View Full Version : WHS - Warehouse Group
marinesalvor
07-11-2005, 09:38 AM
oh well - maybe they can get King Win L to make a takeover - takeover rumours are really the only thing that impacts WHS SP
Snow Leopard
24-11-2005, 09:07 AM
WHS has sold out of Oz.
Snow Leopard
24-11-2005, 09:45 AM
Good to see that they apply their mantra
"Where everyone gets a bargin"
even when selling part of the business.
winner69
24-11-2005, 10:21 AM
Early response seems to be the market does not like .... a bit of selling
Even though well signalled and most knew this would happen and they would have to writeoff $100M odd some would say all built into the price .... but there were many (some on sharetrader) once the announcement was actually made would be the time to get back in
However Snoopys earlier analysis a while ago sort of suggested (I recall) that 400 odd was a pretty good price for WHS ... ecen without Aust strangling it to death
Maybe the market is efficient (more so than we give it credit for) but the next few days could be interesting ... wonder what the price will be next week
craic
24-11-2005, 11:56 AM
Bought a few a while back for 399 cps. Just put in for a further 1000 at todays price. I fail to see why the price is not going up on the announcement. I suppose the majority of small shareholders ahve to read the newspapers, think about it - and then ring a broker. I like the moves they are making in NZ. Sell booze - sell ride-on mowers, maybe sell Chinese cars soon?
Good they are out of Australia.
However, I personally dont think food and alcohol is a good option.
You cant beat supermarkets. They work on higher turnover/lower margins and have better buying power by selling greater volume of product. Also until WHS becomes a full product supplier, people cant do all there shopping there which is the way supermarkets are going.
Placebo
24-11-2005, 01:44 PM
If anything it's a positive as it removes an uncertainty. :D
Then again, it also removes a potential growth avenue. :(
So what now? Big fish in a small pond? Fiji? [?]
I disagree re the supemarkets. They are already converging -- you can buy TVs at Foodtown, toilet paper and shampoo at the Warehouse. No doubt this trend will continue.
rmbbrave
24-11-2005, 01:49 PM
Aussies may get a bargain from sale of Warehouse
24.11.05 10.00am
Discount retailer The Warehouse has signed a conditional deal to offload its troubled Australian business.
A joint venture between Catalyst Investment Managers, its parent PPM Capital, and Castle Harlan Australian Mezzanine Partners -- acting on behalf of the Champ funds -- has agreed to buy the business for A$92 million ($99 million).
In 2000 The Warehouse paid A$105 million for the chain which consisted of 105 Clints Crazy Bargain and Crazy Sollys stores.
The sale will result in a pre-tax earnings expense of between $80-$90 million for The Warehouse.
The sale is expected to be completed in early 2006, subject to regulatory approval and other commercial conditions, including an agreement with Australian discount retailer Millers, which the joint venture is also buying.
The head of The Warehouse Australia, Ian Tsicalas, will stay at the helm of the new combined business, and as a result has today resigned as a director of The Warehouse.
The Warehouse was advised by Auckland-based First NZ Capital and Sydney-based firms CSFB and Allens Arthur Robinson.
The Warehouse chairman Keith Smith said while The Warehouse Australia has made improvements in the past year, a review indicated that substantial further investment was needed to achieve operating scale and future growth.
"The board considered that at this time, focusing the company's resources on developing its New Zealand businesses would generate a better outcome for shareholders," he said.
The Warehouse revealed in June it was looking to merge its troublesome Australian "Yellow Sheds" chain with rival Millers and then sell off the joint operations.
The enlarged discount variety business would generate sales of about A$1.3 billion and have a market share of 14 per cent, making it more competitive against the dominant Australian players, Coles and Woolworths.
Australia has long been a drag on The Warehouse's profits. For the first quarter of this year, The Warehouse Australia reported an 8.7 per cent drop in sales during the quarter, to A$105 million, while same store sales fell 8.7 per cent.
Sales in New Zealand for the period were up 3.2 per cent to $326 million, with same store sales up 0.2 per cent.
The Warehouse in New Zealand has been undergoing a revamp under new chief executive Ian Morrice, who took on the role in August last year.
Mr Morrice has worked at cutting clutter in the group's stores and improving the product line. A new logo was unveiled during the October quarter and a replacement store opened in Palmerston North based on layout and fixture innovations trialled at the group's laboratory store in Te Rapa.
The group has also announced plans to open an alcohol shop within its store in Fraser Cove, Tauranga.
The trial shop will be owned and run by The Warehouse Cellars, a joint venture between the group and Reliance Wines.
Shares in The Warehouse last traded yesterday at $4.09, having ranged between $3.04 and $4.39 over the past year.
- NZPA
quote:Originally posted by PlaceboI disagree re the supemarkets. They are already converging -- you can buy TVs at Foodtown, toilet paper and shampoo at the Warehouse. No doubt this trend will continue.
Yes they are moving into Warehouses area based on there high volume/low profit margin. Warehouse cant compete and I think they will suffer. Warehouse is the David vs the supermarket Golith and in this case I dont think the small will survive.
Time will tell but I think they should have looked for another warehouse stationary (untapped market) rather than supermarkets which is a mature market.
Halebop
24-11-2005, 10:36 PM
quote:Originally posted by CJ
Yes they are moving into Warehouses area based on there high volume/low profit margin. Warehouse cant compete and I think they will suffer. Warehouse is the David vs the supermarket Golith and in this case I dont think the small will survive.
Warehouse was a minnow compared to Farmers when they started out but they prospered by delivering a better offer. As always the better offer will prevail. Nobody in New Zealand has yet demonstrated an ability to package a catch-all grocey+general merchandise offer.
Most supermarkets I go to are attempting to stock limited lines of general merchandise. They are typically hamstrung by lack of space and so will not present a serious one stop shop competitor without some equally serious investment.
Warehouse is already gearing to compete on this level by sourcing oversized sites for the "hypermarket" concept. Personally I think their historical deficiency has been detail. "Retail is detail" and I still remain unimpressed by their merchandising skills although I have not seen their concept store in Hamilton. The key to them succeeding with a full grocery offer is how it will be packaged. I suspect a model similar to Aldi is the way to go because it offers higher gross margins - an important condsideration while they lack scale. This might not fit comfortably with their attempts to upscale the discount stores so I'll await outcomes with interest. A successful strategy could provide years of future growth. A poor implementation will probably see them either splutter along as they have for several years or be swallowed by Woolworths.
I agree with your comments but WHS beat Farmers on cost (and teh customers followed). You cant beat a supermarket on cost (which is my point) so you have to diffentiate some other way (WHS key differentiator is cost though they have now improve to provide a full product line with three pricing options - they call it good, better, best).
The threat I see is why cant supermarkets do the hypermarket. They do that over here (UK) where they have three different formats of stores from inner city dairy type, full supermarket, and then hypermarket.
IMHO WHS should have tried to by repco in NZ rather crazy clints in Australia (ie. tried to get warehouse stationary type growth in the market they know).
rmbbrave
26-11-2005, 05:33 PM
Experimental store performs best
26 November 2005
Sales at The Warehouse's Waikato "laboratory" store have been the strongest of all 85 Red Sheds since its July 14 opening, chief executive Ian Morrice says.
He told yesterday's annual meeting in Auckland that the Te Rapa store, which is testing new layouts and a greater range of clothing, entertainment goods, technology products, gardening equipment, consumables and groceries, has been the group's best sales performer.
In March The Warehouse began a three-year programme to improve store layouts, customer service and products. Aside from Te Rapa, it has opened two further new-format stores, in Palmerston North and Lower Hutt.
The next will be in Pakuranga, Auckland, in April.
The Warehouse Stationery business, or Blue Sheds, would benefit from Thursday's sale of the company's loss-making Australian operations, Mr Morrice said, with about $10 million to be invested in the Blue Sheds over the next few years.
"We think we've got a very good store footprint but can do more to generate more sales per square metre," he said.
He believed this financial year would see consolidation at the 43 Blue Sheds, but would also see a return to earnings growth. July-year profit fell to $3.9 million from $7 million the previous year.
onlinesid
28-11-2005, 11:09 AM
The price dropped again to 3.98
What is going on with WHS? I can't make sense of it.
Although, I sold all my WHS on 4.14 (bought them on 3.86) :D (was a fluke, I needed some money!)
winner69
28-11-2005, 08:27 PM
A few days since telling the world they sre giving up on Australia and will now concentrate on NZ and still the shareprice languishes (Millers on the other hand went up)
Obviously Tesco (or was it Walmart) have given up WHS
Is it that after so many years of hanging in there NZ punters finally officially declared WHS as a dog .... snd not even rsted as a turnaround story
Afraid Mr Icehot ... that $6 here it comes not looking likely
Snoopy
28-11-2005, 09:32 PM
quote:Originally posted by onlinesid
The price dropped again to 3.98
What is going on with WHS? I can't make sense of it.
Although, I sold all my WHS on 4.14 (bought them on 3.86) :D (was a fluke, I needed some money!)
Perhaps it is just people digesting what was said at the AGM on Friday? Did anyone go?
I wouldn't be surprised to see the share price weaken further. WHS at $3.98 certainly isn't cheap. By my reckoning they need to raise underlying profits by 10% next year, to justify even that $3.98 share price. That will be a tough assignment in the current retail environmnet.
With Australia gone, so is the obvious avenue for growth. Having said all this, I don't regard WHS as being seriously overvalued. But I wouldn't be looking to buy any more shares at today's prices either.
SNOOPY
discl: hold WHS, and happy with my underweight position
patsy
29-11-2005, 01:13 PM
quote:Originally posted by rmbbrave
Experimental store performs best
26 November 2005
Sales at The Warehouse's Waikato "laboratory" store have been the strongest of all 85 Red Sheds since its July 14 opening, chief executive Ian Morrice says.
He told yesterday's annual meeting in Auckland that the Te Rapa store, which is testing new layouts and a greater range of clothing, entertainment goods, technology products, gardening equipment, consumables and groceries, has been the group's best sales performer.
In March The Warehouse began a three-year programme to improve store layouts, customer service and products. Aside from Te Rapa, it has opened two further new-format stores, in Palmerston North and Lower Hutt.
He should've said also that the "brains" behind the store redesign and new layout are all gone, in the massive management exodus started with Muir.... There is no real strength of management left, especially at the Blue Sheds, and Tindall is just a figurehead at the moment.
Can anyone tell me where the proposed new format store at 'Pakuranga' is being built. Or does this refer to a new Warehouse being built in the the Slyvia Park project now being developed by KIP. Perhaps Pakuranga sounds better than Mt. Wellington.
rymndchn
29-11-2005, 11:42 PM
I believe that they are currently renovating their Pakuranga store at Pakuranga Plaza at the moment given all the construction work which is going on there.
Presumably this is the store which they are referring to.
Bling_Bling
30-11-2005, 12:00 PM
If Tindell sells his stake, the price will jump 20% !
onlinesid
30-11-2005, 03:16 PM
Wow, only 3.77 just now!
What is happening? Now I'm really glad to have sold it.
winner69
30-11-2005, 03:42 PM
onlinesid ... was 375 earlier
Heck ... where are the faithful ... all though who thinks the WHS is a great story and once Aust was gone the world be a lot brighter and as icehot sais a shareprice of 600 soon.
Looks like the market has at last deemed WHS to be a DOG ... an unwanted one at that .... and probably with fleas as well
Bongo - you are the man ... you were right .... HQ staff were and probably are still in a panic ... more bad news to come out? ... or was it because they all are likely to lose their jobs soon.
onlinesid
02-12-2005, 12:20 PM
quote:Originally posted by Bling_Bling
If Tindell sells his stake, the price will jump 20% !
Care to ellaborate further?
Bling_Bling
05-12-2005, 02:01 PM
quote:Originally posted by onlinesid
quote:Originally posted by Bling_Bling
If Tindell sells his stake, the price will jump 20% !
Care to ellaborate further?
The best thing for WHS is a major stakeholder that can add value to the company. It seems like Tindell has done his bit and time to move over for a larger company that has the muscle behind them to takeover and move this puppy to the next level.
minimoke
05-12-2005, 02:10 PM
Given they were at the London Employment Expo looking for senior distribution / logistics people suggests there are more than one or two challenges ahead.
Dimebag
05-12-2005, 02:24 PM
Just posted this on the other WHS thread:
Last year WHS made about $108m pre-tax & abnormals. Australia contributed a loss of about A$5.4m.
Following the sale of the Australian "assets", WHS's consolidated earnings should increase by about $6m from the de-consolidation of the AU losses, and a further $6m from the reduction in interest outgoings (assuming the $99m is used to retire debt).
WHS's adjusted pre-tax earnings would therefore be about $120m, or about $80.4m after taxes. This equates to about 26.3cps.
At $3.68, WHS are therefore trading at about 14x earnings, the lowest in a long time, but still not an exceptional bargain. It equates to a pre-tax earnings yield of 10.67%, and post-tax of 7.15%.
WHS's NZ growth has slowed considerably in recent times. EBIT was down more than 8% last year, and sales flat. Q1 2006 saw a continuation of this trend; total sales were up 3.2%, but the all-important same store sales a more meagre 0.2% (much below the rate of inflation). WHS is therefore continuing to lose market share. WHS stationary was up 2.9%, with same store sales down by 1.6%. Clearly, the detour into Australia has had the unfortunate consequence that WHS have neglected their NZ business - their strongest asset - and have continued to lose ground and have their competitive advantages steadily eroded.
It was always difficult to see WHS making headway in foodstuffs, given the very efficient and established operating model of the likes of Pak'n'Save which have the discount segment sown up. The liquor venture has some potential, but it won't add materially to WHS's aggregate results.
As such, it appears as though WHS has largely gone "ex growth", and will be prices largely as a dividend stock from here.
A full payout would yield 10.67% pre-tax, which is not too shabby, but that rests on the assumption that WHS can sustain margins at their present levels. This may or may not be a fair assumption.
Whatever the case though, it is difficult to see a large amount of upside in WHS's price at any point in the future, at least unless and until they get there act together in NZ & perhaps move to a position of gaining market share again.
All in all, one would have to conclude that WHS at $3.68 is priced about right, and might appeal to those looking for pre-tax dividends of 8-10%.
Cheers,
Dimebag (none held)
I guess this makes it official, WHS is a Dog:
http://www.fatprophets.com.au/content.aspx?page=Labrador%2c+Fat+257
Bling_Bling
08-12-2005, 08:03 AM
Where is the growth coming from?
onlinesid
09-12-2005, 12:45 PM
It still falling lower even when I thought it's reached the bottom!
Dimebag
09-12-2005, 12:53 PM
There is no growth moving forward - that is the point. WHS are now a dividend stock.
The fact that a company has no growth prospects worth paying for does not make the stock automatically a dog. At a pre-tax earnings yield of say 13%, it would be reasonable value. The stock would have to sell for $3.00 for this to be the case.
For those looking for decent inflation-indexed income, $3.00 would be a buy IMO.
Dimebag (none held)
Current Price: $3.50
winner69
09-12-2005, 02:34 PM
What will be interesting is what happens to WHS pricing strategy and the price roll back if the dollar falls to the level some a predicting
Remember it wasn't that long ago the NZD was worth USD 0.4. The rising currency has caused price deflation and margin problems for the WHS (because the number of things they sold did not increase) ... great for consumers though
latest catalogue has a lot of reference to November prices and previous prices .... what will happen when the new cost could be higher than the old sell price.
Probably will impact demand as well ... would ananda buy those cool Foxhole 3/4 pants for $30 in a few months time (the ones she paid $16.80 for the other day)
Maybe selling less for more might be an answer but the WHS overheads will continue to increase so overall margins might remain under pressure in the future ... bad if demand really drops away
Like Dimebag $3 might be where WHS wettles down at
Bling_Bling
09-12-2005, 06:08 PM
Bling will not be able to help himself if WHS hits $3.00.
Boxing Day sale may yet come early on the equities market. :D
winner69
22-01-2006, 08:25 PM
I see that Millers are up 30% odd since they sold their Aust discount outlets .... but WHS in spite of doing the same still languishes around the 350/360 mark ... some 50 cents off the price the announcement was made
Tescos (or was it Walmart) must still be really tempted ... what an opportunity to get NZ's leading retailer cheap
cjhaigh
01-02-2006, 10:53 AM
Having only entered the Sharemarket a year ago, I guess being a bit of a Newbie.... What are peoples thoughts on this 30 cent rise in only a few days? Is WHS as volatile as it looks?
Kinda feel like getting out now?
Snow Leopard
02-02-2006, 07:20 AM
quote:Originally posted by cjhaigh
Having only entered the Sharemarket a year ago, I guess being a bit of a Newbie.... What are peoples thoughts on this 30 cent rise in only a few days? Is WHS as volatile as it looks?
Kinda feel like getting out now?
There is nothing particularly special with the WHS share price going up or down by 30c plus in a few days, and no guarantees what it will today, tomorrow or next month.
To sell is a decision only you can make. Hopefully you know why you bought and have a view of where the company is going.
Lizard
13-03-2006, 09:53 AM
My reading is that the HY result is considerably better than analysts were expecting. Might see a little interest? Tug-of-war between general negative sentiment regarding consumer spending outlook and positive sentiment regarding WHS FY outlook...hmmm, my guess is it goes up.
barnsley bill
13-03-2006, 09:01 PM
with whs lining the supermarkets up it should be interesting times. The supermarket monopoly has been putting the hurt on suppliers of late due in part surely because of the noises emanating from whs about the food and liquor segments??
barnsley bill -
quote:The supermarket monopoly has been putting the hurt on suppliers of late due in part surely because of the noises emanating from whs about the food and liquor segments??
What supermarket monopoly is that?
It's a duopoly - Foodstuffs and Progressive Enterprises.
barnsley bill
13-03-2006, 09:46 PM
quite right sorry, should have said duopoly. end result is fairly similar. i.e. telecom/ vodafone with mobile charging.
winner69
15-03-2006, 08:15 PM
quote:Originally posted by winner69
I see that Millers are up 30% odd since they sold their Aust discount outlets .... but WHS in spite of doing the same still languishes around the 350/360 mark ... some 50 cents off the price the announcement was made
Must be a hidden message from the market in the relative performance of Millers and WHS since they hocked off their discount outlets ........ Millers now UP 50% since that happened and WHS still languishing somwhat below the $5 mark
Is WHS the sleeping beauty just waiting to make up lost ground
limegreen
29-03-2006, 03:06 PM
"Warehouse Extra" eh? I don't spose that's anything like Tesco Extra. Like a normal store but with extra. Oh wait...
Nice original work kids. Keep it up.
quote:
Warehouse plans a little something 'extra'
29.03.06 1.00pm
The Warehouse's new mega store at the Sylvia Park development in Auckland is to be named The Warehouse Extra.
Deev8
30-03-2006, 06:56 PM
quote:Originally posted by limegreen
"Warehouse Extra" eh? I don't spose that's anything like Tesco Extra. Like a normal store but with extra. Oh wait...
Nice original work kids. Keep it up.
There's no premium attached to originality, but the name is effective. Now if The Warehouse could just borrow a few more effective ideas from successful international retailers ...
quote:Originally posted by limegreen
"Warehouse Extra" eh? I don't spose that's anything like Tesco Extra. Like a normal store but with extra. Oh wait...
Lets wait till they bring out a smaller store format for areas where a large format store wont fit and call it something original, like "Warehouse Metro"
sniper
30-03-2006, 08:40 PM
Get in while you can. Warehouse Extra sounds to me like Ian is getting ready for Tesco (Tesco Extra) to buy WHS.
Deev8
31-03-2006, 08:23 AM
quote:Originally posted by sniper
Get in while you can. Warehouse Extra sounds to me like Ian is getting ready for Tesco (Tesco Extra) to buy WHS.
Perhaps - but as a strategy that sounds as effective for Tesco as The Warehouse expanding by buying Crazy Clints and Silly Sollys.
Disc: I hold both Warehouse and Tesco shares
rmbbrave
08-05-2006, 02:34 PM
Warehouse third quarter sales modest as slowdown bites
08.05.06 1.00pm
Discount retailer The Warehouse today posted a modest increase in third quarter sales as the softening economy continued to bite.
The Warehouse said sales in the three months to April 30 were $386.4 million, up 1.3 per cent on the same period a year earlier.
The retailer said demand remained "patchy", with economic indicators suggesting an "uncertain consumer outlook" for the rest of the year.
The Warehouse said it was sticking with previous full-year earnings guidance of between $83 million and $88 million, after adjusting for the divestment of its Australian discount arm.
Group sales for the financial year to date of $1.318 billion were 1.7 per cent ahead of the same period last year.
Third quarter sales for its flagship Warehouse NZ division were down 0.3 per cent on the same period a year ago at $327m , while year to date sales were up by 1 per cent.
Same store sales for the quarter declined 2.7 per cent in the quarter to be down 1.7 per cent in the year to date.
"Continuing patchy consumer demand and the late onset of winter have affected our seasonal categories, with the result that The Warehouse NZ sales were below our expectations for the quarter," Warehouse chief executive Ian Morrice said.
"Although there were highlights in the sales performance, including the addition of Apple iPods to our range late in the quarter, these gains did not compensate for a slower start to winter merchandise sales."
While no new stores opened in the quarter, the Pakuranga store extension was completed in early April.
In contrast, Warehouse Stationery had a strong third quarter, with sales, at $59.4m, up 11 per cent on the same period a year earlier.
Year-to-date sales at $159.5m were 6.3 per cent ahead of last year.
Same store sales were up by 11.9 per cent in the quarter and 4.6 per cent for the year to date.
The Warehouse opened its first Warehouse Cellars store in Tauranga in April -- offering wine and beer alongside its existing grocery range. The store was trading well.
The next major development for group is opening the first in-store pharmacy at its Te Rapa concept store in Hamilton in the fourth quarter.
The Warehouse will also go head-to-head with the major supermarket chains, opening its first Warehouse Extra format store in Sylvia Park, Auckland, in June.
At 12,500sq m, The Warehouse Extra store will be the first in Australasia to offer customers a Walmart-style non-food and food product range under one roof.
"This is a new way of shopping for New Zealanders," Mr Morrice said.
As well as the general merchandise and apparel usually found in a Warehouse store, customers would find fresh food, a full grocery range, wine and beer, an in-store pharmacy, a cafe and a bakery.
The Warehouse jettisoned its troubled Australian discount offshoot in November last year and now has 85 Warehouse New Zealand stores and 43 Warehouse Stationery stores.
The company has 10,000 employees across New Zealand.
Shares in The Warehouse last traded on Friday at $3.95 against a year high of $4.17 and a low of $3.04.
- NZPA
GTM 3442
09-05-2006, 12:36 PM
WHS doesn't pay enough to hold, and the SP has been dribbling steadily downwards since November 2003. A series of rallies, each lower than the one before.
Tempted to avoid like the plague.
winner69
09-05-2006, 12:42 PM
Even Briscoes are taking share away from the Red Sheds ..... BRG recent sales performance better than WHS
All that increased floorspace and less sales .... ask yourself whats going on
As a consumer i've noticed that that warehouse products lately are still cheap in everything but price.
Sideshow Bob
09-05-2006, 06:58 PM
It's was the weathers fault!
http://www.stuff.co.nz/stuff/0,2106,3661639a13,00.html
minimoke
31-05-2006, 03:25 PM
WHS seems to be in favour today when others are heading down. Good news on the horizon?
Contrarian
07-06-2006, 09:27 AM
GIDDAY
FOODSTUFFS GOING FOR 10 %
TRADING HALT
Thousands will be killed in the rush. Foodstuffs look to be protecting their patch. Warehouse extra about to open - with food. Or perhaps a blocking stake to deter overseas (OZ) -predators.
Toddy
07-06-2006, 10:10 AM
Something exciting for the WHS shareholders.
minimoke
07-06-2006, 02:37 PM
quote:Originally posted by Toddy
Something exciting for the WHS shareholders.
Not to the Insiders who started making their move around 31/5!
BRICKS
07-06-2006, 02:38 PM
BRICKS is in TORONTO,, CANADA and cannot see any comments about WHS as there are not much left on the NZX it had to come,, while the mob talk about TAX and the price of FISH someone steels the last of the BIG ones... [8D]
craic
07-06-2006, 04:15 PM
What a lot of rubbish. WHS say no sale - buyer says 10% only no further interest. Why in the name of reason are mugs paying 506 or more for this one? I sold out at 503 with a big smile and two or more Gs profit and I am still looking for any sign that I was wrong. When the dust settles and they have their 10%, this has to drop back close to 400 cps.
Halebop
07-06-2006, 05:23 PM
I'd put WHS' normalised earnings at around 29 cents per share (they won't hit anything like it this year because of the Aussie losses). If you were buying the company $5.00 would be the sort of price you'd have to pay. But this tender offer seems like an expensive method of buying a 10% stake. Perhaps Foodstuffs have been spooked by someone? I wonder if they had just under 5% already? The price held up quite well the last few weeks. I'd put it down to Telecom money finding a new home but perhaps this what not the reason?
Snow Leopard
07-06-2006, 05:29 PM
Prior to opening today they held approx 5.1m WHS shares and so far today have acquired about 13m (which may or may not include those initial 5.1m)
15.3m would trigger a shareholder notice.
Westie
07-06-2006, 05:39 PM
quote:What a lot of rubbish. WHS say no sale - buyer says 10% only no further interest. Why in the name of reason are mugs paying 506 or more for this one? I sold out at 503 with a big smile and two or more Gs profit and I am still looking for any sign that I was wrong. When the dust settles and they have their 10%, this has to drop back close to 400 cps.
It ain't over til it's over. I read an interview the other day (herald?) with foodstuffs, talking about their strategic moves to stay ahead of the competition (the aussies). They reckon they saw Woolworths coming over here & now they think walmart will be in australasia in a couple of years, maybe through a takeover of woolworths. I'm not sure if it was the same article but i also read about the idea of whs being sold given that they've moved away from Tindall's original conception and reflect Maurice's plans e.g. selling alcohol etc. So Tindall's interest may be waning.
So, given this is clearly a blocking stake, what do Foodstuffs know about who is coming to NZ? Is someone out there negotiating taking all of WHS? will they step in to this stand & start a bidding war? was there a gunman on the grassy knole? & within that speculation lies the answer to the $5.05 bids (not my bids i might add!)
From Bloomberg
quote:Foodstuffs expects Tesco, Britain's biggest retail, or Wal- Mart, the world's largest, to expand to New Zealand within three years, Tony McNeil, managing director of the grocer's Wellington cooperative, told the New Zealand Herald this week.
Westie
07-06-2006, 05:44 PM
quote:I'd put WHS' normalised earnings at around 29 cents per share (they won't hit anything like it this year because of the Aussie losses). If you were buying the company $5.00 would be the sort of price you'd have to pay.
bloomberg quotes walker capital saying that the offer is above their valuation of whs. But then, if that valuation is based on discounted cashflows etc throw it away. An LBO valuation would be more relevant to what an industry player would pay & that is almost always much higher than discounted cashflow. Without seeing the balance sheet, a 30% premium to market price before the offer is about ballpark.
Sideshow Bob
07-06-2006, 06:16 PM
quote:Originally posted by Westie
From Bloomberg
[quote]Foodstuffs expects Tesco, Britain's biggest retail, or Wal- Mart, the world's largest, to expand to New Zealand within three years, Tony McNeil, managing director of the grocer's Wellington cooperative, told the New Zealand Herald this week.
Surely must expect Tesco/Walmart to enter Australia first, and don't believe Tesco at least have said they are looking at this. They are just starting off in the States, and still battling with the others in China to grow as fast as possible.
Aldi have been in Australia for a number of years, and don't believe have been that succesful - although not to the same scale as a Tesco/Walmart/Carrefour.
Rumours have been around for a couple of years that Costco are coming - but.......
rmbbrave
07-06-2006, 07:44 PM
I bought into the WHS @ 3.95 just a month ago hoping for a slow and steady rise.
Not in my wildest dreams did I think I'd get 30% so quickly.
duncan macgregor
07-06-2006, 08:44 PM
quote:Originally posted by rmbbrave
I bought into the WHS @ 3.95 just a month ago hoping for a slow and steady rise.
Not in my wildest dreams did I think I'd get 30% so quickly.
Another poster that sold out today was my old mate SNOOPY. Well done SNOOPY you lucky bugger. MACDUNK
Presumably Foodstuffs want 10% to block a takeover by another player.
Foodstuffs are a cooperative not a corporate. They do supermarketing REALLY well, but they don't necessarily have clue 1 about buying companies.
Halebop
07-06-2006, 11:18 PM
quote:Originally posted by SueJ
Foodstuffs are a cooperative not a corporate. They do supermarketing REALLY well, but they don't necessarily have clue 1 about buying companies.
Agree with Belg here. On the flipside, Warehouse are a corporate, not a co-op, yet managed to stuff up their acquisition strategy.
The shareholding is a spoiler in more ways than one. Even if Foodstuff's paid too much, they have dealt themselves a hand at the table for just $150m. That's a pretty cheap insurance policy in comparison to the size of the grocery sector and the threat of WOW or someone else becoming an "integrated" competitor. It both reduces the attractiveness and increases the takeover price to an acquirer like WOW by attaining a blocking stake. Tindal would have to be pee'd off a key competitor has made any exit strategy on his part that much harder.
I'm more surprised Foodstuffs bought the shares in this manner. I suspect they could have built a 10% shareholding without paying such a high average price. Something must have made them jump - hopefully not the brokers sales pitch!
barnsley bill
07-06-2006, 11:30 PM
quote:Originally posted by belgarion
quote:Originally posted by SueJ
Presumably Foodstuffs want 10% to block a takeover by another player.
Foodstuffs are a cooperative not a corporate. They do supermarketing REALLY well, but they don't necessarily have clue 1 about buying companies.
I need to be careful about what I say here ...
1) Foodstuffs are a 'retailer'. Historically they have done food ... ('nuff said)
2) Yes, while a co-op, they have recognised a need to act like a 'company'
3) In Europe, many of the big players in the FMCG (Fast moving cheap goods) markets are co-ops.
... Underestimate co-ops ... and Foodstuffs ... at your peril ... Just by way of parallel, some of the biggest insurance companies are 'mutuals' ... same sort of concept but in this case a bit different.
Agreed...........
I need to be careful about what I say here ... SERENE :D
Smart move to block, and recent attacks from Australia have seen our listed companies undervaued and open to attack..
Halebop
08-06-2006, 12:28 AM
quote:Originally posted by belgarion
Disagree ... I suspect Tindall would be quite pleased.
If his objective is to hold until the day he dies then it makes no difference. If he wants to exit to a would be acquirer but Foodtuffs doesn't want to buy the whole company then their blocking stake reduces the takeover premium. This isn't something to be pleased about, especially when they time the move to overshadow with the launch of WHS' 1st supermarket.
quote:Originally posted by belgarion
With regards FS buying in this manner ... Hmmm ... sometimes annoucing your intentions in a big way is a great marketing ploy ... Sure they could have built a 5 percent stake and then made a stand ... This way, IMHO, is better ... Pak'n'Save has many followers - including me ... (tightwad kiwi of Scottish forbears that I am. :))
I'm not sure that being a follower of Pak'n'Save is going to induce a fund manager or small shareholder to sell their Warehouse shares to them. The tightwad in me says buy the shares cheaply, not at a 25% premium to market. If they got caught short by another predator amassing a stake then they could still buy on market with a $5.00 stand in 3 months time and not have give away an acceleration clause to boot.
sniper
08-06-2006, 07:16 AM
quote:Originally posted by sniper
Get in while you can. Warehouse Extra sounds to me like Ian is getting ready for Tesco (Tesco Extra) to buy WHS.
:D:D:DYou were all told a long time ago.:D:D:D
lanenz
08-06-2006, 07:27 AM
quote:Originally posted by sniper
quote:Originally posted by sniper
Get in while you can. Warehouse Extra sounds to me like Ian is getting ready for Tesco (Tesco Extra) to buy WHS.
:D:D:DYou were all told a long time ago.:D:D:D
Thats the way the hypermarkets work around the world and Tesco, Carrefour and hypermarket type stores are the trend
Snow Leopard
08-06-2006, 09:09 AM
Oh what a surprise, we have a STAND in the market again today it would seem.
zacman
08-06-2006, 09:36 AM
The 'esclation clause' could be misleading.
I sold yesterday at $5.06, but I do not know who the buyer was. If I sold to someone expecting some "further developments" and price increases then the esclation clause can't apply to me.
How can I tell that I am selling, or did sell, to Foodstuffs ?
zacman
Snow Leopard
08-06-2006, 09:45 AM
quote:Originally posted by zacman
The 'esclation clause' could be misleading.
I sold yesterday at $5.06, but I do not know who the buyer was. If I sold to someone expecting some "further developments" and price increases then the esclation clause can't apply to me.
How can I tell that I am selling, or did sell, to Foodstuffs ?
zacman
A stand in the market gets a special code, in this case SPEC1. (It also appeared as WHSY yesterday).
If you want to sell into the stand then you use that code, check this with your broker first
You definitely sold your shares into the open market and thus, yes, the escalation clause does not apply to you.
warthog
08-06-2006, 09:49 AM
quote:Originally posted by duncan macgregor
quote:Originally posted by rmbbrave
I bought into the WHS @ 3.95 just a month ago hoping for a slow and steady rise.
Not in my wildest dreams did I think I'd get 30% so quickly.
Another poster that sold out today was my old mate SNOOPY. Well done SNOOPY you lucky bugger. MACDUNK
Hang on MacDunk. You can't have your bread buttered on both sides my old china.
When Snoopy picks a shocker, you jump on him and say his method is kaput.
If Snoopy is riding a winner, he's a lucky bugger.
Yet you say "well done", which seems to suggest that Snoopy did something right, which in turn suggests his method has merit.
Well, MacDunk, which is it?
Is Snoopy smart, or lucky, or both? ;)
zacman
08-06-2006, 09:50 AM
Thanks, P T.
We live and learn.
zacman
Halebop
08-06-2006, 10:17 AM
quote:Originally posted by Jolly
You all seem to miss the point on the price factor I think.
quote:Originally posted by Halebop
It both reduces the attractiveness and increases the takeover price to an acquirer like WOW by attaining a blocking stake.
duncan macgregor
08-06-2006, 11:01 AM
WARTHOG, I called SNOOPY a lucky bugger because he is. Unforseen events have a habit of saving him. If i have a go at someones stock selections, or investment habits, then surely i am big enough to congratulate them if they strike a win. I am very pleased for him, even although i think he should have held on for the next play.
macdunk
rmbbrave
08-06-2006, 11:36 AM
I am thinking hard about whether to sell my stake for a 30% profit but I really can't decide.
What do you think the next play will be Duncan?
duncan macgregor
08-06-2006, 11:42 AM
quote:Originally posted by rmbbrave
I am thinking hard about whether to sell my stake for a 30% profit but I really can't decide.
What do you think the next play will be Duncan?
I know no more than you. If i were a shareholder i would weigh up the odds of a second play forth coming. I think it might be worth holding on i cant see it ending here. macdunk.
DISCL nil
Snow Leopard
08-06-2006, 11:52 AM
quote:
I know no more than you
You are being hard on yourself there, MacDunk :D
You could sell into the Stand which gives you $5 in the bank but with the escalation cause giving you upside protection (for six months?). It would be worth foregoing the extra 8c for that insurance.
Foodstuff's stand ends with them holding 5.7%, which is not the 10% they need to block a take-over.
Why didn't they just wait for a year & buy at $2.50?
Snoopy
08-06-2006, 10:37 PM
quote:Originally posted by duncan macgregor
WARTHOG, I called SNOOPY a lucky bugger because he is. Unforseen events have a habit of saving him.
Perhaps the timing was unforseen. But it was always on the cards that a corporate within the global retail environment umbrella would end up on the WHS share register. IOW I don't count myself totally lucky.
You might recycle that statement and say that it was always on the cards that some kind of heavy handed regulation fo Telecom would happen. I can't argue with that statement, except to say 'different cards' and 'different odds' (IMO).
quote:
I am very pleased for him, even although i think he should have held on for the next play.
macdunk
I have sold to Foodstuffs Macdunk, taking the lower than market price ($5). But I still have the upside of the escalation clause if Foodstuffs decides to buy more shares in the next six months at a higher price. In that sense I am still 'in the play' as you put it.
I have to add though, what 'next play' are you hinting at? This is not a full takeover offer. And with Stephen Tindall holding the controlling stake and 'not selling', it never can be a successful FULL takeover offer. That means no 'premium for control' can be built into the Foodstuffs offer price, because there is no control to be gained here.
Generally with takeovers I do not accept straight away. But in this case I had already done the numbers (see Focus Investment Group on the other channel) which basically told me:
Buy around $3, hold around $4, sell around $5
Given that this was not a full takeover, that made a quick decision on the lightning Foodstuffs raid possible.
Just to set the record straight. I still like this company. It is just that I see it as fully priced in the business sense at these levels. That means the price has got ahead of the dividend growth rate. With WHS at $5, I can reinvest my WHS capital better elsewhere.
SNOOPY
discl: former shareholder
quote:Originally posted by SueJ
Foodstuff's stand ends with them holding 5.7%, which is not the 10% they need to block a take-over.
Why didn't they just wait for a year & buy at $2.50?
Why do you think WHS will be $2.50 in a years time? That would indicate a massive deterioration in performance. Do you know something that the rest of us don't
rmbbrave
09-06-2006, 10:52 AM
Foodstuffs stops at 5pc of Warehouse
09 June 2006
By DAVID HARGREAVES
Foodstuffs, New Zealand's leading supermarket operator has called off its bid for 10 per cent of The Warehouse.
Foodstuffs, which has the New World, Pak'N Save, Write Price and Four Square stores, ended its $5-a-share offer at 5pm yesterday, having picked up nearly 52 million shares, or just under 5.1 per cent.
The surprise, unsolicited offer was launched on Wednesday, with Foodstuffs picking up 4.2 per cent of The Warehouse shares that day. But sales slowed to a trickle yesterday, and The Warehouse shares closed down 2 cents at $5.06.
The Warehouse had no comment yesterday, but on Wednesday chairman Keith Smith said the move was a defensive one by Foodstuffs to protect its 57 per cent market share of the food sector.
"The board of The Warehouse Group believes that the offer being made by the Foodstuffs group of companies is not in the best long-term interests of the company," he said.
Foodstuffs New Zealand managing director Tony Carter remains upbeat despite the company's failure to achieve the target.
"We feel we've got a pretty comfortable level of shares. That's a pretty substantial stake and probably makes us about the third or fourth-largest shareholder."
AdvertisementAdvertisementThe Warehouse's largest shareholder, founder Stephen Tindall, reiterated on Wednesday that his 52 per cent stake was not for sale.
Mr Carter said there had been little point in continuing with the bid when it was not attracting a large number of buyers. Foodstuffs was a long-term shareholder and was not ruling out looking for more shares later. The company was not seeking board representation.
Foodstuffs would consider forging a closer relationship with The Warehouse in the future, he said. "Given the complementary natures of our businesses, it is something we would be prepared to discuss with them."
It would, however, be mindful of not doing anything that sparked regulatory concerns.
A spokesman for the Commerce Commission said yesterday it was aware of the Foodstuffs move. "We are looking at it as part of our monitoring and surveillance programme."
The commission becomes concerned when a purchase leads to a substantial lessening of competition.
I sold my WHS shares for 5.04c but was too dumb to know I was not selling into the escalator. Still at an overall gain of 40% I should not grumble. Even better was the 80% gain on selling WHSIZA which leaves me now holding some 40% of my holding in them at zero net cost. Trying to keep something in there in case the action hots up again as predicted.
No complaints, and this sort of thing is always on for FA's who buy when a stock is out of favour. Techies may gain other advantages from momentum trading however they dont often strike this sort of thing wheras it is part of the package that attracts fundies to this style.
As the now thorougly out of favour on this site Warren Buffett stated, " in the short term the market is a voting machine ['hear hear 'says Phaedrus]in the long term it is a weighing machine [' hear hear' says Snoopy].
BRICKS
10-06-2006, 12:35 PM
THEY say most miracle's only last three DAYS.. [8D]
quote:(Belgarion) $2.50, however, even with a well financed new entrant is unlikely. The WHS have a very established presence and it would take a very obvious display of 'uncompetitive' and 'unsustainable' behaviour for the new entrant to pull WHS down to 2.50. I doubt that anyone in NZ would tolerate it ... simply because most Kiwis are smart enough to know that 'things to be good to be true' ... usually are.
However, if SueJ is alluding to other than this ... Then please, SueJ, share your thoughts.
No special knowledge: I know a bit about supermarketing from the inside, I have observed WHS for years.
In its traditional junk-importing business, WHS now faces several unfavourable trends - competition from KMart, Progressive, Bunnings and Mitre 10, each of which often beat WHS in terms of price and quality; the increased prosperity of the country since WHS' glory days of early nineties has moved the whole market up-scale; labour shortage means WHS no longer has the eager clever kids who used to run their stores - the staff is now dross. "The Warehouse, the Warehouse, where everything's broken and open" - this is not a winning business.
WHS now wants to do supermarketing. Sylvia Park is its first full-SM store. But supermarketing requires the just-in-time delivery of relatively small quantities of food, fresh and fit for sale, driven by sales at the store. This is the opposite of WHS's "stack 'em high and let 'em fly" philosophy where vast quantities of imperishable merchandise are pushed out to the stores, where they are stacked up in the tops or jammed up in the storeroom.
I would predict that Sylvia Park may look like a functioning SM - I haven't been there to see - but it will be costing them heaps (mainly in logistics). To reduce the costs they will probably open lots more full-SM stores, but that won't make supermarketing any easier for them. If they use the traditional supermarket manning structure it will cost them lots more in staff - if they use their monkeys-peanuts model it will not work. High stock-out rate, and / or big losses in dumps - or embarrassment when customers buy stuff that should have been dumped.
Hence a hit on profits and a falling share price. Maybe it's all a play to get taken over by Tescos or Aldi.
sniper
10-06-2006, 04:20 PM
WHS is now the biggest seller of one of the hottest items in the youth market. Guess what it is and think what it means about the pulling power of The Warehouse?
lanenz
11-06-2006, 03:16 PM
Sniper, as DM would say, who cares? You really should start up your own quizz thread. You have many questions but offer little answers or the wrong ones.
Sniper lets see how good you are. Pop quizz. Im convinced i know the direction of the Warehouse over the next 10 years, do you? If you can answer that then you will have a good indication on a potential investment stratergy. If you get really stuck i will offer you 1 clue.
lanenz
11-06-2006, 03:55 PM
FYI. You are probably right Sniper. I dont have a clue. But by my own admission i therefore can never think i know everything. If i ever start to believe that then that will be the time i will get thumped.
Now, i will give you a clue. Tesco. Its more abstract than you think.
Now to a different point(no aimed at you Sniper). How care the red sheds improve there customer service? ie speed up there process for getting the customers through the till area. To me this is one of the most exciting aspects. Just like how people got attracted Mackers, Wendy's et people will contiune to demand quicker service without compromising in other others. In the next few years i believe that technology can play a big part. This wont be done by the slow scanning system they currently have like any other retailer. So the next 10 years will provide some great technology in this area.
lakedaemonian
12-06-2006, 09:21 AM
quote:Originally posted by lanenz
FYI. You are probably right Sniper. I dont have a clue. But by my own admission i therefore can never think i know everything. If i ever start to believe that then that will be the time i will get thumped.
Now, i will give you a clue. Tesco. Its more abstract than you think.
Now to a different point(no aimed at you Sniper). How care the red sheds improve there customer service? ie speed up there process for getting the customers through the till area. To me this is one of the most exciting aspects. Just like how people got attracted Mackers, Wendy's et people will contiune to demand quicker service without compromising in other others. In the next few years i believe that technology can play a big part. This wont be done by the slow scanning system they currently have like any other retailer. So the next 10 years will provide some great technology in this area.
In terms of self checkouts, which are being trialed recently, I believe there are some incremental gains in cost savings to be made......RFIDs may also provide some additonal gains in both cost savings and improved logistics strategies, but I think we're still a good ways off, in my opinion, more likely to be 10 years or more, rather than less in regards to RFIDs.
Walmart's success with RFIDs will be a good indicator of how likely success will be if local/regional companies develop RFID based strategies.
I reckon RFIDs are like the internet circa 1996...lots of overpromising and underdelivering, but will eventually live up to its promise.
whatsup
06-07-2006, 10:53 AM
Ann out looks like a turn around of sorts ,revised profit as well could be another rebirth?
Deev8
06-07-2006, 12:42 PM
Earnings Guidance 6th July 2006:
The Directors of The Warehouse Group Limited have revised upwards the expected after-tax earnings for the year ended 30 July 2006 to between NZ$95 million and NZ$99 million including profit on property divestments of NZ$1 million but before losses attributable to disposal of The Warehouse Australia. The previous range was NZ$83 million to NZ$88 million. Reported after-tax earnings are expected to be between NZ$28 million and NZ$31million.
The full year financial results and the fourth quarter sales announcements will be released on
Friday 8th September 2006.
Full text of the announcement:
http://www.nzx.com/market/market_announcements/by_company?id=133739
Rif-Raf
06-07-2006, 08:32 PM
Fascinating that an upgrade of this magnitude for a company as significant as wHS hardly gets a mention. Looks like the turnaround has finally started to arrive.
Disc - Sold my modest holding to Foodstuffs the other week
sniper
07-07-2006, 07:11 AM
quote:Originally posted by sniper
WHS is now the biggest seller of one of the hottest items in the youth market. Guess what it is and think what it means about the pulling power of The Warehouse?
Apple iPods.
That Warehouse - she has some serious pulling power. Other brands are queuing up for the Warehouse to sell their products - it is about maximum customer interface.
The hypermart set-up allows the Warehouse to stretch or shrink its product range and offering to optimise sales and margins.
You heard it here first. ;)
Ttops
07-07-2006, 11:39 AM
quote:Originally posted by sniper
quote:Originally posted by sniper
WHS is now the biggest seller of one of the hottest items in the youth market. Guess what it is and think what it means about the pulling power of The Warehouse?
Apple iPods.
That Warehouse - she has some serious pulling power. Other brands are queuing up for the Warehouse to sell their products - it is about maximum customer interface.
The hypermart set-up allows the Warehouse to stretch or shrink its product range and offering to optimise sales and margins.
You heard it here first. ;)
How many Hypermarts have the got so far? This will take some time won't it. My local WHS still sucks and they never have the bargains they advertise. Limited stock runs to tempt. Very frustrating. :( I sold to soon and its just sour grapes :( but I'll believe it when they report it. I find other stores have beaten WHS on price and quality and thats why I sold :( before the Foodstuffs buyin.
Treetops
minimoke
18-08-2006, 10:27 AM
up 10% in a week and 800,000 through today at $5.00. Something on the boil again?
winner69
18-08-2006, 10:44 AM
Prob on the back of those takeover rumours of Coles in OZ ...... the US takes OZ and NZ by storm
minimoke
18-08-2006, 12:35 PM
Well someone is buying up large, another mil through at $5.00. And there are some happy sellers no doubt.
minimoke
18-08-2006, 01:35 PM
Volume now just tipped over 5m, 3rd biggest day in three years – surely this can’t go by without some market news. Great to see an SP lifting from the $3 lows.
rmbbrave
26-08-2006, 10:56 PM
Sense in Foodstuffs' Warehouse play
25 August 2006
By DAVID HARGREAVES
If at first, the idea is not absurd, then there is no hope for it, Einstein once said.
While nobody went quite so far as terming Foodstuffs' acquisition of a 10 per cent stake in the Warehouse "absurd", it would be fair to say a number of observers didn't really see the point.
Well, let this observer be the first to say: now I get it.
In the little over two months since Foodstuffs, the country's leading supermarket business, launched its market raid on discount retailer the Warehouse, moves have developed that could change the whole face of the trans-Tasman retail scene.
It now appears that in a short space of time Australia's two retail giants – Coles Myer and Woolworths – could both be in the hands of overseas owners,
with deep pockets and limitless ambition.
Putting either or both of Coles Myer and Woolworths in the hands of global players increases the likelihood of serious onslaughts on the New Zealand market.
It is clearly this possible scenario that drove the Foodstuffs decision to invest in the Warehouse – rather than as was widely thought, worries about the Warehouse making inroads into Foodstuffs' 57% market share.
The Warehouse is potentially pivotal in any attack on our market from the global players.
It has a combination of excellent, large sites and a geographic spread that could not be matched by any retailer starting from scratch.
Of course, a 10% holding in the Warehouse offers no guarantees for Foodstuffs. If, and it remains a big if, the Warehouse's founder, Stephen Tindall, can be convinced to sell his 52% stake then control of the company can be seized with one stroke of a pen.
But Foodstuffs can block a full takeover, and would be assured of a seat around the bargaining table.
AdvertisementAdvertisementTindall knows the value of his business.
It would be difficult to see him selling for less than around 800c or 900c a share.
So even if Foodstuffs felt ultimately it had to sell in such a situation it might be looking at a profit of up to $125 million on an original investment of just over $150m.
That would give it a nice war chest with which to take on its new competitors.
But that starts to look like a worst case scenario.
The injection of international giants into the mix increases the possibility of a Kiwis versus the world mindset developing. It is just possible that from the very frostiest of beginnings a closer relationship may yet be forged between the Warehouse and Foodstuffs – an alliance against the big bad wolves from overseas.
The possibilities are virtually limitless and even the industry participants probably don't know yet how it will all pan out.
But Foodstuffs has bought itself a little bit of insurance – and shown the kind of forward thinking that means you take it lightly at your peril.
limegreen
30-08-2006, 08:43 PM
Price "Roll-up" Begins
Was in shopping for some seasonal goods the other day, and noticed a number of products with new Warehouse Stickers over old Warehouse stickers. The product that I bought had had a 32% increase, presumably since last summer. Guess exchange rate is starting to bite, and the "Price Rollback" is starting to seem like a very poor marketing strategy. I await a catchy name and new icon in the catalogue to indicate items with recent price rises...
minimoke
05-09-2006, 04:12 PM
quote:Originally posted by minimoke
Volume now just tipped over 5m, 3rd biggest day in three years – surely this can’t go by without some market news. Great to see an SP lifting from the $3 lows.
400,000 just gone through at $5.15, the highest price in years. Must be some good news in there somewhere
minimoke
08-09-2006, 09:13 AM
Results out today:
- Sales from continuing operations up 2.2% to $1,720.5m
- EBITDA from continuing operations up 5.8% to $183.5m
- Operating profit from continuing operations up 9.2% to $152.0m
- Second half 2006 operating profit from continuing operations of
$57.3m, up 12.3%
- Operating cashflows from continuing operations up 15.3% to $166.9m
- Strong operating cashflows of $153.1m
- Earnings per share, adjusted for Australian divestment, up 8.2 cents
to 31.7 cents per share
- The Warehouse Australia was divested on 27th November 2005 resulting
in a pre-tax charge on exit of $88.8m
- Continued improvement in key balance sheet and leverage ratios
- Net debt down $154.0m or 57.2% to $115.4m (F05: $269.4m)
trackers
14-09-2006, 05:02 PM
Trading halt? Wtf?
barnsley bill
14-09-2006, 05:10 PM
Tindall considering bid for The Warehouse
14 September 2006
BREAKING NEWS - 5.05pm
Retail giant The Warehouse is considering a proposal from founder and major shareholder, Stephen Tindall, in relation to a possible privatisation of the company.
The Warehouse shares are in a trading halt as the information was received late in the trading day.
The company said it expected to release a statement before the market opens tomorrow morning, and lift the trading halt.
minimoke
14-09-2006, 05:14 PM
The founder of The Warehouse Group ("The Warehouse"), Stephen Tindall, today announced his intention to submit a proposal to privatise the company by offering his fellow shareholders NZ$5.75 cash per share, valuing The Warehouse at approximately NZ$1.8 billion. etc.....
....The Stephen Tindall Consortium intends reviewing potential transaction structures and the detail of any proposal including the ability to enhance the value of any offer by distributing The Warehouse's imputation credits. The Warehouse currently has in excess of NZ$100 million of imputation credits.....
....Mr Tindall also intends to examine the ability to offer The Warehouse shareholders a priority allocation in any subsequent capital note issue used to ultimately fund the offer." !!
Happy days
minimoke
14-09-2006, 05:23 PM
quote:Originally posted by minimoke
up 10% in a week and 800,000 through today at $5.00. Something on the boil again?
Perhaps todays news was well flagged for a month or insiders were grabbing what they could.
Pennywise
14-09-2006, 05:27 PM
quote:Originally posted by belgarion Posted - 28/06/2005 : 10:36:11 AM
quote:Originally posted by K9
FINISH $3.68!!!
UP 20% IN LESS THAN 3 WEEKS
Begarion must be the biggest loser!!!
stockcalls that is;)
:D:D:D:Dlovin it[^]
Yip, Im an idiot buying FTX instead of WHS ... Laughing at you K9. woof!! woof!!
OMG[:0]
barhaarfaararahahaaaa:D
trackers
14-09-2006, 05:31 PM
She's gonna be off like a rocket tomorrow morning, id put my free asb money on it! ;)
Pennywise
14-09-2006, 05:37 PM
Originally posted by belgarion Posted - 28/06/2005 : 10:36:11 AM
Yip, Im an idiot buying FTX instead of WHS ... Laughing at you K9. woof!! woof!!
you gotta laugh
Im pissing myself.
Wouldn't Mr Tindall have a few obstacles to overcome first though ? (ie Foodstuffs, for starters) I personally doubt it would succeed, but what is not in any doubt whatsoever, is that price will appreciate tomorrow.
Congratulations to you Pennywise (and if Belg ever makes good out of FTX, I would also congratulate him)
barnsley bill
14-09-2006, 07:57 PM
quote:Originally posted by kura
Wouldn't Mr Tindall have a few obstacles to overcome first though ? (ie Foodstuffs, for starters) I personally doubt it would succeed, but what is not in any doubt whatsoever, is that price will appreciate tomorrow.
Congratulations to you Pennywise (and if Belg ever makes good out of FTX, I would also congratulate him)
What is Tindalls motivation? Why would you bother?
What am I missing? This is very strange, I can only surmise that this is an ego play by tindall, he does not need the money and I have seen at first hand his obvious inability to enjoy the money so why bother?
Take it private then do a deal with one of the big boys overseas.
barnsley bill
14-09-2006, 08:22 PM
quote:Originally posted by CAM
Take it private then do a deal with one of the big boys overseas.
True...
But he cherishes his K1W1 persona... This would give his feelings of saintliness a real hammering
BRICKS
14-09-2006, 08:41 PM
JUST read the statement from WHS came as a surprise but really cant see it will work[ well not at present ] bit of a bite in $KIWI terms but it is bold. The last shake out removed the loose shares and the remaining mite not like to jump, if it goes down [SOLD] one more off the NZX, makes little SMITHS CITY GROUP a PRIZE.. [8D]
PS note the price did not go or was it after the close..
Snow Leopard
14-09-2006, 08:54 PM
There was an immediate trading halt called just before 5pm NZ BRICKS.
This really has come out of left field, no-one seems to have been expecting it.
My initial thoughts are that Steven is not happy with the way WHS has been going, knows that the status quo is not an option and likes the idea of the challenge.
Sideshow Bob
14-09-2006, 09:20 PM
Wonder if he has been talking to Foodstuffs[?]
They could walk away with a profit of about $23 million, plus about another $1.7 million in dividends. Not bad for 3 months work!!
Let's see if they're in for long-term strategy, or short-term profit!
Flying Goat
14-09-2006, 09:58 PM
quote:Originally posted by Sideshow Bob
Wonder if he has been talking to Foodstuffs[?]
They could walk away with a profit of about $23 million, plus about another $1.7 million in dividends. Not bad for 3 months work!!
Let's see if they're in for long-term strategy, or short-term profit!
Highly unlikely that Foodstuffs knew anything at the time of concocting the plan to buy 10% stake, rather this was just a move to cover their ass from a big foriegn supermarket player buying WHS and worsening the competitive environment. Intrigued that ST is teaming with PEP, among the more notoriously ruthless of the Aussie private equity corporate raiders, over the long range this smells more like he is actually selling to Aussie private equity, without wanting to look like selling to Aussie private equity!? Could ble a shame for staff, just talk to anyone that has worked at Whitcoulls or Tegel since PEP took over, gone will the days of WHS being an employer of choice!
FG
winner69
15-09-2006, 07:21 AM
quote:Originally posted by Flying Goat
....
Intrigued that ST is teaming with PEP, among the more notoriously ruthless of the Aussie private equity corporate raiders, over the long range this smells more like he is actually selling to Aussie private equity, without wanting to look like selling to Aussie private equity!?
That's how i see it FG .... ST says he is privatising WHS but probabaly not taking a greater interest .... but the headlines says he is buying the lot eh .... so everybody believes that.
Smart move by PEP using ST as the face of a takeowver
Interesting comments about NZers not wanting to take risk on .... we will protect them from that by buying their shares ... but on the other hand we will borrow their money (if that mention of a preferential capital notes issue means anything)
No doubt the WHS change in direction is risky .... the financials to date don't look too bright .... and maybe this is a signal that it is a lot harder than first thought and there will be a period of reduced profitability.
Irrespective of all that might be a good place to put the cash earmarked for Feltex and see what happens ... seeing I won't be needing that by the looks of it .... somebody else might want WHS as well
minimoke
15-09-2006, 09:07 AM
I’m sorry but am I getting a little cynical about the NZX.
Here we have Tindall being allowed to conduct due diligence prior to yesterdays announcement and the Warehouse makes no market announcement of this and in the meantime we see the highest trade volumes alongside the highest SP in years at the same time. Was this activity simply Mr Market reacting to news that was freely available or what?
BRICKS
15-09-2006, 10:42 AM
AT the price of $6.00 it seems more want to BUY than SELL still think his plan is way out of whack should have just battled away at buying 51% in slow motion then sprung the TRAP.. [8D]
underground
15-09-2006, 10:49 AM
between tindell and the tindell foundation he already does control 51%. i think?
minimoke
15-09-2006, 11:03 AM
quote:Originally posted by underground
between tindell and the tindell foundation he already does control 51%. i think?
Not quite 48.8%:
Total Number of shares 305,488,868
83,058,283 TINDALL, STEPHEN ROBERT
66,323,220 THE TINDALL FOUNDATION
25,922,166 NATIONAL NOMINEES NEW ZEALAND LIMITED
17,060,656 WESTPAC BANKING CORPORATION
11,529,006 RBC DEXIA INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
10,735,245 ANZ NOMINEES LIMITED
6,735,960 CASH WHOLESALERS LIMITED
6,735,960 FOODSTUFFS (AUCKLAND) NOMINEES LIMITED
6,735,959 WARDELL BROS & COY LIMITED
3,539,815 CITIBANK NOMINEES (NEW ZEALAND) LIMITED
Mr_Market
15-09-2006, 12:21 PM
With earnings of only 10cps this stock is only worth about $2.
In order to justify his price Tindall will have to pull something out of the bag that will treble earnings! Maybe another push into Oz?
Looks more like an emotional purchase to me rather that one based on business facts. I'd say take his money while you can get it.
Halebop
15-09-2006, 12:33 PM
quote:Originally posted by Mr_Market
With earnings of only 10cps this stock is only worth about $2.
In order to justify his price Tindall will have to pull something out of the bag that will treble earnings! Maybe another push into Oz?
Looks more like an emotional purchase to me rather that one based on business facts. I'd say take his money while you can get it.
Normalized earnings were almost 32 cents per share.
Pennywise
15-09-2006, 12:37 PM
quote:Originally posted by Mr_Market
Looks more like an emotional purchase to me rather that one based on business facts. I'd say take his money while you can get it.
I think you can be sure that that is a fantasy
be very sure there is a master plan in the background.
If you wanted to exit some stock, hasn't it just done wonders to the shareprice...
Did you calc how many millions his shares went up after the simple job of announcing the intension to market...around $150,000,000 +
Mr_Market
15-09-2006, 01:06 PM
quote:Originally posted by Halebop
quote:Originally posted by Mr_Market
With earnings of only 10cps this stock is only worth about $2.
In order to justify his price Tindall will have to pull something out of the bag that will treble earnings! Maybe another push into Oz?
Looks more like an emotional purchase to me rather that one based on business facts. I'd say take his money while you can get it.
Normalized earnings were almost 32 cents per share.
What is your source for that Halebop?
Mine is from their full year release on NZX.com which states 9.6cps. These were the real earnings not some fantasy 'normalised' earnings.
Halebop
15-09-2006, 02:59 PM
quote:Originally posted by Mr_Market
What is your source for that Halebop?
Mine is from their full year release on NZX.com which states 9.6cps. These were the real earnings not some fantasy 'normalised' earnings.
Mine is from the very same source.
NPAT Excluding losses from Australian Divestment $96.9m (EPS 31.7c)
NPAT Including losses from Australian Divestment $29.3m (EPS 9.6c)
Are you expecting the losses from Australian divestment to continue? The fantasy is in the 2nd number, not the 1st. The money lost in Australia was lost when the purchase was made, not the sale. The sale instantly righted the problem (although at the same time diminshing an obvious avenue for growth but their implementation was a dogs breakfast).
Snow Leopard
15-09-2006, 03:00 PM
Mr Market, Halebop read the same announcement (http://stocknessmonster.com/news-item?S=WHS&E=NZSE&N=136592) you did, but apparently a little more carefully.
quote:
- Earnings per share, adjusted for Australian investment, up 8.2 cents to 31.7 cents per share
The headline figure is often not a true indication of the company's profit.
regards
Paper Tiger
Mr_Market
15-09-2006, 04:17 PM
Yes, It looks like Halebop did read the release more carefully, but he still could not see that the real earnings are not 32cps.
Tell me, does your bank balance show your earnings with writeoffs on failed investments added back. No, of course it doesn't, so why do you believe that the WHS is any different.
Pennywise
15-09-2006, 04:25 PM
Because Mr Market, it is a one off.
The market is looking FORWARD a year or more. The result is looking backward.
earnings NEXT year should be at least 31.7 cps or better as NZ operation continue as normal without supporting the bleeding Aussie operations.
therefore the market believes 100m is possible
giving a forward PE of 18-19ish (@$6)
obviously someone behind Tindall thought a PE of 15 was way too cheap.
Snow Leopard
15-09-2006, 04:36 PM
quote:Originally posted by Mr_Market
Yes, It looks like Halebop did read the release more carefully, but he still could not see that the real earnings are not 32cps.
Tell me, does your bank balance show your earnings with writeoffs on failed investments added back. No, of course it doesn't, so why do you believe that the WHS is any different.
Mr Market, you will find it very useful if you do some research into the basics of accounting.
To be honest, you are a liability to yourself if you are taking the headline figure as the number and can not seperate financial performance from financial position.
Halebop
15-09-2006, 04:38 PM
quote:Originally posted by Mr_Market
Yes, It looks like Halebop did read the release more carefully, but he still could not see that the real earnings are not 32cps.
"Real" earnings were exactly that (31.7 at least). Accounting earnings were not.
quote:Originally posted by Mr_MarketTell me, does your bank balance show your earnings with writeoffs on failed investments added back. No, of course it doesn't, so why do you believe that the WHS is any different.
I think we have a different understanding of how accounting works. A bank balance very definately reflects "failed investments". When I spend $250m on an Australian business and assoicated losses and I only have $100m when I sell it, my bank balance more clearly defines the results than the accounting transactions do. It's caled cash flow. Cash flow drives the value of investments, not reported profits. Hence the market is happy to value WHS on 31.7 rather than 9.6.
Mr_Market
15-09-2006, 04:45 PM
So, it seems you all think that the loss on the Oz operation is now fully accounted for and final.
I believe the economic impact has yet to be fully realised, and that the headline earnings figure is a better approximation of real earnings going forward.
Halebop
15-09-2006, 04:47 PM
No I think it just seems we read the announcement more carefully and better understood the devil in the detail.
Snow Leopard
15-09-2006, 04:48 PM
quote:Originally posted by Mr_Market
So, it seems you all think that the loss on the Oz operation is now fully accounted for and final.
I believe the economic impact has yet to be fully realised, and that the headline earnings figure is a better approximation of real earnings going forward.
:D very funny :D
I see you are trying to wind up all up, nice one,
After all no one is really this misguided.
Edit: Sorry, that was a bit strong, I apologise for my original post
Mr_Market
15-09-2006, 04:54 PM
I hope you people are backing up your assertions by buying up loads of WHS at the bargain price of $6 today :)
Halebop
15-09-2006, 05:13 PM
quote:Originally posted by Mr_Market
I hope you people are backing up your assertions by buying up loads of WHS at the bargain price of $6 today :)
Maybe quit while you are behind? Nobody has talked about value yet.
WHS does not meet my valuation criteria but its easy to ascribe a value at the $5.75 takeover price. 31.7 cents EPS, 8% growth for 5 years, 3% terminatation growth rate and 10% discount rate. Nothing too demanding in those numbers, especially at Takeover premium pricing. But I'd personally only buy at half intrinsic which would require a market value below $3.
Pennywise
15-09-2006, 05:15 PM
No, a little over a year ago, we said buying at $3 was good.
This is current fully priced now IMO.
Lizard
15-09-2006, 05:23 PM
quote:Originally posted by Halebop
WHS does not meet my valuation criteria but its easy to ascribe a value at the $5.75 takeover price. 31.7 cents EPS, 8% growth for 5 years, 3% terminatation growth rate and 10% discount rate. Nothing too demanding in those numbers, especially at Takeover premium pricing. But I'd personally only buy at half intrinsic which would require a market value below $3.
And on that basis, BGR would be worth $2.21...
Mr_Market
15-09-2006, 05:51 PM
Ok, lets talk valuation.
quote:Originally posted by Halebop
8% growth for 5 years
You are an optimist aren't you Halebop. With inflation running at 4% that means they have to produce 12% real growth. Is inflation included in your discount rate, if not you had better up it to 14%.
Given the outlook for the NZ economy over the next few years you'd be lucky to see a positive real earnings growth. Lets say 4% for next 5 years, followed by 2.5% terminal rate.
With realistic percentages even with a starting earnings of (*ahem*) 32cps, you only get a fair value of about $3.00
[:0]
Halebop
15-09-2006, 05:51 PM
quote:Originally posted by Lizard
And on that basis, BGR would be worth $2.21...
True. Although a 10% discount is my Blue Chip rate. Not sure BGR are quite deserving of it.
Halebop
15-09-2006, 06:02 PM
quote:Originally posted by Mr_Market
Ok, lets talk valuation.
You are an optimist aren't you Halebop. With inflation running at 4% that means they have to produce 12% real growth. Is inflation included in your discount rate, if not you had better up it to 14%.
Given the outlook for the NZ economy over the next few years you'd be lucky to see a positive real earnings growth. Lets say 4% for next 5 years, followed by 2.5% terminal rate.
With realistic numbers even with a starting earnings of (*ahem*) 32cps, you only get a fair value of about $3.00
[:0]
The growth rate is not adjusted for inflation. The growth rate is exactly what it is. If you want to add another 4% to those growth assumptions the value would rise to $6.77. That is not a conservative stance. Quite the reverse from being an optimist.
The discount rate is not adjusted for inflation. It is what it is. If you want a 14% return from your investments then discount them by 14%, not 10%.
Here's a simple DCF calculator. The page also has a link to an explanation. I notice you quote Buffett in your profile. You might be interested in this stuff...
http://www.moneychimp.com/articles/valuation/dcf.htm
To achieve a $3.00 value on WHS at 31.7 cents EPS here are some assumptions to make it work: Growth Zero (forever), Discount Rate 10.6%. Zero forever would be quite a pessimistic outlook.
Mr_Market
15-09-2006, 06:10 PM
Well that's the calculator I use Halebop. Looks like we are using the same calculator. Touche!
Try plugging in the numbers I already gave you.
32cps
4% growth for 5 years
2.5% thereafter
14% discount rate
Result = $3.00
That's $3, given modest growth, and taking inflation into account.
Halebop
15-09-2006, 06:23 PM
Depending whose numbers you believe a 14% discount rate would be between 2% and 4% above the historical return sharemarkets (and the NZ sharemarket) deliver. I'd use 14% on resource company cash flows because over time they have shown an ability to deliver less than their cost of capital. But for a market leading retail distribution company? A blue chip rate would apply. 10% is reasonable. 12% is pessimistic or higher risk.
Expecting a major market company in a defensive category to so drastically outperform the long term indices is itself overly optimistic.
Don't confuse the calculator and DCF with inflation expectations. Inflation reduces returns and cash flows. It does not increase it. Adding inflation to any numbers skews results. Particularly factoring inflation to the growth variable can leave you buying a share you should not buy or reducing its growth too far below what it will reasonably achieve.
Mr_Market
15-09-2006, 06:35 PM
I think you are a bit confused now Halebop.
I simply added the 4% to your 10% discount rate to take into account inflation.
I did not factor inflation into the growth rate, I simply reduced it to a more realistic 4%.
Why don't you give me some justification for your choice of an 8% earnings growth rate? What is there in the public domain that would lead you to be so optimistic?
Why don't you give me some justification for your choice of an 8% earnings growth rate? What is there in the public domain that would lead you to be so optimistic?
[/quote]
fwiw there is potential that WHS could actually do better in an economic downturn.
The argument goes like this
Welfare benefits won't reduce with economic downturn hence beneficiaries will continue to shop WHS (benefits could actually increase relatively as the govt looks to stimulate economy using funds taken during better times cf construction industry now turning towards infrastructure projects
Low income earners who don't currently patronise WHS will feel economic chill and may look for cheaper shopping hence giving WHS new customers.
Halebop
15-09-2006, 07:42 PM
quote:Originally posted by Mr_Market
I think you are a bit confused now Halebop.
I simply added the 4% to your 10% discount rate to take into account inflation.
By "simply" adding 4% to 10% you have demanded WHS return more than the sharemarket will historically return. This isn't a "simple" adjustment. This is demanding a return that markets don't deliver in the long run.
The purpose of DCF is not to determine your return. The purpose is to determine an expected value on the share. To base an expected value on parameters outside the norm derives a result which would not be expected either. DCF is an uncertain metric at the best of times but to take an approach that is statistically invalid is doomed for all but the luckiest instances of timing.
What determines your expected return is arbitrage. The difference between the dervied value and the current market value. In the best examples it should be well above 14%, but 14% isn't going to get you there.
quote:Originally posted by Mr_Market
I did not factor inflation into the growth rate, I simply reduced it to a more realistic 4%.
Why don't you give me some justification for your choice of an 8% earnings growth rate? What is there in the public domain that would lead you to be so optimistic?
Without bogging this down with too much detail look at WHS' historical performance within NZ (only) and ask yourself if 8% might be achievable? They are still implementing merchandising improvements, they are only just at the beginning of a new segment roll out, there are always opportunities for cost cutting and economies of scale. At 4% you are saying they will grow only in line with your inflation expectations. Historically, NZ companies achieve earnings growth 2 to 3% above inflation. On one hand you are demanding higher returns than are normal with your discount and then handicapping it with lower growth than is normal. While I might be willing to discount a company's earnings if their market is going through structural change or they are notably inept at what they do, WHS only need to be average in a market (retail distribution) that will easily reflect average economic performance. Their segment is broad and defensive unlike a specalised company operating in a niche that might reasonably under or out-perform the economy by a wide margin. On top of this, management time is now focused on one side of the Tasman, luckily for holders the side that has outperformed the other.
The DCF assumptions and permutations are many and we could have 100 different people arrive at 100 different values for WHS. It is notable however, that a key insider is willing to pay $5.75 and not $3.00. This is a pretty fair indicator on where the value range might lie. If anything, I'd imagine he thought he was buying well, considering most of us don't like to throw money away and maybe even expect to make a return on our investments...
warthog
15-09-2006, 08:22 PM
quote:Originally posted by Halebop
It is notable however, that a key insider is willing to pay $5.75 and not $3.00. This is a pretty fair indicator on where the value range might lie.
Not only Tindall, but PEP as well.
Mr_Market
15-09-2006, 08:25 PM
As I stated before the 14% includes the discount rate component of 10% plus an additional 4% for inflation which you have stated that you have not taken into account. This is simply a mathematically convenient way to take into account the inflation component. The discount remains 10% i.e. it has not changed. FYI, in my own calculations I use a discount rate of about 6% which is the long term average risk-free rate of return.
On the issue of growth rates, I belive that the next few years will not be easy for retail. I think results will generally be below average. 4% seems like a more realistic figure and I prefer to include a good margin of safety in my estimates. Also, they are grasping for new ideas for growth. Any major change in direction will come with major risk attached.
On your last point, I don't trust his judgement at present - I don't believe that he has the emotional detachment required to make a sound valuation. He considers WHS his company and will no doubt pay anything to get it back.
Mr_Market
15-09-2006, 08:29 PM
quote:Originally posted by warthog
quote:Originally posted by Halebop
It is notable however, that a key insider is willing to pay $5.75 and not $3.00. This is a pretty fair indicator on where the value range might lie.
Not only Tindall, but PEP as well.
Who are no doubt awash with cash at present. Here's a bit about PEP's involvement:
http://www.stuff.co.nz/stuff/0,2106,3798340a1865,00.html
Pennywise
15-09-2006, 09:14 PM
[quote]Originally posted by Mr_Market
On the issue of growth rates, I belive that the next few years will not be easy for retail. I think results will generally be below average. 4% seems like a more realistic figure and I prefer to include a good margin of safety in my estimates. Also, they are grasping for new ideas for growth. Any major change in direction will come with major risk attached.
-----------------------------------
At the end of all the "talk", your margin of safety is so conservative that it has had you miss out on a 100% investment increase in a blue chip stock in little over a year because your margin of safety didn't allow you to buy WHS over $3.
The easy money has been made and it was signalled by a few about June 05.
PS, not Belgarion though, he thought even worse than yourself and valued it at just $2, Only $1,200,000,000 short of todays market cap.
I think he had the wrong chain store in his spreadsheet.
I'd be interested in what you [u]would</u> invest in right now on the NZX Mr M.
minimoke
20-09-2006, 08:32 AM
Can someone help me better understand imputation credits.
If I have 305m shares and $100m in imputation credits how can I carry imputation credits of around $1.80 a share?
Referring to yesterdays comment: “Those accepting the buyback would receive payment in the form of a dividend – meaning that the $5.75 a share would carry imputation credits of about $1.80. This could be attractive to institutional shareholders.”
winner69
20-09-2006, 09:17 AM
Minimoke ... gets complicated because Foodstuffs and Tindall's charities can't use imputation credits.
Obviously the plan is to allow those shareholders who can avail themselves of the imputation to take advantage of them .... so the $100M plus (I'm sure thereis more than this available anyway) will be divied out not on the 305 million shares but on a much smaller number.
rmbbrave
24-09-2006, 11:21 AM
Brian Gaynor: Investors hungry for risky business
Saturday September 23, 2006
Stephen Tindall wants to privatise The Warehouse because he doesn't believe New Zealand investors have an appetite for his high-risk, high-growth plans for the company.
He couldn't be more wrong, New Zealand investors have a passion for high-risk and high-growth companies. The problem is that we don't have enough of these and one of our icon business leaders now wants to snatch back his company before he revs it into top gear again.
Rakon was floated at $1.60 some months ago and closed yesterday at $3.35. Delegat's Group, which has an aggressive growth strategy, had an IPO at $1.40 a share in April and is now at $2.27.
The strong performance of these companies indicates that investors have a huge appetite for growth-oriented listings.
The New Zealand Exchange's share price has risen from $5.60 to $6.80 since it announced its Australian ECN (Electronic Communications Network) strategy this month and Pumpkin Patch continues to be highly rated as it pursues an aggressive growth strategy.
And what about Brierley Investments, Fletcher Challenge, Equiticorp, Chase Corporation and a host of other listed companies that adopted high-risk policies? It could be argued that New Zealand investors have too much appetite for risk. In the past year the market value of Plus SMS reached nearly $300 million yet the company has not got a single dollar in revenue.
The Warehouse is another company that has been embraced for its successful high-growth strategy.
The discount retailer was floated at $2.50 a share in 1994, had a 1:5 bonus the following year and reached $9.00 before a 1:1 bonus issue in March 2000.
The acquisition of Clint's Crazy Bargains and Silly Solly's in Australia in 2000 was greeted with a great deal of excitement and the group's share price rose to $6.85 eight months after the 1:1 bonus issue. It hit an all-time high of $7.90 in June 2002 but fell steadily over the next few few years as the Australian operations reported losses.
Investors sold out of The Warehouse because it hit a wall in Australia, not because they were risk averse. Greg Muir resigned as chief executive in May 2003, basically over a disagreement regarding Australia, and the firm's share price hit a five-year low of $3.04 in May 2005 before the Australian operations were sold.
Tindall is attempting to privatise The Warehouse because he believes there is unfinished business, he has a point to prove. He said the Australian operations would not have been sold under privatisation and he has an aggressive growth strategy for its food operations.
Tindall had contact with several Australian private equity organisations during the sale of the group's Australian operations and asked Pacific Equity Partners (PEP) to join his consortium because it has much retail expertise and has had many investments in New Zealand.
All we know at this stage is that the consortium will offer $5.75 a share, valuing The Warehouse at nearly $1.8 billion. Tindall will own just over 50 per cent of the consortium (the Tindall Foundation will not join the consortium) and the purchase will be mostly debt funded and secured against the company.
Tindall will not have an executive role, he has confidence in Ian Morrice and his executive team, and senior executives will be able to sell their shares into the offer and then acquire a shareholding in the consortium.
The board will be dissolved and replaced by a smaller and more active one. Tindall believes the new board will play a major role in the privatisation's success.
There has been considerable discussion whether the acquisition will be through the Takeovers Code, requiring 90 per cent acceptance of all shareholders, or a scheme of arrangement, where approval of only 75 per cent at a meeting is required.
But the issue goes beyond whether 90 per cent or 75 per cent acceptance is required. A takeover offer is from an external source and the role of the target company directors is to advise wh
sniper
24-09-2006, 11:49 AM
Same Brian Gaynor who wrote that NZ investors should ignore CVC's bid last year at $1.65 because RBD was too good a company to be sold at that price. [xx(]
BRICKS
24-09-2006, 04:41 PM
quote:Originally posted by sniper
Same Brian Gaynor who wrote that NZ investors should ignore CVC's bid last year at $1.65 because RBD was too good a company to be sold at that price. [xx(]
GOOD to see your around snip and still kicking some thing,, Well one only one little bite at RBD and the price will shoot up still have time to catch FERRY.. [8D]
minimoke
27-09-2006, 10:09 AM
Blow, didn’t see $6.50 with another 7.4% increase overnight. My sale order got pinged so I’m out, happy with a good profit!
And with a $163m stand so far today someone is making a significant play
Toddy
27-09-2006, 11:03 AM
Wish I had a few!
Warehouse Stock Surges After Report Investor Seeks 10% Stake
By Jonathan Underhill
Sept. 27 (Bloomberg) -- Shares of Warehouse Group Ltd., the New Zealand retailer under takeover offer from its founder, surged, with 8.2 percent of the company changing hands, after a report that a rival investor is seeking a stake in the company.
Warehouse stock rose 45 cents, or 7.4 percent, to NZ$6.50 at 10:21 a.m. in Wellington. About 25 million shares changed hands.
Company founder Stephen Tindall may face a rival takeover offer for the business after Credit Suisse Group's New Zealand affiliate sought a 10 percent stake in the company, Radio New Zealand reported today.
First NZ Capital yesterday approached fund managers about buying shares for an unidentified party, the broadcaster reported, without saying how much the broker is offering.
Tindall and Australian buyout firm Pacific Equity Partners earlier this month offered NZ$5.75 a share, or NZ$878 million ($580 million), for the half of the company Tindall doesn't already own.
BRICKS
27-09-2006, 11:06 AM
YEP there is aways a bigger Fish in the water,, seems someone needs WHS more than ever nearly 26 million at $6.50 and $7 showing on the board,, those people that sold @ $5 will be now kicking the CAT.. [8D]
Yes...Woolworths according to reports
BRICKS
27-09-2006, 11:23 AM
quote:Originally posted by KJ
Yes...Woolworths according to reports
WOT report or just a GUESS.. [8D]
BRICKS
27-09-2006, 11:45 AM
RIGHT not a guess the report is a SSH notice from Woolworths subsidiary Bancroft knocked off 9.34% in one hit they said just stay TUNED.. [8D]
BRICKS
27-09-2006, 02:11 PM
Woolworths has the money & power to blast Mr T right the door the whole of the NZX is just there for each stock to be picked of as required when needed all KIWI players should now buying any of the little stocks available to be in the run,, money in banks and mortgages is a was of time GO for it.. [8D]
Placebo
27-09-2006, 03:48 PM
Last one out, turn off the lights [^]
What is woolworths doing?
Unless Tindell sells (and I dont think he will - against his ethics), they have just paid a huge premium for a minority stake. Not only that, but their rival Foodstuffs also has the same blocking/minority stake.
Im confussed?
Halebop
27-09-2006, 09:42 PM
A minority (but blocking) stake give you a seat at the negotiating table. If nothing else they have defused any leverage Foodstuffs had gained.
TheBossMan
27-09-2006, 10:04 PM
I think that the initial deal of $5.75 + imp. credits was merely a smokescreen...just to get all the interested parties out in the open. Do you think ST would be optimistic that all the instos. would have sold out at that price?
COLIN
27-09-2006, 11:45 PM
Yet further proof that it usually pays not to sell into the first offer that comes along.
BRICKS
28-09-2006, 09:41 AM
WOOLWORTHS has taken the pants of a NZ public company and smack there rear also in public,, WOO has been buying for weeks @ about $6 [NO one said a word but did watch it most said "Who is this Dill" ]and made the final dash yesterday bought 10% for about $5.85 much less than the $6.50 bit that's how you do it they have money the poor thing that lacks in NZ is the lack of cash..
Reason`s;
1 They could get a seat NO worries.
2 Mite seem to block out Foodstuff NO worries
3 Blocks out Mr T he has a worry.
4 Just say long term they will eat Mr T but will be nice in the meanwhile.
5 Only when all 3 work it they will be kind enough to let the public KNOW.. [8D]
TheBossMan
28-09-2006, 12:28 PM
$6.51 now and sellers drying up. All cards to be revealed by tomorrow? Any guesses if $7 per share will give Stephen Tindall 75%?
BRICKS
28-09-2006, 01:03 PM
quote:Originally posted by TheBoss
$6.51 now and sellers drying up. All cards to be revealed by tomorrow? Any guesses if $7 per share will give Stephen Tindall 75%?
$7 would give them a smile that is ALL.. [8D]
minimoke
28-09-2006, 05:07 PM
Non executive Director John Avery sold out 250,000 shares on 14 Septembers. At $5.11 he must have felt this was a good deal but I bet he is kicking himself, or ST, now!
BRICKS
28-09-2006, 06:17 PM
quote:Originally posted by minimoke
Non executive Director John Avery sold out 250,000 shares on 14 Septembers. At $5.11 he must have felt this was a good deal but I bet he is kicking himself, or ST, now!
WHAT a good BLOKE to have on the leader TEAM.. [8D]
Maybe Foodstuff and Woolworths with there stake can now tell WHS to keep to its knitting and stay out of food!!! That would give them a bit of diversity and protect there own market.
Would either of those two want 100%. Maybe but there is no reason why they cant expand into this area themselves as done in UK and US. All WHS stores are too small to do both (food and consumer)except a few.
Halebop
28-09-2006, 10:19 PM
quote:Originally posted by CJ
Maybe Foodstuff and Woolworths with there stake can now tell WHS to keep to its knitting and stay out of food!!! That would give them a bit of diversity and protect there own market.
As minority shareholders Foodstuffs would certainly find itself in trouble with the Commerce Commission and Woolworths probably would too.
quote:Originally posted by CJ
Would either of those two want 100%? Maybe but there is no reason why they cant expand into this area themselves as done in UK and US. All WHS stores are too small to do both (food and consumer)except a few.
They would both want 100% if a cheap enough deal could be arranged. Woolworths has the cheaper cost of capital and more to gain from Warehouse branded or co-located supermarket sales. Foodstuffs would have to do a lot of convincing with its co-operative members and tripartite* structure and the cost of a transaction would put some considerable pressure on their finances.
*1st time I used that word today!
quote:Originally posted by Halebop
tripartite*
*1st time I used that word today!
Congratulations.
Based on your comments, I still cant figure out what their game plan is. No way they will get 100% cheaply (three separate bids - foodstuffs, then tindall, then Woollies) has already pushed the price quite high.
Halebop
29-09-2006, 11:23 PM
I think simply as a spoiler. 10% stops compulsory acquisition. Anyone wanting or needing unfettered access to cash flows needs Foodstuff's (or WOWs or STs) say so. If they need your say so then you have leverage in any negotiations.
With a prospective bid WOW's late entry was actually the low risk entre - they had a lot more certainty, can make Foodstuffs, PEP, ST or whoever else squirm and probably still leave with a profit (and/or concessions?) if an acquisition eventuates (assuming they aren't the main player).
Foodstuffs could yet make the buy but would probably have to siphon cash away from Co-operative Members which might prove a tricky sell. Given a Foodstuff acquisition would be more defensive than expansive (although Warehouse stores could yet add market share, WOW have more to gain from this by virtue of being smaller in NZ), the economics of a buy is probably less attractive. Making WHS pay at say $6.50 or $7.00 a share requires the grocery concept which will still cannibalise member sales even if they ultimately own a share.
ST is still in the driving seat with 50%, nothing happens without him and he could still execute a grocery strategy with or without PEP, WOW or Foodstuffs and as a private or public company. ...If WHS got to double digit Grocery market share, it may be that neither of the 2 main players could buy them in any case.
winner69
30-09-2006, 07:29 AM
quote:Originally posted by Halebop
[ ...If WHS got to double digit Grocery market share, it may be that neither of the 2 main players could buy them in any case.
and isn't that why WOW could be quite happy paying anything to up say $10 a share today
BRICKS
30-09-2006, 09:12 AM
BESIDES the Grocery`s they are really after a "K" Mart or "BIG W" type STORE.. [8D]
TheBossMan
30-09-2006, 09:54 AM
What if the current board says "stuff you all", knuckle down and progress the concepts of grocery/hypermart/or whatever else the bidders want to do? I mean, the "risks" ST is portraying can be taken by the current management in a listed structure.
That way, it'll force all the bidders to act straightaway. It'll up the ante so much that neither ST nor WOW could get control without paying $10 or more per share.
BRICKS
30-09-2006, 12:16 PM
quote:Originally posted by TheBoss
What if the current board says "stuff you all", knuckle down and progress the concepts of grocery/hypermart/or whatever else the bidders want to do? I mean, the "risks" ST is portraying can be taken by the current management in a listed structure.
That way, it'll force all the bidders to act straightaway. It'll up the ante so much that neither ST nor WOW could get control without paying $10 or more per share.
IF you look at it in your point of view Mr T dose not have do anything and just carry on with Biz ,, Noted gone off to UK for 3 weeks and some people want to knock on his DOOR.. [8D]
Flying Goat
30-09-2006, 05:28 PM
quote:Originally posted by Halebop
With a prospective bid WOW's late entry was actually the low risk entre - they had a lot more certainty, can make Foodstuffs, PEP, ST or whoever else squirm and probably still leave with a profit (and/or concessions?) if an acquisition eventuates (assuming they aren't the main player).
Surely your view on Woolworth's position is overly optimistic. What if the whole fiasco ends in a stalemate, WHS plods along with its grocery role out, it does not perform that well and takes a very long time just to return its cost of capital, the share price slides back down to where it was 6 months ago and Woolworths are sitting on a lemon. Paying such a high price for something with an uncertain future was far from a conservative move... but there are also potential rewards.
Halebop
30-09-2006, 11:02 PM
quote:Originally posted by Flying Goat
Surely your view on Woolworth's position is overly optimistic. What if the whole fiasco ends in a stalemate, WHS plods along with its grocery role out, it does not perform that well and takes a very long time just to return its cost of capital, the share price slides back down to where it was 6 months ago and Woolworths are sitting on a lemon. Paying such a high price for something with an uncertain future was far from a conservative move... but there are also potential rewards.
"Plodding along" is the worst case scenario. If this is the case, then the red sheds make money, the Extra stores lose money and after a restructuring charge the business is worth what the red sheds are worth. WOW make a sub par return. That's the risk of being in business.
or...
A short but spectacular loss is the 2nd worst case. After running just 4 stores for 18 months and losing $20m, WHS give up grocery as too hard. Not a big dent on residual value.
or...
After 10 years hard work WHS' 50 Extra stores have a niche in a grocery / bulk retail hybrid. They earn an adequate but not spectacular Return on Equity of 15% also matching their national grocery market share of 15%. But the higher margin discount variety business earns 50% more, partly due to proximity of regular, habitual repeat discount grocery custom. Not only is the discount business consequently worth +50% above where it would have been, but the grocery business adds $1.50 per share in NPV.
quote:Originally posted by Flying Goat
What if the whole fiasco ends in a stalemate
The whole point of the buying a matching 10% block is to create a stalemate. Foodstuff's ownership advantage has been neutralised.
quote:Originally posted by Flying Goat
WHS plods along with its grocery role out, it does not perform that well and takes a very long time just to return its cost of capital, the share price slides back down to where it was 6 months ago and Woolworths are sitting on a lemon.
And when the inevitable shakeout occurs under a lemon scenario, who gets to deal then? In 5 years time a lemon could still own 10% of grocery trade. Which incumbent can afford to let that slip by without at least taking a seat at the table? In a business where market share determines profitability, nobody lightly walks away from it. Irrespective of any profits WHS makes from grocery, nobody doubts they can take market share. An exmaple 10% market share is arguably more important under a lemon scenario than a success one. Under a successful scenario, nobody needs to negotiate with anyone without paying a much higher price.
There is still a chance someone other than ST could secure a controlling interest in WHS. In this situation who would doubt that Foodstuffs or Progressive could make a profitable attempt at a WHS based grocery strategy? So who is willing to walk away without at least taking a seat at the table?
With a $200m investment, WOW are risking maybe a $100m loss (and probably no more than $20m) against gaining a quick windfall profit as an unsuccessful suitor or a long term market share gain as a successful owner or partner or to assist avoiding a long term loss of market share to Foodstuffs. (If I was ST, there could well be an attraction with WOW or Foodstuffs as my JV partner rather than PEP?). $20m is a cheap option and even at $6.50, the price is just a full value for the red sheds, without factoring the market share
Snoopy
02-10-2006, 05:11 PM
quote:Originally posted by COLIN
Yet further proof that it usually pays not to sell into the first offer that comes along.
I am one of the stupid ones who sold into the first offer by Foodstuffs at $5. Generally I think Colin's advice here is sound. With hindsight you can sometimes see events differently in a way that was not so obvious before. I think that is the case here, with the ever rising Warehouse share price.
It doesn't make sense to invest in a share hoping to gain a 'takeover premium' if there is very little prospect of the shares actually being taken over. With ST controlling over 50% of the WHS shares, a takeover was never going to happen without Tindall himself agreeing to it. Prior to the Foodstuffs offer, or indeed for a month or so afterwards, I saw very little evidence that Tindall had *any* intention of taking the company private. Thus I saw the Foodstuffs offer at $5, plus upside potential, as an opportune time to exit WHS myself, book a modest profit at the same time, and reinvest the funds elsewhere to better effect. Looking at WHS from an ongoing business perspective based on PER and historic growth rates $5 stacks up as a good price.
Unless you were on the ST cocktail party circuit, and I am not, there is no way you could have predicted ST's desire to take the company private again. Especially given he went through all the hassle of floating WHS shares in the first place. So does that make the people who 'held out' and didn't sell their shares to Foodstuffs clever, sensible or merely lucky? I pick the latter. However, one fact that I won't argue with is that the 'hold outs' are certainly richer. Personally though I have no regrets about selling out of WHS at $5 for all the reasons I have given.
SNOOPY
discl: ex Warehouse shareholder
quote:Originally posted by Snoopy
quote:Originally posted by COLIN
Yet further proof that it usually pays not to sell into the first offer that comes along.
I am one of the stupid ones who sold into the first offer by Foodstuffs at $5.
Unless Foodstufss ends up doing a full takeover. Wasn't there a step up clause if they buy anymore? (probably the most unlikely of the three though)
Snoopy
02-10-2006, 11:05 PM
quote:Originally posted by CJ
Originally posted by Snoopy
I am one of the stupid ones who sold into the first offer by Foodstuffs at $5.
Unless Foodstuffs ends up doing a full takeover. Wasn't there a step up clause if they buy anymore? (probably the most unlikely of the three though)
The Foodstuffs offer was always only for 10% of the company CJ. With an offer to match any price paid for more shares over the next six months, if the offer was not filled (which it wasn't immediately). Now Foodstuffs have their 10% (the offer target), I don't think Foodstuffs are obliged to pay any more to those that have already accepted. Even if the original deal said they would match any higher price paid for shares within 6 months of the original offer.
*If* Foodstuffs wanted to increase their stake in the Warehouse, then they could either wait until the new year to make absolutely sure the old offer had expired OR make a completely new offer (IMO, although I am happy to be corrected on the position of Foodstuff's offer). But what would be the point of doing that when ST has already said he doesn't want Foodstuffs (or anyone else for that matter) at the board room party?
SNOOPY
madmike
03-10-2006, 05:09 PM
DO I SELL NOW?
TheBossMan
03-10-2006, 05:49 PM
how about putting a stop loss of $6.5 ?
redzone
03-10-2006, 06:06 PM
fair bit of hype starting to get built into this....Just what Mr T wanted I believe....
quote:Originally posted by redzone
fair bit of hype starting to get built into this....Just what Mr T wanted I believe....
I think he actually wanted it unless involving the australians was also a ploy. Look at what his proposed offer was (a bit of though has gone into that). My guess he has already racked up $1m in fees but that is peanuts if he decided to sell out completely.
Saw an article that said 50% chance of Woolies or foodstuffs buying out (with a preference on Woolies I think). 35% that one of them jions the consortium and only 5% for status quo. God knows how they cam up with those percentages (there was another option before anyone says I cant add).
Must have had the facts wrong on the foodstuffs offer. I though they had offered to step up past purchases if price increased in next 6 months.
Bling_Bling
30-10-2006, 11:24 AM
Mr T has pulled out of the game. Where to from here? :D
TheBossMan
30-10-2006, 12:30 PM
4 options:
1. Do nothing - wait & see. Work with current board to influence some strategies.
2. Sell out majority of shares
3. Work with Foodstuffs & Pvt. equities, divest some holdings, offer $7 a share to gain 90%. But the risk remains Woolworths would up the ante and get 10% more.
4. Work with Woolworths & divest some holdings. But the risk remains foodstuff/other private equities would up the ante.
I pick #1 and #3 as more likely.
Any other thoughts?
patsy
30-10-2006, 02:46 PM
quote:Originally posted by TheBoss
Any other thoughts?
Sit pretty after having pulled a stunt that made the SP recover to fair value territory just by making some noise?
ratkin
30-10-2006, 03:10 PM
lol that about sums it up. Amazing a few months ago everybody thought it worth about 4.00
Bling_Bling
30-10-2006, 03:19 PM
quote:Originally posted by TheBoss
Any other thoughts?
On a guess, I would pick #4. I dont think Foodstuff has a deep enough pocket to take out WHS. Dont rule out another player coming into the game. Big ruffle in small waters attracts predators.
BRICKS
30-10-2006, 03:40 PM
CONSIDER Mr T saying wake me up when someone has $10 a share until then its BIZ as NORMAL.. [8D]
Bling_Bling
02-11-2006, 01:44 PM
Looks like something is heating up at the Warehouse. Price closed at 6.81 today !... WOOT ! :)
Fodder
02-11-2006, 09:48 PM
quote:Originally posted by Snoopy
So does that make the people who 'held out' and didn't sell their shares to Foodstuffs clever, sensible or merely lucky? I pick the latter.
No it makes them one thing Snoopy:Patient..........
............."The Sharemarket is the transfer of wealth from the impatient to the patient" ;)
Bling_Bling
03-11-2006, 08:10 AM
quote:Originally posted by Fodder
quote:Originally posted by Snoopy
So does that make the people who 'held out' and didn't sell their shares to Foodstuffs clever, sensible or merely lucky? I pick the latter.
No it makes them one thing Snoopy:Patient..........
............."The Sharemarket is the transfer of wealth from the impatient to the patient" ;)
When you have 3 or more potential players for the company there is only one way it can go and that is up. :)
BRICKS
03-11-2006, 12:44 PM
WELL WHS fits $7.05,, Well can remember when winner69 would not BUY at $2.60 he stated then they where to DEAR ..[8D]
Deev8
14-11-2006, 11:51 AM
Tesco tipped as Red Shed bidder says the New Zealand Herald.
A major player in the international grocery business has expressed interest in buying into The Warehouse, a source close to Stephen Tindall says ... However, the interested party is not yet involved in formal discussions, the source says.
http://www.nzherald.co.nz/section/print.cfm?c_id=3&objectid=10410563
lager
14-11-2006, 12:00 PM
Look like a good time to get some shares here.
Snoopy
14-11-2006, 12:59 PM
quote:Originally posted by Fodder
Originally posted by Snoopy
So does that make the people who 'held out' and didn't sell their shares to Foodstuffs clever, sensible or merely lucky? I pick the latter.
No it makes them one thing Snoopy:Patient..........
............."The Sharemarket is the transfer of wealth from the impatient to the patient" ;)
Fodder, fair enough to throw the quote that I dished out back at me.
However, to reprise the situation: I had some WHS shares. I had a price at which I was willing to buy more. I had a price at which I decided I would sell up and look at other opportunities. These prices were predicated on Stephen Tindall being content with the status quo of his own shareholdings. In order to judge my actions you have to look at the reasonableness of this last assumption.
For a start Tindall floated the Warehouse business himself. Can you name another entrepreneur who floated his own business then subsequently bought it back? No? Then what probability would you give to Tindall doing this with the Warehouse (without the benefit of hindsight)?
What chance do you think of Tindall wanting to sell out to Wal Mart or another big international player, given that he has just tried to buy the company back himself? Before today's announcement concerning Tesco, I would say 'very low'.
What chance would you give to Tindall wanting to retire from his Warehouse directorship, cut the cash supply off to his Tindall foundation and put those shares on the block too. Given Tindall is still pretty much a business dynamo, I would say 'very low'.
The key factor in what is happening at the Warehouse centres around ST contolling the direction of the company he founded via the share register. Personally, before this year, I couldn't think of a top twenty company *less likely* to have a change in contolling shareholder. But that doesn't rule out the unlikely happening!
While patience is a virtue, particularly in investment matters, you have to balance the likelihood of an outcome with the payoff if that outcome happens. Warehouse was always going to be a strategic asset and, to the right retailer, worth a lot more than the underlying economics of the Red Sheds (read has a high payoff). But there are plenty of NZ companies out there with much more open share registers than WHS, that are equally strategic: e.g. Sky City, Fletcher Building and Telecom. To me it makes much more sense to have patience in investing in those shares rather than the Warehouse.
To sum up: I had an investment plan, I stuck to it, I made some money (albeit not as much as if I had held on). To outperform my investment strategy I would have had to have relied on an unlikely event. I don't bet on unlikely events. Thus IMO those investors who held on through the Foodstuffs offer were wrong, even though as it happened to turn out, they are now richer than I am.
SNOOPY
discl: ex WHS holder
Snoopy. Mr G Hart floated Rank and then rebrought his company and it is getting very common overseas with PEP help. His experience with the sharemarket disillusioned him that he trys to avoid them now.
Bling_Bling
14-11-2006, 02:47 PM
Bling Bling says why would ST tell the market that there is another interested party when the party itself has not even made a formal offer on the table? Maybe ST is getting ready to sell at the right price while ramping up the price helps in his decision? :D
ps: Stores that are too big pisses Bling off, cos it takes Bling over 30 mins running around to find out that they dont stock that particular item Bling is after ! [xx(]
lager
14-11-2006, 03:04 PM
Good on those who held this shares. Wish I bought some when they were under $4.
OldRider
14-11-2006, 04:20 PM
Westfield have published a report after 9 months
of trading, has some interesting information
with statistics for growth in different countries, store type and product category.
http://sa.iguana2.com/cache/ce2354347245118764212f5acc36fd2f/ASX-WDC-434096.pdf
Deev8
14-11-2006, 06:17 PM
quote:Originally posted by lager
Good on those who held this shares. Wish I bought some when they were under $4.
Fair enough, it's likely that a lot of people wish that they bought Warehouse shares under $4 at the moment. But to improve your chances of future success you need to solidify your approach and attitude towards investing.
quote:Originally posted by lager (in RBD - Restaurant Brands)
Buying shares is a form of gambling. It's also un-predictable.
Sideshow Bob
21-12-2006, 09:30 PM
Foodies must have done a deal with Tindall, but don't see how they are going to get past Woolies.
Foodstuffs aims to buy Warehouse
NZPA | Thursday, 21 December 2006
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Supermarket operator Foodstuffs has applied for Commerce Commission approval to buy discount retailer The Warehouse.
The three Foodstuffs cooperatives have applied for regulatory approval to buy 100 per cent of The Warehouse shares.
Foodstuffs is New Zealand's largest grocery retailer and owns the New World, Pak'N'Save and Four Square brands.
The Warehouse operates The Warehouse and Warehouse Stationery.
Warehouse founder Stephen Tindall, in a consortium with Pacific Equity Partners, said in September he planned to offer shareholders $5.75 cash per share in a bid to take The Warehouse private.
Mr Tindall's family interests and the Tindall Foundation hold around 51 per cent of The Warehouse.
He pulled back from the bid on October 30, after Australian supermarket giant Woolworths bought 10 per cent of The Warehouse, helping lift the company's share price.
The other member of the New Zealand supermarket duopoly, Foodstuffs, had previously bought 10 per cent of The Warehouse.
Both Woolworths and Foodstuffs were therefore in a position to block any formal takeover attempt.
Today's announcement was released after the market closed.
Shares in The Warehouse closed up 2c at $6.92.
http://www.stuff.co.nz/3907370a13.html
living2
21-12-2006, 09:59 PM
Maybe a majority stake will be enough for foodstuffs???? and then let woolies sit and stew as a minority
Halebop
21-12-2006, 10:50 PM
quote:Originally posted by living2
Maybe a majority stake will be enough for foodstuffs???? and then let woolies sit and stew as a minority
Applying for Commerce Commission approval is also a cheap method of under-pinning the share price without having to outlay a couple of hundred million in borrowed readies. It has the added "Art of War" bonus of making any shares a competitor buys (especially a better financed competitor) more expensive so that if an eventual takeover battle is lost, the returns demanded by the victorious competitor actually render them less competitive in the process. ...i.e "synergy" savings are eaten up by lower returns / higher initial sunk cost, making the prospect of aggressive market share expansion less attractive and thereby protecting Foodstuffs patch.
Bling_Bling
22-12-2006, 10:16 AM
Just sit back and enjoy the ride. :D
Placebo
22-12-2006, 12:16 PM
Do Commerce Commission applications have to be publicly notified? The news has a strategic smell to it... ;)
Steve
12-01-2007, 08:08 PM
Looking at WHS on a trading level (excluding property disposals etc), it would appear that the company is holding up well given that the economy is slowing. It is good to note that operating margins are being maintained
Warehouse Christmas trade below expectations (http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10418821)
"Our trading result over the total Christmas period was our best for three years but still below our own expectations."
Same store sales for The Warehouse during November and December were 2.3 per cent ahead of the same period last year, with total sales for the first half of the financial year ended January 28 expected to be 2.9 per cent ahead of the same period last year, The Warehouse said.
Operating margins for the first half were expected to be maintained at levels similar to the same period last year.
Steve
28-01-2007, 11:06 AM
Will WHS end up like SCY and generate its growth from its finance arm?
The Warehouse - one of its best kept secrets (http://www.stuff.co.nz/3942864a13.html)
The Warehouse Financial Services (WFS) may do little in the way of advertising, but it has quietly been building itself up into one of the heavyweights of the consumer finance sector.
"I think we make a healthy contribution to (the company's joint venture owners) Warehouse Group and to Westpac," WFS general manager Ed Hayes said, although he refused to disclose any financial details.
As it turns out, that "healthy contribution" was $14.14 million which WFS paid out in dividends last year, giving The Warehouse and Westpac just over $7m each, although those were the first dividends they have received since setting up the joint venture in 2001.
In terms of its asset base, WFS is a middling player in the consumer finance market, with total assets of $83.3m.
But when it comes to profitability, WFS punches well above its weight.
The company posted a net profit of $7.9m for the year ended September 30 and only three of the 10 companies in the KPMG survey earned more.
winner69
24-05-2007, 12:10 PM
Way the price falling the last few days makes you think that Commerce Commission has some bad news on the way
Anybody taking a gamble ..... +ve from CC and WHS goes back to 750 .... +17% .... worth it?
hairdresser
24-05-2007, 12:44 PM
I wouldn't take the bet. Commerce commission should decline as it will substantially lessen compettion in the supermarket business, there are enough barriers to entry for any new competitor ie RMA, why would the CC seek to preserve a duoploly.
Works for Foodstuffs and Woolworths as they will appeal with the effect of delaying the launch of any new Warehouse Extras.
i don't think it will lessen competition in the supermarket business, as the warehouse isn't seriously in the supermarket business anyway!
do you know anyone who buys their food from the warehouse? i don't
hairdresser
24-05-2007, 03:50 PM
And at this rate no-one ever will, so duopoly profits will continue for Foodstuffs and Woolworths.
Competition is good for the economy. For this market it will give consumers more cash to spend on other products and services, and prevent ditributed cost and concentrated benfeits for supermarket Foodstuff owners and profits from leaking offshore to Woolworths shareholders.
CC will be wel aware of this and should have the numbers to back this up from overseas markets.
They will now be dotting their i's and crossing there t's anticipating the appeal.
lakeside
24-05-2007, 04:03 PM
Consumer Mag had Warehouse as expensive for groceries.
Their mastercard is good value though, I use it.
stephens.pc
07-06-2007, 01:30 PM
Quite a bit of support today. Anybody catch the comments on ASB business today from a Macquarie analyst?
Deev8
07-06-2007, 05:26 PM
quote:Originally posted by stephens.pc
Quite a bit of support today. Anybody catch the comments on ASB business today from a Macquarie analyst?It was based on the same information as this article in the New Zealand Herald: Woolworths sets its Warehouse price (http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10444067)
Woolworths has told The Warehouse Group it is prepared to pay $7.15 a share to gain control of the Red Sheds company, the Business Herald understands.
The approach - contained in a written proposal to the retailer's board - was made in April, two separate sources say.
It's no great surprise that this has spawned another story during the day Warehouse 'may be in breach' of NZX rules (http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10444157)
Stock exchange operator NZX said The Warehouse would be in breach of listing rules if it had received a takeover offer without disclosing it.
craic
08-06-2007, 10:52 AM
All down the tubes as CC says no - Doesn't anyone know that fat profits from a takeover of this outfit are as remote as a heatwave in the Arctic circle?
winner69
14-09-2007, 12:52 PM
Warehouse quadruples profit
So says the Herald .... and the shareprice goes down
Deev8
16-09-2007, 01:57 PM
Warehouse quadruples profit
So says the Herald .... and the shareprice goes downBut even a quadrupled profit doesn't justify the current shareprice. The prospect of a takeover is the only thing keeping the shares at this level, and it's the increase / decrease of the liklihood of that occuring that's driving the shares up / down.
winner69
29-11-2007, 01:01 PM
Suppose its all on again with Woolworths et al winning the appeal
Good return for those who took a punt around the 500 mark as well
Still think Woolworths will be very interested .... at what price?
COLIN
29-11-2007, 02:46 PM
Suppose its all on again with Woolworths et al winning the appeal
Good return for those who took a punt around the 500 mark as well
Still think Woolworths will be very interested .... at what price?
$7 eventually, when the auction finally comes to an end, but the opening bids will be somewhat lower. It will be an out-and-out war between the two bidders, who will be taking the longer-term view and won't be too influenced by the market oscillations since their original expressions of interest.
Deev8
04-02-2008, 05:57 PM
The Dominion Post Says:
Analysts are expecting a takeover offer for The Warehouse at more than $7 a share will be on the table this year, despite the Commerce Commission's attempts to block the likely bidders.
Macquarie Equities analyst Warren Doak said The Warehouse could attract a takeover bid from either of the supermarket companies at about $2 above the current market price ...
First NZ Capital analyst Sarndra Urlich agreed, saying the commission's original rationale for blocking the two companies was flawed. A bid of $7.20 a share would represent full and fair value, she said.
The article is here: More than $7 a share tipped for Red Sheds (http://www.stuff.co.nz/dominionpost/4385879a6034.html)
Steve
26-04-2008, 09:35 AM
The appeal is on this week with most predicting that it will fail. What would be the risk/reward of taking a punt on this outcome?
Snoopy
26-04-2008, 10:13 AM
The appeal is on this week with most predicting that it will fail. What would be the risk/reward of taking a punt on this outcome?
Steve, I haven't been a Warehouse shareholder for a while. I got out 'too early' (said with hindsight. Of course I considered it a great deal at the time because I didn't regard Tindall as a willing seller back then). $5 was a good price when I got out because Foodstuffs were prepared to pay that premium to get in the share registry door.
Based on trading performance WHS wasn't worth anything like $5 and even today I would rate the 'intrinsic value' of WHS as below $5. Of course the 'strategic value' of WHS is quite different.
The $5.70+ price range only came into play after Tindall decided to try to privatise the company aftwer Foodstuffs was established on the share register. Woolworths Australia came out of the woodwork to trump that bid and establish their own blocking stake. Both Tindall and Foodstuffs involved Australian merchant bankers in thier proposed takeover bids. The merchant banking market has taking a bit of a hit since then. My feeling is that neither Tindall nor Foodstuffs will be able to fund a bid at the oft rumoured $7 takeover price. That just leaves Woolworths Australia that probably could. However, with 'no competition' why would they?
If I was WOW management I would wait for the retail downturn to bite further then wade in with a $6 bid in a couple of years time. There is certainly no hurry to buy WHS because Woolworths can block any other bid in the meantime.
I can see both upsides and downsides in WHS at $5.70. But with so many other great retailing companies selling so cheaply, I'm not chasing WHS myself as an investment proposition.
SNOOPY
Dr_Who
26-04-2008, 02:30 PM
I agree with you Snoopy. I have been in and out of WHS a couple of times. There are better plays in the market at the moment than WHS. The downside risks out weighs the upside benefits, so I am out.
I am gonna put my neck out and say the apeal will fail. I dont think CC will apeal if they think there is no likely chance of winning it.
Dr_Who
28-06-2008, 08:43 AM
You know how bad it is out there when a discount retailer like WHS is having big downgrades. Expect more downgrades in the future? I guess so.
Shopping slump hits Red Sheds
Shares in The Warehouse Group dived yesterday after the company downgraded its profit guidance by 10 per cent because of deteriorating consumer confidence and retail spending.
http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10518813
Steve
28-06-2008, 11:43 AM
From memory, in the past WHS has been less affected by economic downturns than other retailers as when the household gets short of cash, shoppers shift to WHS to obtain a perceived bargain...
ratkin
28-06-2008, 05:53 PM
I believe there are three factors which are different this time for the warehouse and to some extent other "cheap stores"
1) The two dollar shops which have sprung up in every mall. Compete with the warehouse bottom end stuff
2) Trademe , the warehouse brigade have finally made it online and are the heaviest users of trademe. Instead of hanging around in the malls they are increasingly hanging around online , buying real bargains
3) The warehouse is old now , and seen as boring , i remember a time when you could go in and pick up real bargain computer games at crazy prices , now they not much different from other shops.
The trademe phenomenon is fairly new in its impact , however expect it to have a marked effect on the likes of the warehouse briscoes and pumpkin patch to name but a few
winner69
28-06-2008, 07:13 PM
Good points ratkin - esp your comments that The Warehouse is 'old now and boring' and the impact trademe might be having on them ..... I feel the the 2 points are to some degree related.
To me the Red Sheds have reached saturation in NZ and unless there is a radical change in their offer it is hard to see them growing any faster than the general economy. Their efforts to go slightly upmarket might have put some 'better' quality products in stores but it probably dilutes their previous real point of difference - being sort of cheap and nasty where you did get a real bargain.
It also appears they have lost quite a lot of business to the likes of other big box retailers like Mitre 10 Mega and Bunnings -- leaving clothing and shoes almost as their core business and that is not really a good place to be
With expected earnings to be around $80m this year even at the real cheap price of 419 that is still 16 times earnings
So is there a takeover premium still in the price and if so is the touted 700 a dream now? Or has the market assumed that Woolworths etc won't be allowed to take them over.
Be interesting to see what happens over the next few months
Steve
28-06-2008, 07:23 PM
When is the appeal result being released?
Dr_Who
03-07-2008, 10:26 AM
I am guessing that CC will have more chance of winning now with climbing food prices?
POSSUM THE CAT
03-07-2008, 01:41 PM
Dr Who there will be hell topay if commerce commision do not. Why is the cheapest milk in a supermarket up to A $1.00 dearer than a corner store if they take over warehouse it will let them increase their margins even more as people only check supermarket prices thinking as they are so large they must be the cheapest.Why has the Mt Wellington area of Auckland got the cheapest groceries in Auckland. Bananas at PAK & SAVE (pig food quality)$2.49 per kilo good quality Bananas at vege shop 100 meters up the road $0.99 per kilo. We definately need at least one more supermarket chain
hairdresser
04-07-2008, 09:46 AM
Cant see how the CC have any grounds to prevent the takeover. There used to be 3 chains and the CC had no issue with Progs buying Woolies. And Woolies were up and running, profitable, had national distribution all the things the Warehouse doesn't have.
Competition was significantly lessened when Progs bought Woolies. The purchase of the Warehouse won't lessen competition in the grocery market any more than if they bought Farmers Kmart's stores etc etc.
The horse has bolted Possum...
Dr_Who
04-07-2008, 10:31 AM
Cant see how the CC have any grounds to prevent the takeover. There used to be 3 chains and the CC had no issue with Progs buying Woolies. And Woolies were up and running, profitable, had national distribution all the things the Warehouse doesn't have.
Competition was significantly lessened when Progs bought Woolies. The purchase of the Warehouse won't lessen competition in the grocery market any more than if they bought Farmers Kmart's stores etc etc.
The horse has bolted Possum...
When do we expect to hear the result from the appeal?
POSSUM THE CAT
04-07-2008, 11:02 AM
Dr Who Warehouse if it gets into Extra stores with supermarkets in store. The Warehouse Extra Store in Sylvia Park has made Mt Wellington the cheapest for groceries. Even though is not getting the same buying deals as Woolworths and Foodstuffs. Comerce Comission had no choice about the Progressive Enterprises take over of Franklins. Because owner said we sell or we shut doors. And as both Woolworths and Foodstuffs have blocking stakes will either party give in to let a take over ever happen. In the mean time the warehouse has stopped expanding. So both Foodstuffs and Woolworths doing what they like increasing their margins.
hairdresser
04-07-2008, 12:19 PM
This looks like a no brainer play
1. Takevoer should be approved with price going up
Q. Is the takeover going to lessen competition?
A. Only in Sylvia Park [plus a few other markets]. For the rest of the country what competition. The law does not attempt contemplate what the effect on competition may be in 10 years. but judges can do what they want....
2. Don't think the brains trust at WHS have been sitting on their behinds for the past 2 years, they will have a plan B if acquisition is declined. Price should go up.
3. To get a blocking stake [of up to 20% each] Foodies and Progs will have to buy some more shares. This would push the price up to $7.00.
4. Worst case ie nothing happens. A PE of 16 at bottom of the cycle is not too traumatic to turn this into a hold. Also consider the strategic value of the retail footprint.
Cheers
Dr_Who
04-07-2008, 01:03 PM
I really dont think we have seen the bottom of the retail cycle. Not by a long mile.
A possible T/O target, yes. But then it is a gamble.
Snoopy
04-07-2008, 01:46 PM
This looks like a no brainer play
2. Don't think the brains trust at WHS have been sitting on their behinds for the past 2 years, they will have a plan B if acquisition is declined. Price should go up.
3. To get a blocking stake [of up to 20% each] Foodies and Progs will have to buy some more shares. This would push the price up to $7.00.
For a start a blocking stake is 10%, not 20%. Both Foodstuffs and Woolworths Australia already have this. So there is no need to buy any more shares to block any deal.
'Plan B' was Stephen Tindall's mooted $5.70 offer to privatise the company before first Foodstuffs then Woolworths Australia gained their blocking stakes. However that offer was put together with a merchant bank in Australia before anyone had heard the term 'credit crunch'. There cannot be a 'plan B' without both Foodstuffs and Woolworths agreeing to sell out. At the moment in this credit squeezed market, my guess is that only Woolworths would be able to stitch together a deal. And the lack of a competitive offer means they would not need to bid anywhere near $7. Remember Foodstuffs only paid $5 for their stake. In this market a Woolworths bid of $5.50 would be a super premium to the market price and could be a goer.
4. Worst case ie nothing happens. A PE of 16 at bottom of the cycle is not too traumatic to turn this into a hold. Also consider the strategic value of the retail footprint.
We have already considered the strategic value of the local footprint. That is why Foodstuffs and Woolworths were sniffing around and bought their stakes. Don't overplay the hand by counting the chips twice!
And what 'E' did you use to calculate your PE ratio hairdresser? Last years reported 'E' or the forecast 'E' for this year?
I haven't followed WHS closely since I ceased to be a shareholder a couple of years back. Perhaps it is a good buy on today's market? It might very well be. The only problem is I can think of a number of retail shares out there that are even better buys...
SNOOPY
Footsie
24-07-2008, 10:30 AM
Bought at 3.90
Dr_Who
24-07-2008, 05:49 PM
Hey Footsie, we finally agreed on something. :p I too bought into WHS today. Gonna be tucked away in the long term portfolioly.
BRICKS
25-07-2008, 09:00 AM
WHY buy Warehouse when you get a lot more for your money and cum div @ the good stores of SMITH CITY..
Dr_Who
25-07-2008, 09:17 AM
WHY buy Warehouse when you get a lot more for your money and cum div @ the good stores of SMITH CITY..
I have a downside protection of a T/O. There are plenty of cheap retail stocks, but most will probably get cheaper. With WHS, it is good to know that there are competing buyers waiting to take it out at a higher premium. Abit like an insurance cover. :)
minimoke
25-07-2008, 09:50 AM
I too bought into WHS today. Gonna be tucked away in the long term portfolioly.
Ah, the good old days trading WHS. I fondly recall selling out at $6.50 – but being disappointed at the time!
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