are good enough to warrant giving up more personal data ... your mileage may vary.

Sounds like one more hurdle and reason to avoid their empty stores. It shouldn't be so hard, COPY KMART.

[winner69]

First quarter sales report any day soon

Hope they are positive numbers v last year …share price suggest ps they are all

Will be interesting

[Entrep]

"“Unfortunately, and despite ongoing negotiations, the landlord has decided not to grant us a new lease due to other plans for the space. This means we now need to propose closing our doors in line with the lease-end in April,” "

https://www.nzherald.co.nz/business/the-warehouse-group-to-close-28-year-old-milford-store-on-aucklands-north-shore/GH4ZQXT4HFBU5K6KAFK2OPT6D4/

[Sideshow Bob]

Ouch! :mellow:

https://www.nzx.com/announcements/421567

The Warehouse Group (“the Group”) has today provided a trading update for the 13 weeks ending 29 October 2023 (“FY24 Q1”).
The Group reported total sales of $713.3 million in FY24 Q1, a decline of 6.7% compared to the same period in FY23 Q1.
• The Warehouse sales were $394.2 million, down 4.9% compared to the same period last year.
• Warehouse Stationery sales were $54.6 million, down 4.0% compared to the same period last year.
• Noel Leeming sales were $234.1 million, down 5.1% compared to the same period last year.
• Torpedo7 sales were $27.9 million, down 25.4% compared to the same period last year.

The prior year period of FY23 Q1 saw strong sales across all brands following the easing of COVID-19 restrictions, with record The Warehouse sales growth of 39.0% and Group sales growth of 21.2% in FY23 Q1 compared to FY22 Q1. FY23 Q1 was always going to be an impressive performance to follow and in FY24 Q1 we have seen sales decline compared to prior year across all our brands.

Group gross profit was $243.4 million in FY24 Q1, down 1.6% compared to FY23 Q1. Group gross profit margin saw an improvement of 180 basis points year on year, increasing from 32.3% in FY23 Q1 to 34.1% in FY24 Q1, as a result of improvement in the management of Cost Of Goods Sold (“COGS”).

The Warehouse experienced sales decline of 4.9% to $394.2 million in FY24 Q1. Category strength in grocery sales continued, increasing 8.2% in FY24 Q1 compared to FY23 Q1, and making up 22.8% of The Warehouse sales in FY24 Q1. In addition to grocery, we also saw a strong increase in audio visual and television category sales, but offset by a decline in homeware and apparel.

Warehouse Stationery sales declined 4.0% to $54.6 million. Warehouse Stationery saw growth in sales from our print & copy service offering and communication product category with customers responding well to promotions of these services and products, but offset by softening demand for tablets, tech accessories and print & consumables product categories sales.

Noel Leeming recorded sales of $234.1 million, down 5.1% compared to FY23 Q1. Noel Leeming sales experienced early quarter decline in computers, whiteware and television categories, as customers’ discretionary spending was challenged in big ticket items. Partially offsetting this decline were increased sales in communications and gaming categories, and pleasingly improved performance across key categories later in the quarter.

Torpedo7 recorded sales of $27.9 million, down 25.4% compared to FY23 Q1. Torpedo7 continues to pose a significant challenge for the Group. Bikes and riding apparel sales continued to follow the global decline trend in this category. Weather has also impacted other sports categories including water hardware and water apparel, but delivered sales growth in some product areas including snow sport hardware and apparel due to the late snow season increasing demand in this category throughout Q1.

Torpedo7 sales were further impacted in the quarter due to ERP system replacement issues disrupting online and instore sales.

Total Group foot traffic, adjusting for Warehouse Stationery stores moving to a SWAS, decreased 3.5% in FY24 Q1 compared to FY23 Q1, as customers’ spending continues to be more deliberate.

We have seen a continued normalisation of online sales, with these decreasing 6.5% in FY24 Q1 compared to FY23 Q1, and online sales as a percentage of total sales decreasing from 11.1% in FY23 Q1 to 8.4% in FY24 Q1(1). This compares to online sales of 7.8% of total Group sales in FY20 Q1 being the period prior to COVID-19(2).

Across the industry, New Zealand core retail spend decreased 0.1% in the quarter ending 29 October 2023 compared to the same period last year, with The Warehouse core market share decreasing slightly from 9.6% of core retail spend in FY23 Q1 to 9.1% in FY24 Q1.

Highlights for the quarter include opening new The Warehouse and Noel Leeming stores in Wanaka on 12 October 2023 and expanding our fresh fruit and vegetables offering at The Warehouse to 22 stores, up from 12 at year end.

The Warehouse Group CEO Nick Grayston said “It has been another challenging quarter for the Group but overall, we are seeing some margin improvements across our main brands and good progress on lowering our Group cost of doing business.

“Torpedo7 has not made the progress we’d hoped to see. We have a critical quarter ahead as we focus on driving its business performance recovery.”

Outlook

“Trading conditions for the important second quarter remain uncertain, with a new incoming Government, interest rates remaining high and cost of living challenges.

“We remain committed to providing our customers with value while managing our costs to drive profitable results. Looking ahead, we are well positioned as we move into our biggest quarter including Black Friday, Christmas trading, and our summer peak period with good levels of stock across all our brands,” said Mr Grayston.

Dividends

At the FY23 Annual Results, the Board announced a fully imputed final dividend of 8.0 cents per share. The record date for the FY23 final dividend is 16 November 2023 and will be paid on 1 December 2023.

2023 Annual Meeting

The Warehouse Group 2023 Annual Shareholders’ Meeting will be held on Friday 24 November 2023 at 10.00am (New Zealand time) at the Ellerslie Event Centre, Auckland, and online through the Computershare meeting platform. Please refer to the Notice of Meeting which was sent to shareholders and released to the NZX on 25 October 2023 for further information, including how to participate online.

(1) Online Sales includes The Warehouse, Warehouse Stationery, Noel Leeming and Torpedo7 online and Gross Merchandise Value (GMV) through TheMarket.com and Group Marketplace.
(2) FY20 Q1 Online Sales excludes GMV through TheMarket.com and Group Marketplace as TheMarket.com was launched on 1 August 2019 and GMV was not reported at that time.

ENDS

[winner69]

Ouch! :mellow:

https://www.nzx.com/announcements/421567

The Warehouse Group (“the Group”) has today provided a trading update for the 13 weeks ending 29 October 2023 (“FY24 Q1”).
The Group reported total sales of $713.3 million in FY24 Q1, a decline of 6.7% compared to the same period in FY23 Q1.
• The Warehouse sales were $394.2 million, down 4.9% compared to the same period last year.
• Warehouse Stationery sales were $54.6 million, down 4.0% compared to the same period last year.
• Noel Leeming sales were $234.1 million, down 5.1% compared to the same period last year.
• Torpedo7 sales were $27.9 million, down 25.4% compared to the same period last year.

When it’s ouch you resort to the ol’ ‘corresponding quarter last year was a boomer’ trick

Nonetheless WHS sales down 6.7% on pcp ….Briscoes Group sales up 2.4% in same quarter

[winner69]

Torpedo 7 getting uglier and uglier …sales down 25%

Nick says - “Torpedo7 has not made the progress we’d hoped to see. We have a critical quarter ahead as we focus on driving its business performance recovery.”

[percy]

Category strength in grocery sales continued, increasing 8.2% in FY24 Q1 compared to FY23 Q1, and making up 22.8% of The Warehouse sales in FY24 Q1

I looked at three Warehouse stores on Sunday looking for "Kiwiland Orchard Fruits",Eastgate,Barrington and Hornby.
I think their grocery section is very poor quality,Displays are poor,empty shelves, and prices generally more expensive than New World where I usually shop.
Giving more space to low margin products where their logistics are not coping,[ie out of stocks],looks as though it is a high risk.
WHS are not the only store saying they have an item "in stock",but when you visit the store they are "out of stock".
I notice at WHS checkouts grocery customers only have a few items in their trolley,compared with full trolleys at New World.

[winner69]

Category strength in grocery sales continued, increasing 8.2% in FY24 Q1 compared to FY23 Q1, and making up 22.8% of The Warehouse sales in FY24 Q1

……

.

The Warehouse sales were $394.2 million, down 4.9% compared to the same period last year.

If you back out growth in groceries remainder of sales were down more than 8%

Not even maintaining market share ……pretty dismal result

[percy]

The Warehouse sales were $394.2 million, down 4.9% compared to the same period last year.

If you back out growth in groceries remainder of sales were down more than 8%

Not even maintaining market share ……pretty dismal result

I see their grocery section taking up valuable high margin retail space,therefore it comes as no surprise to me they are going backwards.

[Sideshow Bob]

Down 7c or 3.9% on opening to $1.75.

Not quite the lowest price price they've traded at this century.....have been low $1.60's this year.

But don't worry, there is a divvy feed coming up soon.....;)

[jimdog31]

Torpedo 7 getting uglier and uglier …sales down 25%

Nick says - “Torpedo7 has not made the progress we’d hoped to see. We have a critical quarter ahead as we focus on driving its business performance recovery.”

Based on their rough cost of doing business $1.4m per week and assuming 30% margin, their loss for that 13 weeks is $10m.

[Muse]

Based on their rough cost of doing business $1.4m per week and assuming 30% margin, their loss for that 13 weeks is $10m.

You've always had a good eye for the WHS and retail Jimbo.

The problem with TP7 is that it barely eeked out a profit when it was experiencing bubble-like retail conditions (driven by the surge in people buying bikes and outdoor gear when the country was in and out of lockdowns). And what did WHS do - it went on a store opening spree with the assumptions in the business case for those new stores likely based on some faulty/naïve per store revenue inputs.


14842

I find it instructive in retail to look at the sales per the number of average stores during a quarter (or whatever timeseries is available) and how it compares to trend. An issue where there is a severe correction in retail sales is that they don't simply revert to trend, they can fall below it as the segment works through its issues (a glut of bikes the issue here). Sales per ave store in Q1 FY24 now below where they were in the last Q1 before covid hit, despite inflation. Lots of people bought bikes during covid and they are long lasting durable discretionary items that don't need replacing often, especially when households are squeezed. That together with the glut of available stock creates a lot of short term challenges for TP7. No idea when it will be worked through but one would hope for TP7's sake it'll revert back up to trend at some point.

The problem with TP7 is that its stores are large with attendantly large leases and CODBs, its stock slow to turnover, and given the increased footprint in recent years the brand probably carries a higher WALT than other WHS brands, making rationalising the network slower and more difficult. It certainly needs some rationalisation and either through early lease exit penalties or just taking it on the chin until the lease is up, it will be an expensive exercise for the business.

[bull....]

terrible numbers. need to merge torpedo7 in with warehouse stationary and the warehouse all under one roof. ditch the marketplace esp now as they will never compete against temu

[nztx]

Down 7c or 3.9% on opening to $1.75.

Not quite the lowest price price they've traded at this century.....have been low $1.60's this year.

But don't worry, there is a divvy feed coming up soon.....;)


How about the one after and next after that ? .. that could be a bit of a worryhouse as all the boys and girls out there suddenly find their buckeroos not stretching anywhere near before ;)

When will pre Christmas sales start to try reign in the RedShed fiscal woes ? ;)

No sense in getting to own all the excess clutter for another year through to Christmas 2024 and then get to land a large shower of Red for the privilege of the exercise..

[nztx]

terrible numbers. need to merge torpedo7 in with warehouse stationary and the warehouse all under one roof. ditch the marketplace esp now as they will never compete against temu


Wonder if a slight name change to Rocket7 would help ? ;)

[Muse]

terrible numbers. need to merge torpedo7 in with warehouse stationary and the warehouse all under one roof. ditch the marketplace esp now as they will never compete against temu

They need to do something with TP7 but they have leases. A real obligation and always been viewed in retail as quasi debt (more so now under archaic IFRS16 rules). Difficult and expensive to exit. TP7 sells more expensive, high touch products - not like redsheds where people are content to wonder aimlessly without assistance from staff. People want to know about the bike, kayak, snowboard, hiking shoe, sleeping bag, etc.

Temu thrashing themarket. I assume the WHS has pulled back on the heavy adword spend they were doing to bring in customers. But I think the systems that underpin themarket are quite important and central to the other brands and to some extent could be a IT cost centre so not clear to what extent losses can be paired back

WHS already trying to bring bluesheds under the redsheds banner with their store within a store strategy. Only so much you can do to offset an industry in terminal decline.

Important to focus on gross profit and gross margin - not necessarily changes in revenue. Margin did improve although gross profit fell 2%. Gross profit really needs to be growing at ~4-5% or whatever the rate of CODB inflation is just for EBIT to run steady.

Kmart is thriving, Costco looking to expand. JB Hi Fi doing (relatively) well and expanding. Bring up a 20 year chart and clear the business has been in structural decline for the last 2 decades. Hard to see that changing. Business has been in a downgrade cycle the last 18 months and even before todays update is trading on 14x 2024 consensus earnings (which I'd imagine they'll miss). Nothing counter cyclical about this business. My opinion only and GLTAHs. Disc: no position.

[jimdog31]

https://nz.trustpilot.com/review/torpedo7.co.nz

[Balance]

https://nz.trustpilot.com/review/torpedo7.co.nz

Hardly surprising with all the retrenchment & restructuring going on in the group.

Staff morale at all time low in WHS group - that’s one feedback you will get back very quickly if you talk to any contact there who is a non-executive staff.

I went to the local WHS’s gardening section last weekend and it is damning to see so many of the plants half dead (obviously no care or attention) and I wonder why WHS bother! Compare and contrast with the premium presentation at Mitre 10 for eg and one gets the impression of a dying group.

WHS’s glory days are gone and the concept of a lifelong career advancing ever higher within the group is a distant dream.

[Sideshow Bob]

https://nz.trustpilot.com/review/torpedo7.co.nz

Consistent with my T7 experiences. Probably 30% of the time you strike someone good.

I'm into that sort of stuff, and have a gift voucher still to use up with T7 - but will avoid if at all possible.

Last major item I bought there was my then 10 year-old daughters bike. Pedal fell off on the first ride - like WTAF???

[bull....]

They need to do something with TP7 but they have leases. A real obligation and always been viewed in retail as quasi debt (more so now under archaic IFRS16 rules). Difficult and expensive to exit. TP7 sells more expensive, high touch products - not like redsheds where people are content to wonder aimlessly without assistance from staff. People want to know about the bike, kayak, snowboard, hiking shoe, sleeping bag, etc.

Temu thrashing themarket. I assume the WHS has pulled back on the heavy adword spend they were doing to bring in customers. But I think the systems that underpin themarket are quite important and central to the other brands and to some extent could be a IT cost centre so not clear to what extent losses can be paired back

WHS already trying to bring bluesheds under the redsheds banner with their store within a store strategy. Only so much you can do to offset an industry in terminal decline.

Important to focus on gross profit and gross margin - not necessarily changes in revenue. Margin did improve although gross profit fell 2%. Gross profit really needs to be growing at ~4-5% or whatever the rate of CODB inflation is just for EBIT to run steady.

Kmart is thriving, Costco looking to expand. JB Hi Fi doing (relatively) well and expanding. Bring up a 20 year chart and clear the business has been in structural decline for the last 2 decades. Hard to see that changing. Business has been in a downgrade cycle the last 18 months and even before todays update is trading on 14x 2024 consensus earnings (which I'd imagine they'll miss). Nothing counter cyclical about this business. My opinion only and GLTAHs. Disc: no position.

yep the lease costs become like a noose when a business in struggling. themarket costing them over 20m yr and declining sales to go with it. temu/shein/amazon probably making the sales decline even more now soon to nothing is my pick. they are not big enough to compete with these giants

[Jay]

Hardly surprising with all the retrenchment & restructuring going on in the group.


...I went to the local WHS’s gardening section last weekend and it is damning to see so many of the plants half dead (obviously no care or attention) and I wonder why WHS bother! Compare and contrast with the premium presentation at Mitre 10 for eg and one gets the impression of a dying group...

.
Yes was too at a WHS garden section, and agree a lot of plants could do with some TLC, no where near the attention they use to get, at least at M10 they look like they have some "plant" people , that know a bit about them as unlike the WHS

[Sideshow Bob]

Lots of nice words and pictures.

https://www.nzx.com/announcements/422346

[winner69]

Lots of nice words and pictures.

https://www.nzx.com/announcements/422346

No excitment at meeting from Joan and Nick

[Entrep]

Lots of nice words and pictures.

https://www.nzx.com/announcements/422346

Nothing whatsoever that makes me interested.

[jimdog31]

Nothing whatsoever that makes me interested.

Did they give any colour around how they are going to turn Torpedo around??

[JSwan]

Did they give any colour around how they are going to turn Torpedo around??

Nope, they said they’ll provide a “full update” for it at the HY

[mike2020]

When t7 was online initially it provided value but I was quite surprised visiting a physical store. It was all high end prices and nothing else. Not much to differentiate from anywhere else. I have been in a lot of mitre ten, bunnings and warehouse lately. Warehouse can difffer store to store. Staff at the base cant find their arse. Staff at bunnings know where everything is and have time to help. One lady at mitre ten spent ages helping my friend choose two tomato plants. The warehouse feels like a govt department under labour.

[biker]

Ordered some things online on the 22nd. Apparently a “glitch” in the system only discovered yesterday, cancelled a whole lot of orders. Delivery now ‘sometime’ early December.
No comms on this at all until I phoned.

Appalling. Can’t believe I’m a shareholder.

[winner69]

Ordered some things online on the 22nd. Apparently a “glitch” in the system only discovered yesterday, cancelled a whole lot of orders. Delivery now ‘sometime’ early December.
No comms on this at all until I phoned.

Appalling. Can’t believe I’m a shareholder.

I don't think they ever found the TV that was supposedly in stock out the back .....but couldn't find lol

[biker]

Ordered some things online on the 22nd. Apparently a “glitch” in the system only discovered yesterday, cancelled a whole lot of orders. Delivery now ‘sometime’ early December.
No comms on this at all until I phoned.

Appalling. Can’t believe I’m a shareholder.

Picked up on the 30th and estimated delivery 4th Dec!! Over 12 days from ordering to cross town.
Needed tomorrow at the latest.

There’s a chance I may go elsewhere from now on. (sarcasm and understatement should be noted)

[jimdog31]

trading update will sneak out this fri at 4pm.

im picking its going to be an absolute howler.

if only there was a way to short this on the nzx!

ill leave this here

https://nz.trustpilot.com/review/torpedo7.co.nz

[winner69]

trading update will sneak out this fri at 4pm.

im picking its going to be an absolute howler.

if only there was a way to short this on the nzx!

ill leave this here

https://nz.trustpilot.com/review/torpedo7.co.nz


Noel Leeming got 1 and a bit Star as well

Nick says he is so proud of his staff and the service they give you

And of course don’t these sites exist for bad reviews …..like heck Glassons only got 2.1

[jimdog31]

Noel Leeming got 1 and a bit Star as well

Nick says he is so proud of his staff and the service they give you

And of course don’t these sites exist for bad reviews …..like heck Glassons only got 2.1

plenty of businesses on here have good reviews ….

the funny part is , anyone with a 1.5 star average is really actually a 0.5 star, as everyone leaving a review would give zero if they could but are forced to give a 1

[JAX]

trading update will sneak out this fri at 4pm.

im picking its going to be an absolute howler.

if only there was a way to short this on the nzx!

ill leave this here

https://nz.trustpilot.com/review/torpedo7.co.nz

I agree, went into a two different Warehouse stores, one pre Christmas and one yesterday on Boxing day, pretty empty - hardly anyone in them, lots of empty shelves and damaged stock and general untidiness - but what was most striking was how few people were in there buying anything. Didnt get a good feeling - especially the lack of stock and lack of any good deals. Torpedo7 was much the same, except seem to have a massive overstock of bikes and not a lot else, stores a mess and again a lot of opened and damaged stock, was looking at wetsuits no "normal sizes" only giant sizes or midgets, that seemed to be common, cant even give them money so left and bought one at Rebel.

Then I made a silly mistake of going to Kmart - queue for the checkouts must have been the length of the store, people with jammed trolleys, store also a mess - but a different sort, because people had just been going wild. I know who I would be investing with.

If the numbers are just average, it will definitely be a surprise.

[Habits]

Warehouse had a fair number of shoppers this afternoon, more customers than at bunnings. Kiwis need shopping therapy more than splurging on renos

[jimdog31]

must be next friday now

[ratkin]

I agree, went into a two different Warehouse stores, one pre Christmas and one yesterday on Boxing day, pretty empty - hardly anyone in them, lots of empty shelves and damaged stock and general untidiness - but what was most striking was how few people were in there buying anything. Didnt get a good feeling - especially the lack of stock and lack of any good deals. Torpedo7 was much the same, except seem to have a massive overstock of bikes and not a lot else, stores a mess and again a lot of opened and damaged stock, was looking at wetsuits no "normal sizes" only giant sizes or midgets, that seemed to be common, cant even give them money so left and bought one at Rebel.

Then I made a silly mistake of going to Kmart - queue for the checkouts must have been the length of the store, people with jammed trolleys, store also a mess - but a different sort, because people had just been going wild. I know who I would be investing with.

If the numbers are just average, it will definitely be a surprise.

Queues in kmart are insane, they lose so much custom from people putting down their clothes and walking out rather than endure the queue. But at least they have queues, the cashiers at the warehouse twiddling their thumbs.

As for torpedo 7 they do have some decent gear, lots of it is probably bought online, but they are a shambles like you say.

A mate of mine wanted to buy one of their kayaks for 499 in the sale, only one they had to show him was broken, (tower junction store) said they could order him one, but the fact they only had one broken one in stock was enough to put him right off, so he went elsewhere.

[Habits]

Div yield of just over 5 percent 5.06% is poor, my intuition says the share price needs to drop to reflect this. I even picked whs in the share challenge as a retail story for 2024 but having second thoughts. Term deposit interest rates coming down may help

[Entrep]

Div yield of just over 5 percent 5.06% is poor, my intuition says the share price needs to drop to reflect this. I even picked whs in the share challenge as a retail story for 2024 but having second thoughts. Term deposit interest rates coming down may help

This one shows absolutely no signs of turn around.

Kmart killing them
Torpedo 7 and TheMarket killing them

They need to make some hard decisions.

[Toddy]

Haven't had to queue at the WHS in both Auckland and Tauranga for months now.

I do enjoy buying from Torpedo on the Farmlands card. Excellent discounts.

[Sideshow Bob]

Haven't had to queue at the WHS in both Auckland and Tauranga for months now.

I do enjoy buying from Torpedo on the Farmlands card. Excellent discounts.

Wasn't aware on the Farmlands discount.....thanks!!

Although generally it is a painful shopping experience, especially online......currently saying order delays, maybe 10 days for small items and 26 days (!!) for large items, including with click & collect. :confused:

[ratkin]

Wasn't aware on the Farmlands discount.....thanks!!

Although generally it is a painful shopping experience, especially online......currently saying order delays, maybe 10 days for small items and 26 days (!!) for large items, including with click & collect. :confused:

The 26 day delay at torpedo 7 is ridiculous. Stuff like kayaks, tents etc people want for their summer holidays, can't see many putting up with a 26 day delay

[Muse]

The 26 day delay at torpedo 7 is ridiculous. Stuff like kayaks, tents etc people want for their summer holidays, can't see many putting up with a 26 day delay

It’s outrageous - almost a case study in how to stop customers in giving you their money.

Not that I am a frequent reddit user but there is a very recent thread on the warehouse in personal finance nz on the severe operational challenges besetting TP7 and other TWG subsidiaries. Some significant strife occurring .

[Mr Slothbear]

It’s outrageous - almost a case study in how to stop customers in giving you their money.

Not that I am a frequent reddit user but there is a very recent thread on the warehouse in personal finance nz on the severe operational challenges besetting TP7 and other TWG subsidiaries. Some significant strife occurring .


i saw that too Muse. Anyone entertaining the thought of putting your money near them should give it a read.

i don’t short but if I did WHS would be one of my top candidates

[winner69]

No update on Christmas sales yet

Maybe a case of no news is good news

[Perky]

Nick will be still at his Bach at Omaha. Joan be out shopping choosing the lip stick colour to put on the pig.

T7 will still be having a shocker..too many stores (25) costing a lot to run..Too much stock not moving lots of discounting. They can’t even get it to customers when they do buy it. They have the quinella…software and hardware issues ..lol
The Market gone very quiet…no promotional activity…pretty sure they put it to sleep this year. Amazon. Au be killing it
Noels seem to be discounting a lot.
No idea how red sheds going..the one I visit seems quiet.

Agile management my arse.
The share price tells you what the market expecting..nearly 52 wk low I think.

Might be time for Nick and Joan to find a new home. Nicks Expensive to run and been there a while now.

[Jay]

Nick was spotted doing some shopping at a warehouse store yesterday - good to know he shops there!

[Perky]

Do you know if he was buying the lipstick…might have my wires crossed. Joan could be at Omaha.

[Traderx]

On 14/11 WHS stated in NZX announcement:

"Torpedo7 sales were further impacted in the quarter due to ERP system replacement issues disrupting online and instore sales."

and

“Torpedo7 has not made the progress we’d hoped to see. We have a critical quarter ahead as we focus on driving its business performance recovery.”

As at today 9/1 ~7 weeks later: on the Torpedo 7 website there is a bright banner stating

"Order delays (includes Click & Collect) - Large items may take up to 26 days, small items can take up to 10 days. Can't wait? Shop in store"

What on earth is going on? Who is running this ship?

Disc: Not a holder!

[Perky]

Captain Nick the Agile is in charge. Joan of Arc is the fleet commander.

This is what Nick said in December…the problems are mostly resolved…but that not what your seeing

However, Torpedo7 sales declined a further 25.4% in the first quarter of the 2024 financial year, covering the 13 weeks to October 29.
As well as a decline in bike sales, Torpedo7 was impacted by the move to a new enterprise resource planning software system in the quarter, with some customers unable to have transactions fulfilled, both instore and online.
Most of those teething problems were now resolved, Grayston said.

[winner69]

Pretty big drop in share price today …close at $1.50

Seems to be the lowest it’s been this century

Probably bad news coming out tomorrow

[Sideshow Bob]

Market cap $545m

Buy it and use the red shed footprint as a supermarket chain......

[emearg]

It's PE is 17. That seems high to me for a retail stock. Does it have particularly bright prospects?

I note BGR has a PE of 12.

One of these companies has a very large turnover and the other generates significant profits.

Why is WHS so highly regarded by the market?

[malreid]

Having done a bit of shopping recently with time to spend comparing pricing and offering across different stores, T7 and Noels left me completely underwhelmed with what was on offer, store condition/organisation and tidiness. Gave up on trying to find any staff available or with sufficient knowledge to assist as well.

Pricing of consumer level products is also pretty much the same as anywhere else for equivalent quality, with T7 a surprising amount higher. Simply reinforced in my mind why I avoid the group 99% of the time and take my money elsewhere.

Long gone are the days when a bargain could actually be found.