WHS - Warehouse Group

[BRICKS]

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. :)

DONT be SO sure that Warehouse will end in a takeover and could end up back at $2.50 if the wheels fall off the deal, Don't forget the owner of WHS dose not want to be taken over and doing his best to fight that's why they are in court all the time, Where Smiths City is already at the bottom and making profits and paying Div`s it also could get taken over with a bigger price RISE..

[macduffy]

DONT be SO sure that Warehouse will end in a takeover and could end up back at $2.50 if the wheels fall off the deal, Don't forget the owner of WHS dose not want to be taken over and doing his best to fight that's why they are in court all the time, Where Smiths City is already at the bottom and making profits and paying Div`s it also could get taken over with a bigger price RISE..

I'm pretty sure WHS will eventually be taken over. The Commerce Commission is taking the court action, not Stephen Tindall. In fact, didn't ST try to come to an arrangement with Foodstuffs quite early on in the piece before Woolworths stepped into the fray? Or was it the other way around?
The CC's contention that WHS provides competition to the big 2 supermarket chains looks a bit far-fetched to me. I suppose, though, we shouldn't rule out political meddling in the name of " protecting essential businesses" at this touchy stage of the electoral cycle.

;)

[Dr_Who]

$2.50? Wow, at that price I will backing the truck and loading it with shares. Falling sp dont concern as I will buy more. I have a longer view on WHS and will continue to buy if it falls. :)

Politics wont come into play for WHS. It is not a strategic asset.


Ah, the good old days trading WHS. I fondly recall selling out at $6.50 – but being disappointed at the time!

Very nice. I sold out at slightly lower level, still, a profit is a profit, one cant complain. People fail to realise that WHS is the only one around with a dominant market share for its sector and a good retail location spread around NZ. Cheaper and more time efficient for a competitor to buy it out than to start from scratch.

[Footsie]

The WHS is an instiution. They are like Marks and Spencer. Everyone has something at home from the WHS.
Kiwis have an affinity with the red sheds.

to be honest at $2.50 i'd probably be happy to park my whole portfolio in there....


today's sell off in the market is just what you;d expect... people were always going to sell the first rally.

[BRICKS]

[QUOTE=Dr_Who;214627]$2.50? Wow, at that price I will backing the truck and loading it with shares. Falling sp dont concern as I will buy more. I have a longer view on WHS and will continue to buy if it falls. :)

THEY where at $2.50 for a very long time even 69 said at the time they where to dear its only when they pulled out of Oz wounded and came back to NZ to recuperate that they came under attack and have never been left alone to get on with the JOB..

[Dr_Who]

Where to from here? A chance for Tindell to get his hands on WHS and privatise it. Tindell only need to JV with a large overseas retailer to buyout WHS cheap in this environment.

1. NZSE announcement

WHS
31/07/2008
GENERAL

REL: 0854 HRS The Warehouse Group Limited

GENERAL: WHS: WHS - Commerce Commission Appeal allowed

31 July 2008

THE WAREHOUSE GROUP LIMITED

Commerce Commission Appeal allowed

The Court of Appeal announced this morning that it has set aside the
clearance granted by the High Court for Woolworths and Foodstuffs to acquire
up to 100% of the shares in, or assets of, The Warehouse Group.

The Warehouse Group Limited will not make any further comment on the Court of
Appeal decision until it has received the full judgment and has considered
its implications.

ENDS
End CA:00168027 For:WHS Type:GENERAL Time:2008-07-31:08:54:29


2. Newspaper Article from Stuff.co.nz


Warehouse takeover blocked by court

Reuters | Thursday, 31 July 2008

BREAKING NEWS: The Court of Appeal has overturned a lower court's ruling allowing rival grocery firms to bid for discount retailer The Warehouse Group Ltd.
The court has prevented Australia's Woolworths Ltd and New Zealand co-operative Foodstuffs bidding for The Warehouse, New Zealand's largest listed retailer in a deal that could be worth over $2 billion.
In a summary of its decision, the Court of Appeal said the appeal of the Commerce Commission against a High Court decision letting the two retailers lodge takeover bids would be allowed.
It set aside the clearances granted in the High Court and ordered the two supermarket chains to pay costs to the regulator.
Shares in The Warehouse closed on Wednesday at $3.82 after trading between $3.77 and $6.66 over the past 12 months.
The Commerce Commission argued that if either supermarket chain bought The Warehouse, it would result in a substantial lessening of competition.
The Warehouse sells a broad range of general merchandise in its 85 "Red Shed" stores. It is about 50 percent-owned by founder Stephen Tindall and interests close to him, while Woolworths and Foodstuffs each own about 10 percent.

[Footsie]

well that was painful

I was on the bid at 3.00 on the open for more and missed out by 1c...... ahhhhh

[Dr_Who]

well that was painful

I was on the bid at 3.00 on the open for more and missed out by 1c...... ahhhhh

Yeah I missed out on buying some this morning also.. LOL.. My bid was only a couple of cent too low.

[minimoke]

Ah, the good old days trading WHS. I fondly recall selling out at $6.50 – but being disappointed at the time!
But not at disappointed as those that bought yesterday. Down 15% to $3.25 on today’s decision.

[Footsie]

bought more at 3.24

too cheap.

will rebound

It used 3.20 as support in May 2005. Seems like a good level to find support now.

[Dr_Who]

Yep, I bought more also. This is going in the long term portfolio.

In the long run I will look back and wonder why I didnt buy more. I recall WHS a few years back when the sp were trading at these levels and having problems with their Aussie operation and everyone bragging what a dog it was.

There will either be a supreme court appeal or another party or Tindell coming to the party to T/O it at these levels. Good things dont stay down too long.

[Footsie]

for long term players

WHS is an institution.... any lower and mum and dads will be queing up to buy

It's probably the most well known company on the NZX.....as it reaches across all areas of society.

might bounce between 3.10 and 3.20 for a while but you still get a dividended and even if the recession is bad... i doubt profits will fall much more that what they are down to now.

there is probably even a short term trade in here.... im sure it will bounce once the offshore hedge funds are out.

[foodee]

... i doubt profits will fall much more that what they are down to now.




Am not sure about that as:-

NZD trending down
Slowing local economy
Labour costs increasing in Asian manufacturers
and of course fuel/energy hike

cheers

[Dr_Who]

Am not sure about that as:-

NZD trending down
Slowing local economy
Labour costs increasing in Asian manufacturers
and of course fuel/energy hike

cheers

WHS wont be around for long. Someone will eventually take it out. Be it Tindell or another party, it will be like all the other good NZ asset, gone from the NZX.

It is not in Tindell's best interest to see revenue growth in WHS when he wants to privatise it himself. He will want to buy it out cheap. "Everyone gets a bargain".

[Footsie]

kiwisaver funds should be using today's volume to buy into a NZ icon


looks like they are probably the ones buying off the o/seas hedge funds

[Cadmium]

I bought today at 3.20.

This was my first ever share purchase. I'm looking at the long term and didn't bet the farm, so I am feeling pretty good about it. :)

Regards
Cadmium

[The Great Gold Guru]

I still think the shareprice is too high. Surely in this market you want to buy at a really cheap price ... there is so much to chose from. At $3.24 with forcast 2008 eps of 25.8c that is a PE of 12.56. For a retailer facing so many headwinds that is just way too expensive for me. Smith City are on a PE of 6 !!!!

"Where everyone gets a bargain" ... certainly not here !

[Dr_Who]

I still think the shareprice is too high. Surely in this market you want to buy at a really cheap price ... there is so much to chose from. At $3.24 with forcast 2008 eps of 25.8c that is a PE of 12.56. For a retailer facing so many headwinds that is just way too expensive for me. Smith City are on a PE of 6 !!!!

"Where everyone gets a bargain" ... certainly not here !

Comparing Smith City with WHS is like comparing CDI with ING. I understand Woolies was prepare to pay north of $7 and Tindell was prepare to pay north of $5.75 and dont forget Foodstuff. I dont see anyone prepare to pay anything for Smith City let alone a premium.

The store locations WHS have and the market share they have is worth a premium.

[BRICKS]

Comparing Smith City with WHS is like comparing CDI with ING. I understand Woolies was prepare to pay north of $7 and Tindell was prepare to pay north of $5.75 and dont forget Foodstuff. I dont see anyone prepare to pay anything for Smith City let alone a premium.

The store locations WHS have and the market share they have is worth a premium.

WHO your counting your chickens before they hatch, and your going great guns loosing 70 cents today on your first bet even if you bought today you are now holding an average $3.55+ you could have waited for today and you would have been better off, So SCY down 0 up 0 but still cum div till next Friday that's CASH in the hand NOW..

[tim23]

Comparing Smith City with WHS is like comparing CDI with ING. I understand Woolies was prepare to pay north of $7 and Tindell was prepare to pay north of $5.75 and dont forget Foodstuff. I dont see anyone prepare to pay anything for Smith City let alone a premium.

Dr who - that was then this is now.

[SEC]

I still think the shareprice is too high. Surely in this market you want to buy at a really cheap price ... there is so much to chose from. At $3.24 with forcast 2008 eps of 25.8c that is a PE of 12.56. For a retailer facing so many headwinds that is just way too expensive for me. Smith City are on a PE of 6 !!!!

"Where everyone gets a bargain" ... certainly not here !

Tend to agree with you Nelehdine and note that consensus 09 PE is about 12 too. That's cheap if the co is expanding or has critical mass to be a price maker (cf Woolworths/Coles) but the growth bubble has long since popped for WHS - to think it used to trade on a PE of nearly 30!!!!!

Furthermore what are Woolies and Foodstuffs going to do with their WHS stakes now? There may be an overhang as one or both decide to exit WHS, further depressing the share price (interested in comments from others here).

Nevertheless WHS is now on my watchlist as I await what happens to the Woolies/Foodstuffs stakes. If sold on-market it'll provide WHS with some much needed liquidity and perhaps become my first NZX share purchase in over five years.

SEC

[Thumpa]

Who's the Nong at the High Court who overturned the original Commerce commission decision in the first place ? What a waste of time and money.

Today's ruling is the best news for New Zealand.

Would love to see The Warehouse thru private equity or capital raising buy a lightning raid 10% blocking stake in Woolworths . Woolies is kinda cheap now , and the irony it would bring......WOW.

[Dr_Who]

The game is not over yet. :)

Watch this space and think outside the square. Be there or be sqaure.:D

Timing looks about right for Tindall to get his bargain

http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10524657

[macduffy]

Who's the Nong at the High Court who overturned the original Commerce commission decision in the first place ? What a waste of time and money.

Today's ruling is the best news for New Zealand.

Would love to see The Warehouse thru private equity or capital raising buy a lightning raid 10% blocking stake in Woolworths . Woolies is kinda cheap now , and the irony it would bring......WOW.

Irony perhaps, but I don't see the logic.
It's not as if anyone else is looking to takeover WOW so it wouldn't make much sense for a private equity group, even if they could borrow the money in today's market.
Unless I'm missing something?

[Dr_Who]

Nice bounce this morning. :)

Hey Footsie, you taking quick profit or holding on for bigger profit later?

Be there or be square! LOL

disc. Proud holder of WHS

ps: you guys who work on PE only are thinking inside the square!

[Footsie]

i was out this morning.

I had an order left in the system at 3.49 from yesterday to sell half.... and arrived at my computer to find i'd been taken out. totally forgot about it.

i'll sit on the rest for the moment.

[Dr_Who]

i was out this morning.

I had an order left in the system at 3.49 from yesterday to sell half.... and arrived at my computer to find i'd been taken out. totally forgot about it.

i'll sit on the rest for the moment.

CLASSIC MATE! LOL

Accidental profit. What a WOOT! I actually think the sp may come down abit from here until the next announcement.

[GTM 3442]

Bought some of these early yesterday. Looking like a good dividend payer for the bottom drawer.

Some possible potentioal for upside, but not a lot - I don't think retail is a growth area for a while.

[macduffy]

Did nobody tell the Court of Appeal that most of us don't live in Sylvia Park or anywhere near Te Rapa, and that the chances of WHS expanding its food offering to take on WOW and Foodstuffs is virtually nil?

Disc: Disgruntled WHS holder.

:(

[Dr_Who]

Did nobody tell the Court of Appeal that most of us don't live in Sylvia Park or anywhere near Te Rapa, and that the chances of WHS expanding its food offering to take on WOW and Foodstuffs is virtually nil?

Disc: Disgruntled WHS holder.

:(

Judges dont live in the same world as us. They've probably never heard of Sylvia Park and Te Rapa, only the Foodtown in Remers and Newmarket.

[Footsie]

IF i remove my own bias

I actually think its a good decision

more supermarket competition is better.... I just wish WHS would roll out food across all its store.... AND LIQUOR..

you can build a store within a store.... and sell spirits...

now that's where the real $$$ are.

[Dr_Who]

I actually think that the WHS entering into the grocery market is a big mistake. WHS dont have a competitive advantage in the grocery market sector and NZ is a very small market that may not be able to hold up three competitors.

Ive been out to the Slyvia Park and Manukau stores and have noticed that no one shops at the grocery area.

[Nitaa]

I have never been a retail investor fan but in my opinion i think there is plenty of updside for the big red shed.

Going back to the late 80's and ear;y 90's my view was TBRS were doing extremely well as all the penny pinchers flocked there. I see this trend continuing.

The whs exta (whatever its called) is the way of the future as well. the big supermarket chains know it. should the whe get into the hypermarket type of concept then it will be best primed to catilize on the future of retail shopping.

discl. dont hold

[Footsie]

Go to Europe (Carrefour) or the US (Walmart, Costco)

Most low to middle income earners prefer the one stop shop....

its the more affluent who like specialty shops.

its the way of the future

but like i said..... Liquor and in particular spirits namely alcopops is the place for them to make big $$
If the WHS built a "box within a box" liquor store in every shop they'd double NPAT in 2 years. SIMPLE


PS I personally love shopping at WHS... you know what you are going to get and yuo know that basically, whatever you want ....will be there... in some way shape of form

[waikare]

IF i remove my own bias

I actually think its a good decision

more supermarket competition is better.... I just wish WHS would roll out food across all its store.... AND LIQUOR..

you can build a store within a store.... and sell spirits...

now that's where the real $$$ are.

The WHS Fraser Cove in Tauranga as well as selling Speights they also have a few lines of spirits.

[Sideshow Bob]

Walmart are going gangbusters in the States at the moment, as people shop a little more downmarket. In Europe, the likes of Lidl and Aldi are the only ones growing.

To compete manfully in food, most red sheds that I have been to would need to extend, and many don't really have the area - except upwards. If they put food into existing stores, they then are taking away space from other profit making items.

Believe that most supermarkets make their larger margins from meat/deli/fruit & vege etc, not so much from dry goods. Needs more facilities, capacibilities etc. Too hard at present.

I don't really see them as being a threat on food, but Foodies and Woolies thought so, and taking advantage on WHS strength in hard goods.

I'd love to see more competition in the food business - it's just an all too comfortable duopoly for my liking.

[winner69]

I actually think that the WHS entering into the grocery market is a big mistake. WHS dont have a competitive advantage in the grocery market sector and NZ is a very small market that may not be able to hold up three competitors.

Ive been out to the Slyvia Park and Manukau stores and have noticed that no one shops at the grocery area.

Thats exactly why Tindall wants to take WHS private .... he wants to expand into groceries and like .... but recognises that is a risky strategy because some shareholders like Dr Who think it a mistake and most WHS shareholders would not appreciate another mistake or a few years of choppy earnings ..... he is prepared to take the risk himself so privatising is the best bet for him.

Wouldn't be easy but it took the mighty Walmart years before food was a success but when they perfected the model did sales take off. This is a good overview

http://www.coriolisresearch.com/newsletter/coriolis_chartwatch_2006Q2.html

[Halebop]

Agreed W69. Winning hearts, minds and wallets is a long term strategy requiring a long term vision. Given it can be expanded incrementally it's a relatively low risk strategy providing owners can accept low or negative returns until critical mass and optimal formula is achieved.

Personally I don't think their offer hits the mark yet - there are notable product gaps in some areas while others like dairy seem over-served in comparison. If they really wanted overkill in a category produce would seem a better place to attempt it - the current setup is underwhelming when you enter and sets the mindset for the rest of the store. There are also different disciplines involved in merchandising a supermarket that they still haven't executed cleanly... but then if my local Auckland Foodtown stores are anything to go by they have a few issues here too.

[Dr_Who]

Thats exactly why Tindall wants to take WHS private .... he wants to expand into groceries and like .... but recognises that is a risky strategy because some shareholders like Dr Who think it a mistake and most WHS shareholders would not appreciate another mistake or a few years of choppy earnings ..... he is prepared to take the risk himself so privatising is the best bet for him.

Wouldn't be easy but it took the mighty Walmart years before food was a success but when they perfected the model did sales take off. This is a good overview

http://www.coriolisresearch.com/newsletter/coriolis_chartwatch_2006Q2.html

After the failed foray into Aussie, a recession looming and two giant grocery competitor breathing down WHS's back, it is wise for Tindell to privatise WHS. I dont think shareholders will support WHS into the grocery market after seeing what they have on offer in Sylvia Park and Manukua.

[Deev8]

In Europe, the likes of Lidl and Aldi are the only ones growing. I think that Tesco might disagree with that statement.

[Sideshow Bob]

Tesco are under alot of pressure from the UK equivalent of the Commerce Commission. Tesco are about 33% of the supermarket trade and they won't let them grow anything further in the foiod business. Their growth is coming from the likes of trying to sell houses (failed) and other new business areas!!

There is a stat that £1 in every £5 spent in the High Street goes through a Tesco store.

[Deev8]

Tesco are under alot of pressure from the UK equivalent of the Commerce Commission. Tesco are about 33% of the supermarket trade and they won't let them grow anything further in the foiod business.Getting a bit off-topic for a thread on The Warehouse, but regulatory constraints on Tesco hasn't held back their financial performance too badly.

Tesco Profit for the year ending Feb (£ Millions)
2005 1,344
2006 1,570
2007 1,892
2008 2,124

Now if The Warehouse could turn in a similar rate of growth ...

[Dr_Who]

I am wondering why Walmart, Tesco, Kmart etc wont make a T/O offer for WHS? Maybe WHS is too small for them?

[POSSUM THE CAT]

DR Who K MART in NZ belongs Wesfarmers the owner of Coles and Bunnings and so far in debt. That I doubt anybody would lend them the money to do that. The Company that might is ALDI and that would really set the cat among the pigeons

[Deev8]

I am wondering why Walmart, Tesco, Kmart etc wont make a T/O offer for WHS? Maybe WHS is too small for them?It was rumoured that Tesco took a look at The Warehouse back in 2006, and that Tindall met with Tesco executives while he was in the UK for a holiday. It seems that Tesco weren't sufficiently interested.

[Dr_Who]

After the failed foray into Aussie, a recession looming and two giant grocery competitor breathing down WHS's back, it is wise for Tindell to privatise WHS. I dont think shareholders will support WHS into the grocery market after seeing what they have on offer in Sylvia Park and Manukua.

Interesting comments today by the board. Looks very interesting indeed. Surprising no one here owns shares in WHS. Another great NZ company going overseas soon.

Disc. shareholder

[macduffy]

Perhaps a couple of glasses of good pinot gris have made me over-optimistic but I see a good chance of WHS deciding to abandon the grocery idea; the courts deciding that there's therefore no reason to prevent a takeover; and the two supermarket giants resuming their tussle for control.
Don't see the SP getting back to previous highs, however.

Disc: small holding.

;)

[Grimy]

Interesting comments today by the board. Looks very interesting indeed. Surprising no one here owns shares in WHS. Another great NZ company going overseas soon.

Disc. shareholder
I've been a shareholder on and off over the years, and they've been pretty good for me. Only have a tiny amount now. Have often used it as my "cash" share, sell when needing money for something like reroofing the house, rebuying when cheap.

[winner69]

Maybe WHS could have another go in Aust .... isn't this what they hocked off a year or so ago

Receivers In At Discount Grouo
http://business.smh.com.au/business/receivers-in-at-discount-group-20090120-7ln3.html

[Dr_Who]

If WHS is looking to go back into Aussie, I would recommend a SELL on it.

[macduffy]

I would think that Australia is the last thing on WHS's mind, except the possibility of an Aussie in the form of WOW making a takeover bid.
Any evidence to the contrary or just idle speculation?

[Dr_Who]

I would think that Australia is the last thing on WHS's mind, except the possibility of an Aussie in the form of WOW making a takeover bid.
Any evidence to the contrary or just idle speculation?

What is happening with WOW? Are they still interested in WHS? Whats your views Macduffy?

[macduffy]

What is happening with WOW? Are they still interested in WHS? Whats your views Macduffy?

It all depends on Mr T of course but I think it's inevitable that WOW will have another go sooner or later. And of course it may be sooner if the market gets any more depressed.
Whether or not Foodstuffs would contest the issue or not?
No idea, but I reckon WHS is worth more to WOW who would then have a ready-made network to adapt to and benefit from the greater purchasing power of their BigW operation.

[Deev8]

Results for the six months to 25th January 2009 were released this morning.


REVENUE - $923.490 million, a decrease of 2.9 %
OPERATING PROFIT - $84.246 million, an increase of 1.1 %
EBIT - $74.503 million, a decrease of 19.2 %
PROFIT BEFORE TAX - $69.610 million, a decrease of 22.3 %
NET PROFIT - $48.968 million, a decrease of 23.8 %
EARNINGS PER SHARE - 15.9 cents, a decrease of 23.6 %
INTERIM DIVIDEND – Maintained at 15.5 cps, fully imputed

Subject to any further material adverse change in operating conditions the Directors expect adjusted net profit after tax for the full year to be similar to adjusted NPAT for F08.

Full results announcement: The Warehouse Group 2009 Interim Results (http://www.nzx.com/markets/NZSX/WHS/announcements/4873919)

[Steve]

WHS are in the process of converting the old New World supermarket in to a smaller scale store in Mosgiel. Due to open later in the year...

[macduffy]

I finally got around to having a look at WHS's interim report to January, 2009.
Difficult trading conditions of course but significant improvement in the company's financial position, ie

- Net operating cash flow increased from $54m to $177m.

- Cash and cash equivalents up from $4m to $103m and foreign currency hedging contracts " in the money" to the tune of $45m.

- Inventories reduced by almost $10m.

- Borrowings reduced by $20m with consequent improvement in gearing.

WHS may not be a spectacular performer but it would appear to be one of the more soundly financed companies on the NZX at present.

[Corporate]

I finally got around to having a look at WHS's interim report to January, 2009.
Difficult trading conditions of course but significant improvement in the company's financial position, ie

- Net operating cash flow increased from $54m to $177m.

- Cash and cash equivalents up from $4m to $103m and foreign currency hedging contracts " in the money" to the tune of $45m.

- Inventories reduced by almost $10m.

- Borrowings reduced by $20m with consequent improvement in gearing.

WHS may not be a spectacular performer but it would appear to be one of the more soundly financed companies on the NZX at present.

Macduffy - i've never really looked into WHS, and I was presently suprised. They will be on a PE of 10 if they hit their target of 90m NPAT for 09

[macduffy]

A report that Woolworths may be looking at a major overseas acquisition rather than a share buy-back.

WHS may not qualify as "major" but it gets a mention here.

http://www.theaustralian.news.com.au/business/story/0,28124,25685714-643,00.html

;)

[Dr_Who]

The other big hurdle for WOW is Mr T and Foodstuff holding a large chunk of WHS. I guess these are huge hurdles to over come.

[whatsup]

Now that WHS is not in the food retail business there wont be any interest from Woollies in this N Z company, market too small and a non specialist retailer in a low growth/country ( now ) market ! imho.

[macduffy]

Now that WHS is not in the food retail business there wont be any interest from Woollies in this N Z company, market too small and a non specialist retailer in a low growth/country ( now ) market ! imho.

I don't think that that's necessarily the case.
The attraction from WOW's point of view is that it would give them the base for extending their highly regarded Big W operation to NZ with the buying power and other synergies that it would bring.
It may well be, too, that Foodstuffs would be more relaxed about WOW buying out WHS if they consider that the WHS chain won't be used to compete against them in the food business.

;)

[whatsup]

A few years ago when Coles were trying to flog off KMart Woollies were offered but they turned it down, the same still applies , gen merchantdice is not their thing here in N Z , food and may be grog, although recently they were romoured to be looking at the aussie Jb-hify.

[macduffy]

A few years ago when Coles were trying to flog off KMart Woollies were offered but they turned it down, the same still applies , gen merchantdice is not their thing here in N Z , food and may be grog, although recently they were romoured to be looking at the aussie Jb-hify.

Well, they already have the Dick Smith's chain so they're not solely concentrating on food and grog in NZ.

There's a huge difference between what they could do with the WHS chain and what they were offered via KMart's comparative handful of stores. They will come in to NZ in general merchandise only if they get the right opportunity. WHS with it's 100+ stores offers this.

[whatsup]

Mac, W bought Dick S off the establisher Dick Smith himself, it - D S already had a presence in N Z but a very small part of a sucessful Aussie operation.

[Peitro]

The Warehouse now offer online shopping.

Interesting move from the WHS, great way to bring their offering to the smaller towns that do not have a red shed.

Something to keep an eye on...

[ratkin]

Seems to be very strong last few days , something about to occur?

[nwood]

Seems to be very strong last few days , something about to occur?

http://www.stuff.co.nz/business/2681272/The-Warehouse-rolling-out-more-stores

[Peitro]

Solid Results- I'm looking forward to the webcast today. Special divi of 10c plus 5.5c

Went to the local Warehouse last Sunday and the place was packed

[Deev8]

Solid Results ...Yes, the announcement looks quite good, and importantly they had a good second half:

The board of The Warehouse Group today announced a net profit after tax excluding unusual items of $85.2 million compared to $80.9 million in F08, up 5.3%. Net profit after tax for the second half, excluding unusual items, was $28.4 million up 17.8%.

In announcing the result, Chairman Keith Smith says, “In light of economic conditions prevailing during the trading period this is an excellent result. Very strong cash flow has enabled us to not only maintain our final ordinary dividend for the year but to also distribute accumulated imputation credits to shareholders by way of special dividend, a very pleasing outcome”.

The Warehouse Group - 2009 Annual Results Announcement (http://www.nzx.com/markets/NZSX/WHS/announcements/2854427/The-Warehouse-Group-2009-Annual-Results-Announcement)

[ratkin]

Havent been paying much attention to this stock.
Yesterday recieved the special dividend , was a nice suprise .

Went into the barrington mall shop today , didnt look very busy for the time of year

[Dr_Who]

Went into the barrington mall shop today , didnt look very busy for the time of year

The Manukau Warehouse is packed with shoppers. Had to cue for ages. I have some rental properties out that way, so do shop around there.

disc: WHS shareholder.

[POSSUM THE CAT]

DR WHO how many were actually looking for five finger discounts

[kizame]

DR WHO how many were actually looking for five finger discounts

That is rife in retail,the one positive thing,if you can call it that,is that as well as taking a lot of shoppers away from other retailers,they also take more than their share of these unshoppers,or destockers.

[winner69]

If all the bad times are over and NZers are opening their wallets again then this mornings announcement from WHS was a shocker ..... flat sales in the last 9 weeks .... following a small decline in the 1st quarter

If flat sales equals flat profits then WHS EPS will remain about 25 cents .... so still has a PE over 17 which is pretty rich.

One concern would be 'price deflation' impacts (like craic saying he got a giant TV for $500 odd which was down from $1200) .... ie selling heaps more stuff for the same dollars ,,,,, which isn't good for margins (like heaps more stuff still has heaps more cost sort off) .... so earnings guidance in march will be much anticiipated by many

It was price deflation' which stuffed WHS profits up a few years ago .... and they have stayed at about those levels for some years now

[winner69]

Reading the announcement again it is really a profit downgrade of sorts in disguise .... or warning the market one will be coming soon

Maybe NZ is still stuffed .... jeez if The Warehouse can't sell more this year than when the times were really gloomy we are in trouble

For shareholders the action has to be for management to screw staff more .... averted industrial action pre Xmas .... need to push harder

[Jaa]

Maybe NZ is still stuffed .... jeez if The Warehouse can't sell more this year than when the times were really gloomy we are in trouble

People are reactionary (to bad news)....

For the average kiwi things were far worse this Christmas than last year. More out of work, more with lower salaries, less overtime etc

Its the accumulation of the entire current year's earning's that factors into Christmas spending I reckon not ones hopes for next year as expressed by house and share prices.

Note the opposite is true in reverse for many people. They will spend a pay raise/bonus as soon as its offered and long before it is received.

[kizame]

Reading the announcement again it is really a profit downgrade of sorts in disguise .... or warning the market one will be coming soon

Maybe NZ is still stuffed .... jeez if The Warehouse can't sell more this year than when the times were really gloomy we are in trouble

For shareholders the action has to be for management to screw staff more .... averted industrial action pre Xmas .... need to push harder

Isn't it that big ticket items are the first area of retail to recover from a recession,I would be watching the sales figures of F&P Apl. and Smith City,and to a lesser degree Harvey Norman or maybe to a greater degree now.

Don't like the comment "Screw staff" No company gets very far doing that sort of carry on.Remember their staff are their greatest asset.

[ratkin]

Havent been paying much attention to this stock.
Yesterday recieved the special dividend , was a nice suprise .

Went into the barrington mall shop today , didnt look very busy for the time of year

As predicted , often in that shop and was certainly quieter during the xmas period than previous years. May be store specific as more people would of migrated to the new improved westfield riccarton mall

[winner69]

As predicted , often in that shop and was certainly quieter during the xmas period than previous years. May be store specific as more people would of migrated to the new improved westfield riccarton mall

Good on you ratkin getting that special dividend .... the workers called it a bonus ... just like what senior managers got .... while they were stuffed around and had to work harder under some fancy project name

What the workers don't get is that shareholders want their bit of the action each year .... and come what may sometimes they have to be the sacrificial lamb .... should count themselves lucky they still have a job

Kizmae in his post infers shareholders shouldn't ask management to 'screw staff' because 'staff are their greatest asset' ...... come on Kizame .... get real

Customers (maybe not those wanting the five finger discount) are the centre of the universe ..... they buy heaps of stuff to pay the shareholders their dividends ..... in an operation like the WHS staff are just a means of making that happen and if you don't screw them down enough they'll be depriving (screwing) the shareholders of their decent dividends

You'd agree eh Ratkin

PS .. from your comment about the upgraded mall it would appear that The Warehouse is starting to lose its attraction. More friendly shopping malls with plenty of specials (on more decent stuff) and more Bunnings and Mitre 10 Megas (stock a lot of the stuff The Warehouse does or did) and maybe even Briscoes are starting to chanage the competitive landscape

[Doyle]

WHS is starting too look a bit closer to fair value or maybe even undervalued. At $3.80 divedends will represent a 5.5% imputed return, better than money in the bank, and pretty safe as well. The potential upside is always the possibility of a takeover offer and in the meantime the divedends keep coming in plus the occasional special one as a bonus.

That was probably the biggest volume i have seen the Warehouse trade for about 12 months. Maybe Foodstuffs or woolworths staring to sell out?

Discl: Bought a few shares today having sold out before christmas.

[ratkin]

PS .. from your comment about the upgraded mall it would appear that The Warehouse is starting to lose its attraction. More friendly shopping malls with plenty of specials (on more decent stuff) and more Bunnings and Mitre 10 Megas (stock a lot of the stuff The Warehouse does or did) and maybe even Briscoes are starting to chanage the competitive landscape

Dont forget the two dollar shops , saw many people nipping in buying xmas decorations, wrapping paper etc. Previously they would of been heading into the warehouse

[beacon]

In my book, WHS still has t/o premium built into its price. Way to go yet to fair value ...

[Doyle]

In my book, WHS still has t/o premium built into its price. Way to go yet to fair value ...


Fail to see how todays price could have any take-over premium built in. Well capitalised company, produces good divedends and has proved itself to be relatively defensive during economic downturns. Admittedly has little growth prospects, but based on normalised profit has a P/E of 13.2, and is likely to produce a similar profit again this year, with small upside for Future years. P/e of 13.2 is easily justifiable in my book without takeover prospects, with these prospects, I tend to value WHS on a P/E of 15. Don't forget that Historically WHS has traded at a P/E raio of 20.

Disl: Re-entered WHS at $3.84

[Snoopy]

Fail to see how todays price could have any take-over premium built in. Well capitalised company, produces good dividends and has proved itself to be relatively defensive during economic downturns. Admittedly has little growth prospects, but based on normalised profit has a P/E of 13.2, and is likely to produce a similar profit again this year, with small upside for Future years. P/E of 13.2 is easily justifiable in my book without takeover prospects, with these prospects, I tend to value WHS on a P/E of 15. Don't forget that Historically WHS has traded at a P/E raio of 20.

Disl: Re-entered WHS at $3.84


Doyle you admit that WHS has little growth prospects. That means that a PE of around 13 must be hard to justify. Look at RBD trading on a forward PE of around 10 (share price $1.75) yet they have only refurbished half of their KFC stores and the sell off of the unprofitable Pizza Huts is yet to come. I would argue the growth prospects of RBD are better and it trades on a lower PE than WHS.

Long term I think you will do OK out of the Warehouse Doyle, but I don't think that even if a takeover comes you will get anywhere near the $7 figures being bandied around a few years ago. That was all pre credit crunch. In the shorter term I think we could easily see $3.50 for the Warehouse. Don't get me wrong. I think WHS is a great company, better than RBD, but is it 30% better?

SNOOPY

discl: sold out of WHS at $5 some years ago.

[macduffy]

I tend to agree with Snoopy that WHS is fully, if not overpriced at today's levels and that there is still some takeover premium there. Historical P/E's are irrelevant now that the growth phase is well and truly passed.

I still think though that we will see WOW attempt a takeover at some stage. WHS offers the only option for WOW to replicate its Big W chain here in NZ, giving it a ready made network of suitable stores in good locations. I suspect that Foodstuffs would be happy to quit their 10% once it is clear that the WHS stores won't be competing in the supermarket/food sector. May need a side agreement to that effect!

[Zito]

Some interesting posts today.

I tend to agree with Snoopy et al that a PE of 13 is unjustified given WHS flat growth, esp when RBD is trading on a lower PE with better growth prospects.

RBD is also in an uptrend, while WHS is now downtrending.

Two reasons why I'm a RBD holder and not a WHS holder.

[emearg]

It is interesting all the comparisons with RBD? Especially for me as I sold my WHS last June and put the money into RBD. I was thinking the shine had come off WHS and RBD was looking very good.

It is nice to occasionally get it right!

[Doyle]

[QUOTE=Snoopy;290180]Doyle you admit that WHS has little growth prospects. That means that a PE of around 13 must be hard to justify. Look at RBD trading on a forward PE of around 10 (share price $1.75) yet they have only refurbished half of their KFC stores and the sell off of the unprofitable Pizza Huts is yet to come. I would argue the growth prospects of RBD are better and it trades on a lower PE than WHS.

Long term I think you will do OK out of the Warehouse Doyle, but I don't think that even if a takeover comes you will get anywhere near the $7 figures being bandied around a few years ago. That was all pre credit crunch. In the shorter term I think we could easily see $3.50 for the Warehouse. Don't get me wrong. I think WHS is a great company, better than RBD, but is it 30% better?

SNOOPY

Not quite comparible, in that RBD has turned out to be genuinely counter-cyclical where as the Warehouse is just realitively defensive. While you could argue RBD is a growth company I would big to differ, I think its peak in sales will be this financial year. The pick up in Pizza Hut is an aboration and in furture years it will continue to be a drain on profitability. KFC, is looking good but fast food is competitive, and if recessionary effects are dissapating and we start to see a tighter labour market, sales growth will slow (Counter intuitive). Starbucks could go either way, struggling at the moment but might be ok and Pizza hut is a great big anchor. If they figure out a way to cut pizza hut lose without to much of a loss I could become interested.

But in Short there is a good reason why RBD is trading at a Forward P/E of 10 and WHS 13.

P.S. If Woolworths really want it, they will have to pay a lot. Stephen Tindell hasn't expressed much of a desire to sell and has always said " That he doubts Woolworths would pay enough". This is perhaps the biggest hurdle to the takeover, still one can live in hope I suppose.

[winner69]

One way of looking at

Currently WHS EBIT about $128M (assuming this year to be about the same as last year) which after tax gives Operating Earnings of about $90M .... driven from shareholder equity of $$320m and debt of $100m .... so a 20% return on capital .... fantastic performance

At current shareprice market cap is $1.1 billion. So if you managed to buy the company it would cost you this $1.1 billion and you pick up the $100m debt so total cost (capital required) is $1.2 billion. All of sudden that $90m operating earnings is not that attractive .... it only gives you a 8% return on the capital invested (6% if you had to pay a 20% premium)

So honestly .... would any of you if you had $1,4 billion buy something for a 6% after tax return .... esp when they have essentially saturated the market and future growth potential is rather limited without further capital.

I doubt it ... therefore isn't WHS overvalued at the moment .... or there is some strategic value of the sites / footprint for a potential buyer included in the price.

Same sort of thinking Buffet applies ... as Snoopy would probably say Warren wouldn't be buying WHS at these prices .... but at what price? .... at least a 12% return i would say to cover cost of capital ... ie about $2.10 a share.

Is that what Warren pay Snoopy ... haven't checked your latest workings on sharechat

Interesting

[modandm]

One way of looking at

At current shareprice market cap is $1.1 billion. So if you managed to buy the company it would cost you this $1.1 billion and you pick up the $100m debt so total cost (capital required) is $1.2 billion. All of sudden that $90m operating earnings is not that attractive .... it only gives you a 8% return on the capital invested (6% if you had to pay a 20% premium)

Interesting

Exactly. And WHS management are well aware of this fact. Expect a bond issue of 100m followed by a special dividend of 30cps mid year. This will re-lever the business and improve ROIC. Also a handy 15% yield for 1 year.

Mark my words! :)

[winner69]

So then W69 you're saying that, unlike many other NZX companies, WHS is fairly valued ;)

Not really -- probably saying that that WHS as on ongoing concern is overvalued and those that think there is a reasonable take over premium currently built into the price are correct ... if that is the reason for the 'overvaluation'

At current price and current company performance returns for anybody taking it over is 8% ..... probably on the low side .... like Snoopy uses Buffet's number of 15% ..... so take it from there and WHS is not worth 385

Never mind all this crap .... the market is always right eh .... so it must be worth 385 .... no argument

[Corporate]

One way of looking at

Currently WHS EBIT about $128M (assuming this year to be about the same as last year) which after tax gives Operating Earnings of about $90M .... driven from shareholder equity of $$320m and debt of $100m .... so a 20% return on capital .... fantastic performance

At current shareprice market cap is $1.1 billion. So if you managed to buy the company it would cost you this $1.1 billion and you pick up the $100m debt so total cost (capital required) is $1.2 billion. All of sudden that $90m operating earnings is not that attractive .... it only gives you a 8% return on the capital invested (6% if you had to pay a 20% premium)

So honestly .... would any of you if you had $1,4 billion buy something for a 6% after tax return .... esp when they have essentially saturated the market and future growth potential is rather limited without further capital.

I doubt it ... therefore isn't WHS overvalued at the moment .... or there is some strategic value of the sites / footprint for a potential buyer included in the price.

Same sort of thinking Buffet applies ... as Snoopy would probably say Warren wouldn't be buying WHS at these prices .... but at what price? .... at least a 12% return i would say to cover cost of capital ... ie about $2.10 a share.

Is that what Warren pay Snoopy ... haven't checked your latest workings on sharechat

Interesting

Good post Winner. I think you hit the nail on the head!

[modandm]

think you guys have it wrong.

You can't think of any investment in the way you have described.

This is how people are thinking:

Solid blue chip co with defensive characteristics

Strong dividend yield with high likelyhood of 30cps special div this year.

Modest return risk characteristics

YES - il have this in my clients retirement portfolio please.

Sure its not going to be a double bagger unless there is a takeover but it is going to be reliable and provide a good income stream

believe it or not thats what most people want from their investments.

Plenty of room for upside as blue sheds get spun off or sold.

Cheers

[POSSUM THE CAT]

modandum Take the blinkers off. With the present hopeless management I do not know if I would buy them at $3.00. Tindall needs to return & manage The Warehouse again to bring back some core business stratedgy. Instead of looking at every passing fad. Bluesheds are suffering because of poor management. With staff that know very little about there product how can they expect to charge the same sort of prices as the likes of Whitcoulls & Office Depot where you get personal service and the staff have lots of product knowledge.

[ratkin]

Sure its not going to be a double bagger unless there is a takeover but it is going to be reliable and provide a good income stream



In these trying times i actually agree with you here , the company has very little debt and isnt quite the basket case it being portrayed as.
Might not be a screaming buy according to Buffett , but then what is?

[Balance]

In these trying times i actually agree with you here , the company has very little debt and isnt quite the basket case it being portrayed as.
Might not be a screaming buy according to Buffett , but then what is?

WHS has strategic value which will be realised soon enough.

Enough said.

[winner69]

modandum Take the blinkers off. With the present hopeless management I do not know if I would buy them at $3.00. Tindall needs to return & manage The Warehouse again to bring back some core business stratedgy. Instead of looking at every passing fad. Bluesheds are suffering because of poor management. With staff that know very little about there product how can they expect to charge the same sort of prices as the likes of Whitcoulls & Office Depot where you get personal service and the staff have lots of product knowledge.


The reported double digit sales increase by BGR doesn't put WHS in very good light

The market was not as stuffed as Ian made out .... some retailers have done very well and The Warehouse wasn't one of them

Prob stock a lot of stuff punters don't want .... Briscoes must stock the stuff punters want and at the price they are willing to pay

Be interesting to see whether WHS expanded margins like BGR say they have managed to do

[emearg]

Rod Duke continues to prove himself to be one of the countries most capable retailers.

In my opinion Stephen Tindall used to be one of the countries most capable retailers.

I'm not sure about the current Warehouse management or strategy. They have gone a little more upmarket in terms of layout, quality and prices and don't have the constant sales that used to appeal to a lot of people (or was it just me?)

I'm not sure any of these things suit the Warehouse brand that was created over a couple of decades? It seems they have tried to become a bit of a 'me too' (like Dick Smiths have just done) shop and have perhaps lost some of their appeal because of that?

Over the past few years I have found myself buying very little from the Warehouse. Briscoes sells better quality gear (in my opinion) for not much more (when it is on sale). If I want CDs and DVDS which I used to buy at the Warehouse I now go to JB HiFi as they have a much better range and are generally cheaper.

[Lizard]

Putting on my "chief household shopper" hat, I find myself shopping less and less at our local Porirua store - even actively avoiding it. When I do go, I tend to leave feeling irritated:

Never enough checkouts open - usually a queue of at least 3+ people at any checkout.
Seems like assistant leaves the till for every other customer to check on something.
Items often not visibly priced or not priced correctly or pricing is confusing (sale items mixed with non-sale)
Unfriendly and unattractive.
Pricing policy seems a bit random. No longer assume it will be best price there.
The annoying "pay for bags" policy - I don't mind being asked if I want one, but the petty charging grates.


Okay, I admit I am probably no longer in WHS target demographic, but I think a little more pride at shop floor and improved focus on customer experience wouldn't go amiss.

[percy]

Putting on my "chief household shopper" hat, I find myself shopping less and less at our local Porirua store - even actively avoiding it. When I do go, I tend to leave feeling irritated:

Never enough checkouts open - usually a queue of at least 3+ people at any checkout.
Seems like assistant leaves the till for every other customer to check on something.
Items often not visibly priced or not priced correctly or pricing is confusing (sale items mixed with non-sale)
Unfriendly and unattractive.
Pricing policy seems a bit random. No longer assume it will be best price there.
The annoying "pay for bags" policy - I don't mind being asked if I want one, but the petty charging grates.


Okay, I admit I am probably no longer in WHS target demographic, but I think a little more pride at shop floor and improved focus on customer experience wouldn't go amiss.
Everytime I go into barrington store I find myself asking what the hell am I doing in here.Cannot find what I am looking for and no staff to ask.

[Lizard]

Actually, if there was one store in Porirua I'd like to be a shareholder in, I think it would be "Pete's Emporium". I'm not usually a fan of these types of shops, but this one just keeps going up in my estimation!

Bring on the IPO and nationwide roll-out :D

[emearg]

The service at the Warehouse has always been terrible. I think it has improved a little in recent years but not much. Personally I used to accept that as part of 'you get what you pay for'.

That said, it is interesting to compare the service at Bunnings and the Warehouse. Both pride themselves on having large shops with the cheapest gear. Surprisingly the Bunnings people are incredibly helpful and know a lot about a huge range of products (at least at the Naenae and Porrirua big stores in Wgtn). So if Bunnings can get the service aspect right why can't the Warehouse? Perhaps there is no management focus on this? Actually it seems pretty clear that good customer service isn't their focus which for a retailer is a really bad thing!

I also wonder if the world has changed a bit from the best days for the Warehouse? There isn't much doubt now that the world has limited resources and which kinda makes you want to buy a product that will last so you don't waste resources and fill up land fills. Cheap alone isn't enough anymore.

The Warehouse have improved the quality of many items, but they still seem to be missing something?

The Warehouse has a few things to do to get their business back on track. I have no doubt they can get back on track, but maybe not with the current management/board/focus?

[percy]

The service at the Warehouse has always been terrible. I think it has improved a little in recent years but not much. Personally I used to accept that as part of 'you get what you pay for'.

That said, it is interesting to compare the service at Bunnings and the Warehouse. Both pride themselves on having large shops with the cheapest gear. Surprisingly the Bunnings people are incredibly helpful and know a lot about a huge range of products (at least at the Naenae and Porrirua big stores in Wgtn). So if Bunnings can get the service aspect right why can't the Warehouse? Perhaps there is no management focus on this? Actually it seems pretty clear that good customer service isn't their focus which for a retailer is a really bad thing!

I also wonder if the world has changed a bit from the best days for the Warehouse? There isn't much doubt now that the world has limited resources and which kinda makes you want to buy a product that will last so you don't waste resources and fill up land fills. Cheap alone isn't enough anymore.

The Warehouse have improved the quality of many items, but they still seem to be missing something?

The Warehouse has a few things to do to get their business back on track. I have no doubt they can get back on track, but maybe not with the current management/board/focus?

A very good analysis of WHS problems.Bunnings as you point out excel in knowledge and helpful service.SCY also do both.I agree cheap alone isn't enough anymore.

[ratkin]

Up 12 today , any ideas?

[Balance]

Up 12 today , any ideas?

Stock is tight as a drum.

Just need a whisper of takeover activity and POP!

Tesco to break the impasse by buying off Tindall and give Foodtsuffs & Woolworths a way out?

[Balance]

Sellers are all pulling out.

Something is up?

[COLIN]

Stock is tight as a drum.

Just need a whisper of takeover activity and POP!

Tesco to break the impasse by buying off Tindall and give Foodtsuffs & Woolworths a way out?

Aldi, perhaps? Its been mooted from time to time.

[POSSUM THE CAT]

Who would be interested with both Woolworths & Foodstuffs holding blocking stakes

[macduffy]

Who would be interested with both Woolworths & Foodstuffs holding blocking stakes

Yes, it would probably need a non-food company to persuade WOW and Foodstuffs to give up their stakes.

Doesn't leave many options.

[ENP]

Is now a good opportunity to buy WHS shares? We seem to be coming out of the recession, more consumers are buying up and the wharehouse is a discount retailer for bargains for the majority of people who don't want to spend on the upper class retail stuff. The management is also undertaking a complete re-shuffle in the upcoming months to cut costs and regenerate more profits.

I've saved up $5000 and want to make the most of it. I'm undecided whether to go for the "security" of either ANZ or Westpac shares, the dividend and possible capital gain on Wharehouse or the more volatile and risky Tourism Holdings.

Any advice would be appreciated.

[ratkin]

Only advice i would go with is dont choose tourism holdings

[ENP]

Only advice i would go with is dont choose tourism holdings

Reason being? And what are your thoughts on Telecom? Has the market over-reacted to make it now a decent deal?

[POSSUM THE CAT]

ENP at least split it in half Two lots of $2500.00 would suggest of those you have asked about ANZ & TEL diversification reduces the risk.

[ENP]

ENP at least split it in half Two lots of $2500.00 would suggest of those you have asked about ANZ & TEL diversification reduces the risk.

This is my first time investing in shares. I'm going to go through an online broker for $30. If I buy two shares, for example ANZ and TEL, will I have to pay $30 or $60? (sorry if this is a newbie silly question)

Thanks.

[POSSUM THE CAT]

ENP $29.90 per each purchase up to NZ$15000.00 per trade at Direct Broking. But you cut your risk for an extra $29.90 I started with $50 lots many years ago

[percy]

ENP
THL has a lot tied up in capital,hard to make good returns as always has to upgrade vans etc.I would go either bank as would give you an aussie share.WHS is better focused than TEL and is a possible takeover target.Remember NZ shares usually pay the tax on the divie while aussie shares you have to pay tax on the divie.makes a huge difference on nett yield.Good luck with your investments.Just take your time.

[beacon]

I've saved up $5000 and want to make the most of it. Any advice would be appreciated.

Without knowing your risk appetite and investment horizon, difficult to advise anything. I'd say, you'd double your money if you fold it in half, and keep it in your back pocket. Check back returns in a year. Pretty sure, the money in your back pocket will still be "secure".

[ENP]

With The Wharehouse and Vector giving dividends on 12% and 9% respectively, I don't see where you can go wrong?

[winner69]

12% dividend from a Whorehouse is pretty impressive .... is that why that ASB fraudster invested in whores?

Sorry ENP - your spelling of Warehouse makes me smile - you must be of Maori descent

[Snoopy]

With The Warehouse and Vector giving dividends on 12% and 9% respectively, I don't see where you can go wrong?


Your best bet ENP, with 5k or so to spend on NZ shares would be to put it in the index fund TENZ. TENZ takes a market proportional stake in the top ten shares by capitalisation. You can buy TENZ like a share on the market. That way you will get diversification at low cost with low ongoing fees, and a decent ongoing dividend stream as well.

If you try to pick winners off the bat one of two things will happen.

1/ You will get lucky and outperform the market. Your ego will then inflate beyond your ability and you will become more reckless with future investments and lose everything you have made.
2/ You will get unlucky and spend the rest of your life 'burned' by the market after you vow that all those corporate guys are crooks anyway. Then you will never return.

Your naievity with regards to the Warehouse for example, since that is the thread we are on, is breathtaking to me.

Did you know that the 12% yield you are quoting includes an historical special dividend that is not guaranteed to be repeated? The yield based on normal dividend policy you will find is much less.

Also why if we are coming out of a recession would people be more inclined to spend at a discounter for bargains? If we really are coming out of a recession, why wouldn't people use their increasing purchasing power to move away from the lower price/quality Warehouse stuff ?

When a share's earnings are not growing (as is WHS at the momnent) you would not expect any capital gain. In fact there is every chance that such a share may suffer 'price multiple deflation' which could see the WHS share price fall even when earnings do not. So what capital gain are you talking about? Perhaps you think WHS will be a takeover target? Perhaps it will, but guess what? This fact has been known by the market for *years* and is almost certainly already partially priced into the market.

WHS is better 'focussed' than Telecom? There is difficulty in comparing businesses across different sectors. But I would say recently regulatory changes and network problems have made Telecom management very focussed on getting stuff done. If anything, the relative underperformance of WHS verses the other retailers would suggest that it is Warehouse managment that are asleep at the wheel.

Despite what I have said above, long term, I think you would be onto a winner backing the Warehouse. But it may take time, lots of time. Perhaps the increased shop renewal program will show dividends? But I'm not convinced WHS is an obvious winner based on today's market prices.

SNOOPY

discl: Bought in at $4, sold out at $5 a few years ago when the Aussie expansion turned to custard.

[ratkin]

Buy two, 2470 dollars worth of WHS , and for the other i would recommend same amount on SKC. Cant go far wrong imo

[modandm]

CFO buys shares on market. Good sign. Once the bond issue finishes up the special dividend will be coming. 30c minimum. I already have marked my words on this one.

[winner69]

Supermarkets have these 'Wind back the prices' promos every now and again ... prob all marketing hype suggesting they are selling things today at proces from years ago

Hey ... is the NZX having a wind back sale ..... WHS nearly down to last century prices (at least that what the charts shows which I assume are adjsuted for the share split they once had (I think))

Always said that $2.50 to $3,00 is a fair price for WHS .... getting closer to that $3,00 .... week by week just that bit closer

Keep watching .... problen being when it gets to $3.00 will still be overvalued relative to the market but could be interesting

[macduffy]

DB website says yeild is 14.4% !!!! Friggin' hell, surely a screaming buy at this level? (Or have I missed something?) Anyway, need more retailers in my portfolio to pick up the recovery $$$$.

My imperfect memory seems to remind me that there was an element of Special Dividend in last year's div, which is probably what the 14.4% is based on.

A question of using up imputation credits or something?

[macduffy]

My imperfect memory seems to remind me that there was an element of Special Dividend in last year's div, which is probably what the 14.4% is based on.

A question of using up imputation credits or something?

A check of the records show that WHS paid a special div of 10cps last year. 'Normalised" div for the year was 21cps, the same as the previous year.

That would give an indicative yield of about 6.25% without the benefit of any imputation credits although these are likely to be available again this year. Still not a bad deal in today's conditions with the added possibility that Woolworths or Foodstuffs might decide to take some action regarding their respective shareholdings.

[GR8DAY]

...what/who to believe?? just spoke with a broker this afo about WHS (pure coincidence as I dont normally consult such creatures)...he claims a divi return of 9.2% year ahead. National Bank site is showing almost exactly half this figure so I can only take from that National Bank is showing a 6mnthly return as the broker was adamant it is around 9.2%pa. ??

[macduffy]

The 9.2% sounds about right as a gross yield ( including imputation credits) and assuming WHS pays out the same "normalised" dividend as last year.

[percy]

...what/who to believe?? just spoke with a broker this afo about WHS (pure coincidence as I dont normally consult such creatures)...he claims a divi return of 9.2% year ahead. National Bank site is showing almost exactly half this figure so I can only take from that National Bank is showing a 6mnthly return as the broker was adamant it is around 9.2%pa. ??

You can choose : NBR 9.94%
The Press 14%
The Independent 6.6%
Or you can go with Craigs who agree with mcduffy at 9.2%

[GR8DAY]

..or wait for it National Bank site NOW claiming 14.27%!!!...........I kid you not, a couple of hours ago NB was showing about 4.69% from memory, I was discussing the return with a broker and thats what it was showing then....and now this....what the hell is going on....madness!!!

[CJ]

You can choose : NBR 9.94%
The Press 14%
The Independent 6.6%
Or you can go with Craigs who agree with mcduffy at 9.2%I guess this just shows the confusion. Is it gross or net. Is it based on forecast divs or prior years (inc or exc special dividends).

[macduffy]

It always pays to read the small print ( if any) that appears at the bottom of such tables.

For example, in the DomPost's listing, supplied by Craigs, it notes :

"Dividend (CPS). Dividend Cents per Share over the last 12 months excluding imputation credits"
ie, it doesn't exclude any special dividend nor does it claim to be a forecast of ongoing dividends.

"Dividend yield. Dividend CPS as a proportion of the current share price."
Again, purely a historical statistic.

Take care and DYOR!

[Balance]

Keeping a close watch - someone is paying up on this potential corporate play.

Be there or be square!

Worse - see someone sold 150,000 NZS at 40c on 5th July - missed out on 35% in 2 weeks. Ouch!

[modandm]

anyone have any comments on the annual report?

From my readings:
- I am pleasantly impressed particularly by the long awaited turnaround at warehouse stationary. I was expecting the flat performance from the red sheds.
- I was disappoited at the lack of a capital management initiave - read high special dividend, but im sure many retirees will be attracted to the 90% payout ratio and conservative balance sheet. This company is a really good yield play imho.
- I am impressed by the culture at the warhouse and the drive to innovate with the online platform and the push into growth segments such as sporting goods.

Overall after purcahsing the stock at 3.80 early this year I am reasonably happy that it has been a safe place to park cash, but with a recovery on the cards now imho and the chnce of a double dip fading fast I may look to exit post dividend and chase some high beta stock.

[macduffy]

Yes, a fair result from a difficult year.

I'm not sure that lifting the payout ratio to 90% is the same as "providing superior returns to shareholders". I'd prefer to see some of this achieved through higher growth and SP appreciation but I guess it's an admission that WHS has run out of ideas to grow.

I wonder if WOW and Foodstuffs have given up any notion of taking WHS and are content to sit there with their respective blocking stakes?

[JayPe]

I guess it's an admission that WHS has run out of ideas to grow.

The failure of the Yellow sheds has really limited their options, hasn't it? They've played with some ideas - supermarkets being the biggest one - but unfortunately none seem to have taken off.

[GR8DAY]

.......I think the "intelligent" buying public are well and truly over the Wharehouse brand and the absolute rubbish they sell (shud be giving away)..........Ive been in just lately (99c cards still seem to work) and look around in disbelieve that they are still in business. Pretty much the same low low quality goods they were flogging about 15yrs ago............unbelievable that sort of junk is allowed to cross our borders......only to end up in wheely bins each week to then contribute to our landfill and litter problems......."BUY ONCE and BUY QUALITY" i say.

[ratkin]

I agree about the tat they sell , however it hasnt stopped me being a shareholder.
A large number of kiwis seem happy to waste their money on cheap plastic crap.
Having said that i bought a couple of books in there recently which were cheaper than
identical booms in the books and more store next door. The cds are also cheap

[JayPe]

BUY ONCE and BUY QUALITY" i say.

I think that quote definitely applies to shares - none of this trading every day to time the market! However Warehouse does have good prices on consumer goods like DVD's, CD's, Books which compare favourably to specialist retailers. The movement to convenience (shop once and buy everything!) in this present world means that they will sell other goods successfully from people who first come in to check out items like those.

[J R Ewing]

The quality isn'y all bad by any means, often you are buying identical kids toys/books/CD's/branded products at lower cost. Sure, they also sell a lot of cheap rubbish, but I'm sure there is plenty of money to be made selling to the 50% of the population who are below average intelligence!

[JayPe]

There are shares out there I would buy despite not buying the products they produce. McDonalds and Coca-Cola would be classic examples ...

[opac]

I can't see how the WHS can grow anymore. Aussie is/was a shamble, as was the Warehouse xtra. Now I have been told that their latest crazy plan is to open shops in small towns with population of around 3 to 4 thousand with 3500m2 shops with at least 24 staff. These shops will most certainly loose money, the population is simply to small, and no doubt they'll be locked into huge leases. Also apart from the CD's, they are not that cheap unless the product is on sale which always finishes a day or two after they have advertised it. Time to sell your WHS shares for sure.

[macduffy]

I don't think things are that bad at The Warehouse, opac.

Sure, the growth seems to have gone out of WHS but it's settling down now to be a good income stock with just a glimmer of a prospect of takeover one of these days. Depends a bit on what you want from a stock but I see it as having a place in a well diversified NZ portfolio.

[ratkin]

Just put them in the bottom drawer , collect the dividends and then one day in the future pick up the takeover cheque

[ratkin]

Up 4% whats the latest gossip?

[JayPe]

Up 4% whats the latest gossip?

The official response is that WHS are not aware of why the share price would increase like this in the absence of new information.
See http://www.nzx.com/markets/NZSX/WHS/announcements/4197840/Trading-Enquiry for the statement.

I note the share price has gone back a little since then (from $4.00 to $3.95), but its odd all the same. Perhaps a market just getting carried away on 'signs' that were in fact random?

[JayPe]

Post-AGM article:
http://www.nzx.com/news/4393869/The-Warehouse-to-expand-online-offering

Growth plans:
- Looking to grow online offering to $30m-40m revenue p.a. including a number of online items (e.g. spa pools). Nice to see that they're already getting 200k hits per week, you'd think this would be a massive growth area for them.
- more stores, with 5-8 red sheds in the next few years, 3 blue sheds by christmas(!) - good to see the stationary business turning around after a lousy few years
- "refresh and refit" a swag of stores, and "compete vigorously" in core categories like footwear - so more of the same there then.

[winner69]

So The Warehouse had a pretty bad couple of months with same store sales down 4%

Things might be tough in retail land but I think The Warehouse need to face up to reality in taht they are probably losing market share to the likes of Briscoes, Bunnings and Mitre 10 Mega (and CDs and DVDs going to JB Hi Fi)

I went to The Warehouse yesterday .... dead as but was really amazed as to how much cheap crap sitting on shelves and on the floor ... and the place was a mess as well ... and the garden section looked worse than my garden after I have neglected it for a few months

Hardware / tools - utter crap and no choice ... and power tools at higher pruces than Bunnings around the corner

Why would anybody buy a 42 inch Transonic TV when name brands are about the same price at the many other stores competing like hell

No doubt WHS will still have sales over a billion but heck if growth is on their minds they have problems ... big problems

They have not kept up witht he changing retail landscape ... and blaming a bad economy is keeping their heads in the sand

Christmas cheer bypasses Red Sheds
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10698035

[percy]

I agree with you.Also if you look around you will notice they are out of the most popular sellers.I noted in meanswear in shirts they did not have a full range of sizes.Allways plenty of small,but out of mens, large,or xl sizes.So their buying and supply clain is not working.Also remember to have same sales you need to be up 2.5% with GST increase.

[Balance]

None of the instos really want to be out of WHS as they could miss out if Woolies made its next move.

Just like what happened with NZS and PGW - if you are not there, you miss out.

[Jay]

Is Stephen going to accept a price around $5 tops
Can't see Woollies etc offering upwards of what they paid for their 5-10% earlier

[POSSUM THE CAT]

Balance have you forgotton that Foodstuffs have Blocking stake & they are not going to let Woolworths do anything. So realistically with two blocking stakes The Warehouse is not going anywhere that would upset either Foodstuffs or Woolworths

[Snoopy]

Foodstuffs was blocking WHS entering into food (a foray which WHS have since canned). If Woolies commit to staying out of the food duopoly in NZ (Foodstuffs and Progress have 90%+ of the NZ grocery mkt) then Foodstuffs would probably sell. That said, I expect various regulatory bodies, and probably some of the big grocery suppliers, would have quite a bit to say about such an agreement.

Er, Belg the owner of Progressive is already Woolworths Australia. So there is no chance at all of Woolies commiting to staying out of food when they hold 45% of the NZ market already!

SNOOPY

[Balance]

Or how long before he decides he can no longer sit and watch and starts rattling cages.

No need to rattle cages - Woolies already said they are interested if he wants to sell.

http://www.nzadviser.co.nz/newsletter/17-bond/11-the-warehouse.html

So far, they have played the better game - Tindall will not get the $7.15 Woolies was offering a few years ago but maybe, $4.50?

The question for Tindall is - what will WHS be worth in 2 years' time if Ian Morrice still runs the WHS into the ground like he has been doing?

Look at the Warehouse now - it's a confused entity with some seriously slow moving lines of stock - power tools which nobody buys (cheaper at Bunnings), appliances (who buys Transonic when equivalent branded appliances are similar in price) etc. Then, there's the awful display and totally disinterested staff. Yeck!

[POSSUM THE CAT]

Balance would Woolworths be happy to hold 90% as no way will Foodstuffs let them have 100% That was why they both bought their holdings to stop the Warehouse getting any bigger in food & stop either Foodstuffs or Woolworths geting 100% of Warehouse. Because with 100% of Warehouse some stores could easily convert to supermarkets without much hassle.

[winner69]

No need to rattle cages - Woolies already said they are interested if he wants to sell.

http://www.nzadviser.co.nz/newsletter/17-bond/11-the-warehouse.html

So far, they have played the better game - Tindall will not get the $7.15 Woolies was offering a few years ago but maybe, $4.50?

The question for Tindall is - what will WHS be worth in 2 years' time if Ian Morrice still runs the WHS into the ground like he has been doing?

Look at the Warehouse now - it's a confused entity with some seriously slow moving lines of stock - power tools which nobody buys (cheaper at Bunnings), appliances (who buys Transonic when equivalent branded appliances are similar in price) etc. Then, there's the awful display and totally disinterested staff. Yeck!

Right on mate .... but this guy on the NBR site (comments) put it better

.....coming from the Warehouse to Briscoes is like coming from Steptoe and Son to Harrods

[winner69]

Warehouse sales havedrifted from $1.88 billion in 2006 to $1.68 billion in 2010 and look to continue their downward trend this year .... and the shareprice has followed eh

All this in spite of stories about growth and how they are going to improve margins etc .... unfortunately Norrice et al don't seem to have grasped the fact that the Warehouse model is broken and that competitors like Bunnings and Mitre 10 now rule the big box segment and that competitors like Briscoes do a better job with homewares and that with all the appliance retailers cutting their throats Warehouse doesn't have a credible offer in this segement and that even the likes of Postie Plus and T&T do a better job with cheap clothes

I went into a $2 shop (or whatever they are called) and they even had better products than a Warehouse.

In saying all that just becuase they have the footprint Warehouse will still heaps and make about $70-$80m this year ... and most of this will go back to shareholders with a 24 cent odd divie so a pretty good return for shareholders

Maybe a bit more for shareholders one day if Foodstuffs / Woolworths work out what to do with their stakes but if I was them I wouldn't wait too long

WHS not a dog yet

[winner69]

Issue now is Tindall - how long can he sit and watch the WHS go backwards?

Confirmation that things are under way to get rid of Morrice .... as always hear it first on Sharetrader

http://www.stuff.co.nz/business/industries/4542613/Rumours-of-Warehouse-shake-up

[winner69]

Off course the board has not discussed recent performance .... yeah right

Morrice gone by Xmas .... retirement by the sounds of it sounds better than being give the boot

[Balance]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10700521

Good piece by Fran.

[OldRider]

Interesting article, haven't owned any WHS shares for quite a few years having come to the conclusion growth for the company
was going to be difficult to find. That there was a greater prospect of a sales decline than increase.

I have a suspicion more of the problem lies with Tindals controlling shares than the CEO. I have no doubt Tyndal is a hardworking, trustworthy
gentleman, but suspect his business plan is yesterdays ideas ,that he can't see beyond them. He can either privatise the companany,
carry on with the same plan and continue to stagnate, or radically change board and management, give them all the room they need
to make changes. Won't be cheap or quick though I think, or sell out which would surprise me.

I wonder what plans Woolworths & Foodsfuffs have? Must be a worry for them.

[modandm]

WHS is a great investment right now IMHO. Put it this way - the SP really can't get any lower... you truly are getting a bargain. I have absolute confidence that you will earn a steady 10% return on this stock holding for 5 years inc divis and cap gain when bought out.

Sure it may take a year or 2 or 5 to turn this company around or have it bought out - but until then you can collect the dividends and relax. Leave the worrying to Steven, WOW, and Foodies, and WHS management and Board. It'll all sort it self out eventaully and i will take my cheque and say thanks.

Impatient investors need not apply!

[Balance]

WHS is a great investment right now IMHO. Put it this way - the SP really can't get any lower... you truly are getting a bargain. I have absolute confidence that you will earn a steady 10% return on this stock holding for 5 years inc divis and cap gain when bought out.

Sure it may take a year or 2 or 5 to turn this company around or have it bought out - but until then you can collect the dividends and relax. Leave the worrying to Steven, WOW, and Foodies, and WHS management and Board. It'll all sort it self out eventaully and i will take my cheque and say thanks.

Impatient investors need not apply!

That's what people said about Telecom at $4.50 - cannot get any lower.

Warehouse cannot stand still - it has to do something more radical than simply rejigging store formats and product lines.

One gets the feeling that Tindall and the Board are totally lost for ideas and are presiding over the steady and soon, accelerating decline of the Warehouse.

[modandm]

I realise that you can draw comparisons with TEL and TLS but the difference is the Warehouse doesn't need to make vast capital commitments in the face of government regulation. They are really quite different.

WHS is still a very profitable company and will continue to be so. I know some of us here have complaints about their lack of growth (-ve growth) but this is priced into the SP and is quite pessamistic. I think predicting an accellerated decline is probabally a bit outlandish.

[macduffy]

From today's NZX market report:

"Warehouse Group, the country's biggest listed retailer, rose 1.8 per cent to $3.49 after media report quoted Grant O'Brien, chief executive designate of Australian retail group Woolworths, as saying he was still interested in growing its stake in company but has no immediate plans.

Woolworths currently owns a 4.4 per cent stake in WHS through its Foodstuff subsidiary."

NZX surely has this wrong. Foodstuffs is the opposition! And don't both Woolworths and Foodstuffs each have stakes of approx 10% in WHS?

[kizame]

From today's NZX market report:

"Warehouse Group, the country's biggest listed retailer, rose 1.8 per cent to $3.49 after media report quoted Grant O'Brien, chief executive designate of Australian retail group Woolworths, as saying he was still interested in growing its stake in company but has no immediate plans.

Woolworths currently owns a 4.4 per cent stake in WHS through its Foodstuff subsidiary."

NZX surely has this wrong. Foodstuffs is the opposition! And don't both Woolworths and Foodstuffs each have stakes of approx 10% in WHS?

No! not Foodstuffs the nz co. foodstuff as in general offshoot dealing in foodstuffs.

[macduffy]

Possibly, but it's a poor choice of wording in that case, particularly the use of a capital "F"; the fact that "Foodstuffs" is the big opposition; and the 4.4% stake?

[winner69]

Well the long slow grinding down of the WHS shareprice continues .... close at 310 today ... only 4 cents of the previous low this century of 306 ..... jeez another 11 cents and the shareprice will have a 2 in front of it

Forecast earnings of $70m so still on a PE of nearly 14. They say 90% of the earnings to be paid out in dividies so about 6% plus credits which not too bad.

Maybe the market still spooked by the new guy wanting to spend hundreds of millions on doing the stores up ... jeez this outfit is capital intensive isn't it .... where's that cash come from ... some suggestion of more debt at the ASM.

Shareprice probably still has some takeover premium in it ---- while a billion (would also have to tke on the debt as well) is petty cash for Woolworths it probably isn't much in Tindalls eyes and there lies the problem

So it all comes down to how much is one prepared to pay for $70m NPAT .... most wouldn't pay a billion for it at the mo .... at that is what the chart is saying

[percy]

For a retailer who has lost market share and faces poor growth prospects I would think a PE of about 6 or 7 would be about right.

[modandm]

god your mad percy - i disagree with you on alot all over this board.

10-15 very resonable for a company of this size in NZ with its high yield, strategic position and defensive earnings.

Look around - what are AIA, FPH, SKC, TPW, CEN etc trading on - i dont even have to look but I am betting the average of these would be 20+

WHS on a PE of 7 - what planet are you from?

[percy]

god your mad percy - i disagree with you on alot all over this board.

10-15 very resonable for a company of this size in NZ with its high yield, strategic position and defensive earnings.

Look around - what are AIA, FPH, SKC, TPW, CEN etc trading on - i dont even have to look but I am betting the average of these would be 20+

WHS on a PE of 7 - what planet are you from?

Would pay to compare with other retailers.The top retailers are BGR on PE of 11.8 .... HLG on PE of 11.8 .....Kmd PE on 12.6.
MHI on PE of 10.2 .....SCY PE of 11.7.
Other than warehouse stationary I see a group which has lost direction and has a poor outlook.
Disagreeing with me helps make sharetrader more interesting.Keep it up.!!!!

[winner69]

Modandum - WHS was below 300 but closed the year out at 300 .... you will be pleased to see on the charts that 300 has been pretty solid suppport level in the past ... like in 2005 when the computer broke down and OZ went all wrong ...and 2006 when the GFC pushed all shares down .... 300 was as far down as it went

Myabe 300 a low as well ..... maybe not in light of the recent comments on this thread .... WHS has lost its may and seems directionless in what it wants to offer ..... and still wants to spend hundreds of millions in doing its stores up .... expensive business this big box retailing eh

Do you think the divie might be cut this year .... jeez that would sink the share price eh

[Lizard]

Well the long slow grinding down of the WHS shareprice continues .... close at 310 today ... only 4 cents of the previous low this century of 306 ..... jeez another 11 cents and the shareprice will have a 2 in front of it

Forecast earnings of $70m so still on a PE of nearly 14. They say 90% of the earnings to be paid out in dividies so about 6% plus credits which not too bad.

Maybe the market still spooked by the new guy wanting to spend hundreds of millions on doing the stores up ... jeez this outfit is capital intensive isn't it .... where's that cash come from ... some suggestion of more debt at the ASM.

Shareprice probably still has some takeover premium in it ---- while a billion (would also have to tke on the debt as well) is petty cash for Woolworths it probably isn't much in Tindalls eyes and there lies the problem

So it all comes down to how much is one prepared to pay for $70m NPAT .... most wouldn't pay a billion for it at the mo .... at that is what the chart is saying

Good post, Winner. I just got around to looking at WHS again - discovered I hadn't actually looked at it seriously since 2006... and still didn't find much to excite. You seem to have covered the main points in your post. Div a definite to fall a little (20cps ?). However, there is a good platform here for a turnaround. Part of me would like to see them seriously attack the div to upgrade the stores rather than take on more debt - but if they can get the transformation right, more debt is probably not a killer and some consideration for shareholders income needs doesn't go amiss.

Last few visits to the local store have been okay - no stand-out irritations anyway, so perhaps things are improving there. And, as percy says, the Warehouse Stationery seems better, and the current MD was previously overseeing that, so not too green.

Still not a huge fan of retail and, short term, need to at least get the foreshadowed lower first half result out the way to see where this ends up... but may be looking for a bottom somewhere in the next 3-9 months? I might like it at $2.40....

Btw, is it just me or are vouchers for Christmas presents gaining popularity in these recessionist times? Warehouse always a popular choice in this regard due to the wide range of goods and omnipresence in most townships. Hard not to spend a bit more in there while spending those vouchers too.

[winner69]

Oh dear - WHS not going to meet expectations again .... the $70m guidance is now $62m (they did gave a range but we will give more credence to the lower number eh)

Seems a trend developing here .... (adjusted) profit 2010 $83m / 2011 $76m and now $62m in 2012 .... seems like it is falling year after year

And little reaction from the market after a 11% downgrade ..... and still she trades at 15 PE .... surely far too high .... and too much for a takeover premium

Based on othe retailer valuation WHS should be $2 .... not around the $3 mark

Never mind this slow giant which has lost its way will be reawakened and all will be OK again

[winner69]

At least the press have picked up on that they will still achieve 'reported' NPAT of $80m ... silly me

But they rave on about this (adjusted) NPAT which seems the normal operating profit ..... does anybody know what the other $18m between 'adjusted' NAPT and 'reported' NAPT of $80m

Got me stuffed ..... who do I believe .... or do they jsut throw all these numbers around to confuse the punters .... after all most of us are stupid anyway

[Lizard]

I thought the $80m was supposed to include surpluses on sale of non-strategic property. Don't recall seeing any announcements about actual sales, but guess they must have sold some in the first half to be including it.

[macduffy]

I thought the $80m was supposed to include surpluses on sale of non-strategic property. Don't recall seeing any announcements about actual sales, but guess they must have sold some in the first half to be including it.

I'm sure you're right, Lizard and if so this is one instance where I think there's value in reporting the two numbers - one being the actual NPAT which includes the non-trading profits/losses and the other the "underlying" profit from trading. And in this case, unfortunately, the latter is the lesser of the two!

I don't know what to make of WHS. On the one hand I'd have thought that their bargain basement merchandise would be insulated to some degree from economic problems as consumers trade down. And less susceptible to on-line purchasing impacts. On the other hand, perhaps NZ consumers have had their fill of cheaper goods and are being more discerning in their choices. Buying less but better quality?

Who knows!

[ratkin]

I'm sure you're right, Lizard and if so this is one instance where I think there's value in reporting the two numbers - one being the actual NPAT which includes the non-trading profits/losses and the other the "underlying" profit from trading. And in this case, unfortunately, the latter is the lesser of the two!

I don't know what to make of WHS. On the one hand I'd have thought that their bargain basement merchandise would be insulated to some degree from economic problems as consumers trade down. And less susceptible to on-line purchasing impacts. On the other hand, perhaps NZ consumers have had their fill of cheaper goods and are being more discerning in their choices. Buying less but better quality?

Who knows!

Problem is most the warehouse clothes buyers now buy their tat from ezi buy
CDs etc now being downloaded for free
Electronics have reputation for poor quality
Household goods are now at least as cheap at briscoes
and the real cheap tat can be had at the two dollar shop

[percy]

I have a view that for a number of years WHS stole a march on other retailers.If you wanted something cheap you went to The Warehouse.Over time the other retailers have worked to get their customers back.Farmers,Briscoes,Halensteins,Noel Leeming,Smiths City,Whitcoulls and Paper Plus now offer excellent products,and have been a lot better buyers,passing on savings to their customers.
WHS have found the "cheap rubbish" is no longer profitable,and left that to $2 shops,so they are now competing in a very crowded market place.That is without Trade Me or internet sales,which draws "the bargain" shoppers.

[Lizard]

I have a view that for a number of years WHS stole a march on other retailers.If you wanted something cheap you went to The Warehouse.Over time the other retailers have worked to get their customers back.

Yes, I was thinking the same. What is more, if I go to Paper Plus and buy the kids stationery, not only is it as cheap as warehouse stationery, but I also get to chat with my friendly local staff who recognise me and rack up points on my new Paper Plus Card, plus Fly Buys.

At Briscoes, I can buy the same cheap towels as at The Warehouse, but I also get to see what paying a bit more will get me - that way, I can make a fairer choice between quality and price. The surrounds will feel nicer. There probably won't be a 10 minute queue while they find the price. Nor will I get charged if I want a bag because I bought more than I can juggle.

As the price gap narrows, it's much more about the shopping experience.

The Warehouse needs to decide on it's strength again, as it's not consistently cheap enough to be sure of getting a bargain any more.

[percy]

As the price gap narrows, it's much more about the shopping experience.

The Warehouse needs to decide on it's strength again, as it's not consistently cheap enough to be sure of getting a bargain any more.[/QUOTE]

I think we are very much in agreement Lizard.You can't be everything to everybody.Play to your strenghths,and give service.I deal with Bunnings and note they always have experienced people on hand.Even have a person to direct you when you enter the store.Compare that with The Warehouse,no floor staff and poor store layout.Just try finding a tube of superfix glue.I came unstuck.!!!!
Pleased to note you enjoy shopping at Paper Plus.My wife comes home with nice things from Briscoes too.

[macduffy]

Who knows!

Well, that certainly sparked a response or two!

I think you're all on the money there. The Warehouse has lost its way in today's marketplace. Will it regain its niche or has it had its day, both as a merchandiser and as an investment?

:confused:

[RRR]

I decided 2 years ago not to step in a Warehouse store again and I am still not missing anything! Warehouse is a junkyard.

[percy]

I am thinking it's like a bottle of lemonade.Once you have left the top off overnight it is impossible to get the"fizz" back in.
Retail markets change.When WHS first started NZ was starved of selection.Prices were high.WHS rode that tide,NZ public were hungry for "bargains",and WHS did well.Today ,the market is flooded.Go to any mall before Xmas,and they were like "Asian flee"markets.
Warehouse stationery focused on selection,value,service and have done well. As far as WHS as an investment,the SP will depend on retail sales.Poor sales = poor investment.Great sales = great investment.If you like shopping there buy their shares.If you don't ,don't .!!!!

[emearg]

.I deal with Bunnings and note they always have experienced people on hand.Even have a person to direct you when you enter the store.Compare that with The Warehouse,no floor staff and poor store layout

So true! Bunnings staff are super friendly, super helpful and seem proud to work at Bunnings.

Warehouse staff are unfriendly, often rude, disinterested and obviously would prefer to be somewhere else. You can avoid this problem by avoiding them right up until the checkout. Sucks to queue for ages only to be greeted (or not) by someone who doesn't have a clue how to provide customer service.

I used to own Warehouse shares but sold out a few years ago when I thought they had lost their way. Until they sort themselves out, assuming they aren't broken, I won't go near them.

[kiwitrev]

With the now new low as of the moment of $2.82 you would think that Tindall would have to seriously look at the company's prospects and the path outlined under the current capex for expansion etc. It seems to me this company now has inherent issues which the current regime are unlikely to resolve without a change in direction and some really serious $$ which would be beyond WHS. Does this current S/P get WOW's attention? I would be interested to hear views from other posters.

[macduffy]

Ever since WOW bought that 10% holding in WHS I thought that they would eventually make an offer as the basis to replicate their BigW chain in NZ. It was also, of course, a counter to Foodstuffs who held a similar number of shares in what became a Mexican standoff where neither was prepared to sell out in case the other made a move!

Must say though that I've changed my mind as the retail scene has evolved; WOW planning to become big-time in hardware in Aust; growth of internet shopping; WOW's plans to quit Dick Smiths, etc. I reckon now that WOW would be happy to cut their losses and quit the WHS shareholding if they could get a half-decent offer for the shares.

[percy]

Macduffy I think you are right.
After posting on this thread I thought about who would be a natural owner of WHS.I thought about Foodstuffs,but I keep coming back to WOW.After reading your post ,it is hard to see a takeover at a premium.

[Silverlight]

Just to be a bit contrary in the mix, the new stores look really really good. They feel bright, and the new environment has a positive impact on staff.

The online store is very easy to use and well designed, if I want to compare items at bunnings, their website doesn't tell me prices, and their beat by 15% only works if items are the same brand/ model.

[percy]

Silverlight.
Nice to hear some one positive.
I think retail is all about presentation and a bright store not only has a positive affect on staff,but customers enjoy it,and happy customers will spend.Activity breeds activity.
The day of just looking for a bargain has gone.Today people expect good products,good prices,good service in a pleasant environment.
If you like the new stores I am sure others will too.I look forward to visiting one,as I thought they were well past their "use by " date.!!
I will also try out their web site.

[GTM 3442]

Silverlight.
Nice to hear some one positive.
I think retail is all about presentation and a bright store not only has a positive affect on staff,but customers enjoy it,and happy customers will spend.Activity breeds activity.

Isn't that pretty much what Farmers did a while ago - moved their retail experience upmarket. Nice to see WHS finally cottoning on. . .

[percy]

Isn't that pretty much what Farmers did a while ago - moved their retail experience upmarket. Nice to see WHS finally cottoning on. . .

Yes Farmers did and are doing a great job.Got rid on non-core areas and focused on what they are good at.Reinvested profits into the business.
I was in Postie Plus Auckland shopping centre store yesterday,and could not help thinking how hopeless they are.Shop was flat,dull,and boring.As I posted earlier bright,interesting stores are what customers want.If WHS can follow Farmers, then they will have a bright future.
They are really a big force in NZ retail,even with low sales growth they still move a mountain of product.If they don't they will follow Postie.

[kiwitrev]

The basic problem I see with WHS is the product range. From their earlier days they were true discounters offering a huge range and today they still want to be all things for all people. Just consider the thousands of product lines they carry, which is the old philosphy. They are just not specialist enough.

[winner69]

Biggest problem as I see it they have an enormous number of shelves to fill up ..... far too many to be a specialist in anything ..... and following Farmers would be a dangerous game to play

Only real strategic asset they have is that footprint .... but the real value of that is being diluted as Mega and Bunnings keep buiding their big boxes .... just down the road in many cases

In saying all that they don't do that bad ..... makes heaps of money ..... more than their cost of capital .... but for the market not making even more heaps of money is precieved to be bad

[Jaa]

They need to find a new blockbuster category to own, through which to people back to the stores. Music sales used to do this but not any more.

They still do seasonal merchandise well, easter, fireworlds, xmas etc.

[POSSUM THE CAT]

Snapiti Stop dreaming they will both say NO at board level. That is IMHO why they both bought 10% stakes

[winner69]

WHS once was a 1 stop shop for most things ..... even if it was for 'cheaper' brands .... a true dept store

My local would be the Warehouse out by Wgtn airport .... it is part of a whole complex

Want TVs and other stuff .... Dick Smiths next door and a Noel Lemings
Want clothing .... KMD might have a 70% sale
Want shoes ... heck No 1 Shoe Warehouse is next door .... yippee
Want sports gear ..... heck Rebel Sports is there as well
Want lights .... Lignting Direct always have good deals
Want homewares .... good choice at Briscoes as well as Bed Bath and Beyond
Odds and ends for the car .... hey there is Super Cheap Auto in the complex as well
Tools and garden stuff ....... Mitre 10 (not a Mega) next door to the car park and Bunnings 100 yards down the road

So what competitive advantage does WHS have at this complex?

Just my observation

[winner69]

and i see the sahre price down to 270 this morning ..... eek

[Hoop]

WHS once was a 1 stop shop for most things ..... even if it was for 'cheaper' brands .... a true dept store

My local would be the Warehouse out by Wgtn airport .... it is part of a whole complex

Want TVs and other stuff .... Dick Smiths next door and a Noel Lemings
Want clothing .... KMD might have a 70% sale
Want shoes ... heck No 1 Shoe Warehouse is next door .... yippee
Want sports gear ..... heck Rebel Sports is there as well
Want lights .... Lignting Direct always have good deals
Want homewares .... good choice at Briscoes as well as Bed Bath and Beyond
Odds and ends for the car .... hey there is Super Cheap Auto in the complex as well
Tools and garden stuff ....... Mitre 10 (not a Mega) next door to the car park and Bunnings 100 yards down the road

So what competitive advantage does WHS have at this complex?

Just my observation

The Warehouse at the Base in Hamilton is in a similar environment....

[BIRMANBOY]

A lot of negative comments here which are shortsighted in my view. Sales for group are up 4.2%. NPAT is online for 80 million. They return good dividends. I dont believe competition is going to hurt them unduly...business's are not going to have an easy time matching WHS buying experience and proven ability to buy the right goods at the best price. Its the margin between buying and selling which in the end run will make a business succeed. Rents, payroll, overheads are roughly the same for everyone but the company that buys best has a big advantage. From what I have read over the years WHS has always done this very well. Buy it now if you are a holder..and even if you are a trader could be some good money to be made. Low share prices to me in this case are an opportunity not a call to abandon ship.
Disclaimer...obviously I hold these shares.

[emearg]

A lot of negative comments here which are shortsighted in my view. Sales for group are up 4.2%. NPAT is online for 80 million. They return good dividends. I dont believe competition is going to hurt them unduly...business's are not going to have an easy time matching WHS buying experience and proven ability to buy the right goods at the best price. Its the margin between buying and selling which in the end run will make a business succeed. Rents, payroll, overheads are roughly the same for everyone but the company that buys best has a big advantage. From what I have read over the years WHS has always done this very well. Buy it now if you are a holder..and even if you are a trader could be some good money to be made. Low share prices to me in this case are an opportunity not a call to abandon ship.
Disclaimer...obviously I hold these shares.

So why are their profits falling? How does they compare with Briscoes? Don't they have good buyers too? And improving sales? And improving profits? And no debt and big bucks in the bank? Lower dividend though, although that may change considering their surge in profit?

So I am interested to know why I should buy WHS over BGR? Perhaps why buy either? I am interested in your thoughts. Cheers :)

[winner69]

A lot of negative comments here which are shortsighted in my view. Sales for group are up 4.2%. NPAT is online for 80 million. They return good dividends. I dont believe competition is going to hurt them unduly...business's are not going to have an easy time matching WHS buying experience and proven ability to buy the right goods at the best price. Its the margin between buying and selling which in the end run will make a business succeed. Rents, payroll, overheads are roughly the same for everyone but the company that buys best has a big advantage. From what I have read over the years WHS has always done this very well. Buy it now if you are a holder..and even if you are a trader could be some good money to be made. Low share prices to me in this case are an opportunity not a call to abandon ship.
Disclaimer...obviously I hold these shares.

Mate the only negativity about WHS is that most see little growth potential in WHS .... they have reached a point of saturation in the NZ market and at best probably can only consolidate their market position while doing their best to maintain margins

Financially WHS performs bloody well .... but the punters say not well enough .... at least those punters with a growth mindset .... hence the shareprice drifting down

For all their (perceived) woes last year WHS returned a 20% on invested capital .... bloody fantastic and a return that most companies would envy .... even this years guidance (is actually $62m-$66m and not the $80m you mention) will result in a ROIC in excess of 15% - a company making excessive returns on capital .... truly wealth creating

So how do you work out what WHS is really worth? Even at 10% cost of capital and building no growth MVA is about $400m .... add WHS equity of just under $300 and market cap should be about $700 on this basis (8% cost of capital gives $770m). Market cap today $843 so reasonable if people still believe some growth is coming or a takeover premium.

Another way is look at dividend yield - say a 20 cent divie .... thats 7.4% or over 10% gross .... not too bad

So maybe current price is about as low as it will go .... or give it a few days for the growth punters to finally get out and it might be a little lower

The current discussion is similar to all the pages and pages on sahretrader about how a dog RBD is ..... RBD sales have always been around the $300m mark (slowly creeping up now) and except for a couple of years a while ago have always made decent returns on the capital invested ..... these days that return is over 50%. The point making is that RBD has for years seen as a dog ..... except for astute investors who recognise that high returns on capital will always lead to high dividends (even with pretty large capex requirements). Growth per see is not always necessary to make above average returns

So maybe look at WHS as a bond and if you can get 10% plus a year thats pretty good ..... if you want growth maybe WHS is not the place to be but in saying that the face value of the 'bond' will at least keep up with inflation

[BIRMANBOY]

So why are their profits falling? How does they compare with Briscoes? Don't they have good buyers too? And improving sales? And improving profits? And no debt and big bucks in the bank? Lower dividend though, although that may change considering their surge in profit?

So I am interested to know why I should buy WHS over BGR? Perhaps why buy either? I am interested in your thoughts. Cheers :)


BGR returns a dividend of approx 5.9% on your money...WHS at current price is returning 9.6%. If you are buying for mid to long term investment its obvious which one is looking good. I dont buy for growth or trade for profits in the share price since my primary focus is only for dividend yield...probably different than most people on this forum. "Share TRADER" is after all what its called. I see WHS as one of a dozen of my investments that will hopefully always keep me ahead of the battle against inflation and dropping term deposit rates.

[stoploss]

What chance slightly better news in the (H1) result tomorrow from WHS ,up 8 cents today in a pretty flat market ?

[macduffy]

Could be, stoploss.

But it's only a recent upturn on pretty average volume. I'm inclined to think that it's more a case of speculative buying on hope, rather than expectation.

[Lizard]

I'd be surprised if this result marked the turning point. Looks a little on the low side, terrible cashflow and big debt position (maybe larger than expected). Div about where I'd have picked, but maybe cut further than some analysts hoped.

I think it will still get down below my earlier $2.40 target and I have yet to review whether I'm sticking with that one after this result. At least their presentation recognises some of the key things we've talked about, e.g. mentioning that improving store experience is the critical enabler.

[macduffy]

Could be, stoploss.

But it's only a recent upturn on pretty average volume. I'm inclined to think that it's more a case of speculative buying on hope, rather than expectation.

Oops!

:ohmy:

I should have checked for news before making that post! But about right, anyway.

[winner69]

Nice to see Te Awamutu getting a star mention .... good old Te Awamutu leading the way the WHS evolves into a more vibrant business .... good stuff

[macduffy]

Today's SP rise looks a little overdone to me. The result wasn't that good, as Lizard has suggested.

I put the reaction down to a combination of :

- A little better than expected.
- Market looking for reasons to rise.
- General firmness today.
I'd be surprised if the gains are held on Monday.

Disc: I hold a few, courtesy of speculation that WOW or Foodstuffs would make a bid.

:(

[Lizard]

I'd be surprised if this result marked the turning point. Looks a little on the low side, terrible cashflow and big debt position (maybe larger than expected). Div about where I'd have picked, but maybe cut further than some analysts hoped.

...must have read it wrong (now $2.80). Will turn the report upside down this evening and try again...

[macduffy]

Don't bother, Liz.

First impressions are usually pretty good!

:)

[emearg]

I want to buy a few more retail shares. Can anybody suggest some reasons why I should buy WHS over BGR (which I already hold a small number of)?

Cheers
Eme

[percy]

I want to buy a few more retail shares. Can anybody suggest some reasons why I should buy WHS over BGR (which I already hold a small number of)?

Cheers
Eme

No.!! BGR are in an uptrend while WHS is in a down trend.

[stoploss]

I want to buy a few more retail shares. Can anybody suggest some reasons why I should buy WHS over BGR (which I already hold a small number of)?

Cheers
Eme

I have been buying WHS down here as I see it as a free hit. It was not too long ago Woolworths wanted to buy them and were happy to pay somewhere around $7.00 per share.Our friendly local supermarket chain took a 10 % stake to block them between 5 & 5.50 from memory.The competition commission whatever it's called denied the bid in the end anyway.In the meantime they make between 60 & 70 mio a year.Imagine the cost with resource consent etc to replicate their buildings & infrastructure in todays market.... So I have been buying with the hope Sir Stephen Tindall decides to tidy it up or Woolworths or someone like Aldi comes and has a look.Just because a bid was denied in the past doesn't mean it will always be so, just look at AMI and IAG ......

[macduffy]

That's right, it's a different world now. But I 'm not sure that either Woolworths or Foodstuffs would be interested in WHS these days. Their 10% stakes were originally built to block each other in the days when WHS looked like it was serious about the food business, from which it has since retreated. I thought for a long time that WOW would want to expand their Big W business via WHS but this now looks increasingly unlikely given the lacklustre performance of Big W and WOW's recent heavy investment in hardware in Aust.

I'd therefore discount the chances of a takeover in assessing the investment merits of WHS but would be very happy to be proved wrong in this!

[Balance]

Perception is everything in the retail game which is NZ.

Looks like the Warehouse has lost the perception that it is a place to get bargains and the best deals.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10791832

In every category, there is a competitor which easily beat the Warehouse - Bunnings, Briscoes, JB Hifi etc.

Meanwhile, the company continues to pay high dividends - now only maintained using debt!

Lots of red lights flashing.

[westerly]

[QUOTE=Balance;370225]Perception is everything in the retail game which is NZ.

Looks like the Warehouse has lost the perception that it is a place to get bargains and the best deals.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10791832QUOTE]

Often wonder about the value of on line surveys of a few hundred or so people. How do you compare the brands like "maggi " or " homebrand" for example against a relatively big business like " The Warehouse".
As you say perception is everything but doubt if it will have any long term effect.
Was thinking of buying a few but will wait for the next drop in price.

Westerly

[emearg]

Thanks for the comments. Dividends out of debt to stop their share price falling further/faster doesn't strike me as a great long term plan. Briscoe's with their 90 million in the bank seems better in this regard.

[macduffy]

As posted elsewhere, WHS is to delist its shares from the ASX. Shareholders on the Aust register will be transferred to the NZ register or may opt to have their shares sold through a share sale scheme. Only 2% of WHS issued capital is held on the Aust register so any selling pressure resulting is likely to be minimal.

[winner69]

Two page article in the Dompost today outlining the last 30 years of WHS. yes it is there birthday

One telling comment was an admission by the company that five years ago they changed their focus to shareholfers and forgot about the customers

Always interesting question as to who should be at the centre of the universe in the stakeholders model ..... And WHS found out the hard way

Big problem when (greedy?) shareholders demand more and more. Wrong decesions that impact the long term are made. Let's put it down to the fact that insto's think they know best and do act in the best long term interest of the punters who give them their hard earned cash to 'invest.

[CJ]

One telling comment was an admission by the company that five years ago they changed their focus to shareholfers and forgot about the customers.

If the company looks after its customers, the customers will look after the shareholders. Pretty simple really.

[Balance]

Was at AGM and the point made by a few shareholders is that there's no new blood on the board or new ideas from the management. It was all too much of "back to the future".

Latest results show the company increasing sales at expense of margins - any retailer can that!

Meanwhile, some of its competitors/other retailers are capturing increased market shares and expanding margins.

[winner69]

If the company looks after its customers, the customers will look after the shareholders. Pretty simple really.

Totally agree but how often is that the case. Institutional shareholders have too much say ..... To the long term detriment of many companies

Interesting the Myers head honcho decided to forgo growth the insto's wanted and said he would spend more on service/on line.stuff ... Good on him even if a bit late but in Myers case the greedy shareholders of old have screwed aust big time

[Jim]

#Totally agree but how often is that the case. Institutional shareholders have too much say ..... To the long term detriment of many companies#

But Sir Stephan Tindall own nearly 50% and WOW and Foodstuffs own 20 %. The institutional shareholders hold only a minority of shares and I think WHS lost its sense of direction.

[winner69]

Sparky thats not fair

WHS no lemon .... jeez it still makes $60m-$70m a year after tax on shareholder funds of $320m .... thats pretty good I reckon

Problem being people think the lemon should produce more juice

[Hoop]

http://i458.photobucket.com/albums/qq306/Hoop_1/WHS25052012.png

[whirly]

Master 14 and Miss 17 went to the WH with vouchers they were given yesterday. Came home empty handed. "Clothes not appealing and expensive, DVDS and music handed round at school for free and books better off bought on Book Depository or borrowed from the library."

[percy]

Master 14 and Miss 17 went to the WH with vouchers they were given yesterday. Came home empty handed. "Clothes not appealing and expensive, DVDS and music handed round at school for free and books better off bought on Book Depository or borrowed from the library."

You can now look forward to your old age,knowing your children can make good choices.A credit to you and Mrs.Whirly.

[CJ]

Master 14 and Miss 17 went to the WH with vouchers they were given yesterday. Came home empty handed. "Clothes not appealing and expensive, DVDS and music handed round at school for free and books better off bought on Book Depository or borrowed from the library."I hate vouchers. I feel ripped off buying stuff even thought I didn't buy the voucher. Amazon, Wiggle, book depository, strawberrynet...

[whirly]

Thanks Percy, Mrs Whirly is indeed proud. So I then asked if not the WhareWurri what to buy shares in. Internet Service Providers was the quick answer. Both kids have cellphones and netbooks and Master 14's penchant for video making and uploading and occasional forays into online gaming see our broadband quota decimated in short time.

[percy]

Thanks Percy, Mrs Whirly is indeed proud. So I then asked if not the WhareWurri what to buy shares in. Internet Service Providers was the quick answer. Both kids have cellphones and netbooks and Master 14's penchant for video making and uploading and occasional forays into online gaming see our broadband quota decimated in short time.

may pay to get them to look at Estar thread,or get them to go to www.estaronline.com web page.

[Snoopy]

A chart like that is a salutatory lesson for buy and hold investors!


The chart certainly shows the folly of the mythical buy and hold at any cost investor. However, I am a buy and holds investor and did very well out of the Warehouse. Basically I bought in a $4 and sold at $5 (plus accumulated dividends) a couple of years down the track (must have been mid 2006), into the first of the stake building takeover offers. I had no plans to sell before a takeover offer came along. As it happened I would have done better holding out for the later Woolworths offer which IIRC was higher. However, that's life and I really can't complain as I still made a good profit on the deal.

I don't think it is a fair assessment of buy and hold investors to say that they never sell at any cost. Obviously if a good takeover offer comes along then you accept it. That doesn't disqualify you from being a buy and hold investor!

SNOOPY

[Silverlight]

The chart certainly shows the folly of the mythical buy and hold at any cost investor. However, I am a buy and holds investor and did very well out of the Warehouse. Basically I bought in a $4 and sold at $5 (plus accumulated dividends) a couple of years down the track (must have been mid 2006), into the first of the stake building takeover offers. I had no plans to sell before a takeover offer came along. As it happened I would have done better holding out for the later Woolworths offer which IIRC was higher. However, that's life and I really can't complain as I still made a good profit on the deal.

I don't think it is a fair assessment of buy and hold investors to say that they never sell at any cost. Obviously if a good takeover offer comes along then you accept it. That doesn't disqualify you from being a buy and hold investor!

SNOOPY

In addition, that chart looks like it also ignores over $2.80 worth of dividend and imputation credits payed since Sept 2005, so the buy and hold investor may not be as down on their luck as implied.

[Silverlight]

To me the chart on WHS just goes to show that all share market investments must be actively managed and reviewed, because even the good companies can turn sour at investors cost, unless it's PepsiCo or Coke who are both up about 3500% and 6000% respectively over the last 30 years.



To be fair on The Warehouse if you bought in the IPO at $1, you have expereienced one sharesplit and over $9.5 in dividends and imputation credits. This is over a 16% return pa since listing or a 1350%+ return over the past 17 years.

[Snoopy]

When do you take profits? Do you have a particular formula or policy that you use?


I usually sell into takeover offers that are recommended by the independent advisers.

Otherwise my grand NZX plan is to have 10 shares (at the moment I have 9) with a roughly equal amount of capital in each. However, my limit on the total amount of capital tied up in each share is quite loose. I will tolerate errors of 50%! I am a little nervous of some of my low liquidity holdings so have been managing those a bit more actively recently. But generally I trade an infrequently as practicable.

I don't buy shares unless I can be fairly sure I know where that company will be in ten years time. I find picking where that same company might be in two years time is much harder!

SNOOPY

P.S. I can only think of one case where I have a company on my sell list because it has changed so much since I invested in it.

[Balance]

To be fair on The Warehouse if you bought in the IPO at $1, you have expereienced one sharesplit and over $9.5 in dividends and imputation credits. This is over a 16% return pa since listing or a 1350%+ return over the past 17 years.


How many people bought at IPO and still kept the shares?

Many sold when WHS had computer problems a year after listing and price fell below issue price.

Most bought during run up to $9 ....

[Silverlight]

How many people bought at IPO and still kept the shares?

Pretty impossible to answer, although the registry would know, however there were just over 5,000 shareholders in the IPO and today there are over 11,000, so you could conclude that many who had bought in the IPO still hold today.


Many sold when WHS had computer problems a year after listing and price fell below issue price.

Many bought as well, looking at the figures just has many bought and sold in the 3 years after the glitch as the price moved from $1 up to $4

Year Volume
1996 84,382,022
1997 78,140,288
1998 77,279,538
1999 77,073,838


Most bought during run up to $9 ....

And equally just as many people sold, however to quantify with figures, volumes were only 30% greater than in the 90's, except 2006, which is the outlier.

Year Volume
2003 112,031,464
2004 110,333,844
2005 116,917,686
2006 165,292,951
2007 100,008,664

[Balance]

Pretty impossible to answer, although the registry would know, however there were just over 5,000 shareholders in the IPO and today there are over 11,000, so you could conclude that many who had bought in the IPO still hold today.



Many bought as well, looking at the figures just has many bought and sold in the 3 years after the glitch as the price moved from $1 up to $4

Year Volume
1996 84,382,022
1997 78,140,288
1998 77,279,538
1999 77,073,838



And equally just as many people sold, however to quantify with figures, volumes were only 30% greater than in the 90's, except 2006, which is the outlier.

Year Volume
2003 112,031,464
2004 110,333,844
2005 116,917,686
2006 165,292,951
2007 100,008,664

Point being that anyone who held from IPO has done okay if measured from IPO, but not as well as if they sold out when stock rose above $5.00.

Point also that at this price, most who bought above $2.50 and are still holding are nursing losses now.

Good on those who saw the light and got out.

WHS is toast - no strategy and a piece-meal revamp of stores which has competitors laughing and rolling in the aisles.

[BIRMANBOY]

Point being that anyone who held from IPO has done okay if measured from IPO, but not as well as if they sold out when stock rose above $5.00.

Point also that at this price, most who bought above $2.50 and are still holding are nursing losses now.

Good on those who saw the light and got out.

WHS is toast - no strategy and a piece-meal revamp of stores which has competitors laughing and rolling in the aisles.

As usual, individuals views are skewed by personal experience. I'm very happy with my WHS dividends thank you.

[Balance]

As usual, individuals views are skewed by personal experience. I'm very happy with my WHS dividends thank you.

Good man!

NZX needs more shareholders like you as there are many more companies which need capital and have shareholders who care not about the sp.

[Snoopy]

WHS is toast - no strategy and a piece-meal revamp of stores which has competitors laughing and rolling in the aisles.


I am going to make a prediction. In ten years time the Warehouse will be one of the three largest general retailers in NZ (they are number one at the moment so I think it is a fairly safe bet). Return on shareholder equity is strong and will remain so. All other observations on WHS are basically just noise. I have no idea how WHS will do over the next couple of years. As a long term investor I am not interested.

This is all the long term investor needs to know to be sure WHS will be a good investment at some point going forwards. At what point this will be I don't yet know. I do know to repeat the WHS retail footprint throughout NZ would be impossibly costly.

WHS may be slightly stale bread, but it is not toast. I don't know who the MD will be in 10 years time. But rest assured if the current management strategy doesn't work, he/she will not be following it.

Plenty of you guys get so caught up in the moment, you are blind to the big picture. All shareholders need do from here is wait for that MD who knows how to get more juice from the lemon.

SNOOPY

[percy]

I am going to make a prediction. In ten years time the Warehouse will be one of the three largest general retailers in NZ (they are number one at the moment so I think it is a fairly safe bet). Return on shareholder equity is strong and will remain so. All other observations on WHS are basically just noise. I have no idea how WHS will do over the next couple of years. As a long term investor I am not interested.

This is all the long term investor needs to know to be sure WHS will be a good investment at some point going forwards. At what point this will be I don't yet know. I do know to repeat the WHS retail footprint throughout NZ would be impossibly costly.

WHS may be slightly stale bread, but it is not toast. I don't know who the MD will be in 10 years time. But rest assured if the current management strategy doesn't work, he/she will not be following it.

Plenty of you guys get so caught up in the moment, you are blind to the big picture. All shareholders need do from here is wait for that MD who knows how to get more juice from the lemon.

SNOOPY

Walk through Barrington store and tell me you are not worried.

[POSSUM THE CAT]

Percy walked through the recently revamped store in Albany recently. Big signage for Product on special but a different product on shelves. Staff did not know where the correct product was. Also people getting pissed off with setting the alarms off going out the front doors. because staff were not properly trained to deal with the security tags. Would be good buying at 50cents as the break up value would be more than this.

[percy]

Percy walked through the recently revamped store in Albany recently. Big signage for Product on special but a different product on shelves. Staff did not know where the correct product was. Also people getting pissed off with setting the alarms off going out the front doors. because staff were not properly trained to deal with the security tags. Would be good buying at 50cents as the break up value would be more than this.

Be careful PTC,as like all retailers you have the ongoing lease liabilities for their stores.Most would have 5 years or more of rent liability.
ps.Just loved your post.!!!!!!

[Snoopy]

Walk through Barrington store and tell me you are not worried.


Isn't that the store you have to enter via a kind of cave? Have been to Barrington Mall a few times, but have always been too scared to go into the Warehouse store there. I would prefer to crawl into a real cave than go to Warehouse Barrington.

The store to visit is the Warehouse Extra on Blenheim Road. Big spacious with plenty of parking. Went in there last week, couldn't find what I wanted. Found an assistant who pointed me straight to it. Have been into Warehouse South City and found that OK too. I think you are visiting the wrong Warehouse Percy.

SNOOPY

[percy]

Isn't that the store you have to enter via a kind of cave? Have been to Barrington Mall a few times, but have always been too scared to go into the Warehouse store there. I would prefer to crawl into a real cave than go to Warehouse Barrington.

The store to visit is the Warehouse Extra on Blenheim Road. Big spacious with plenty of parking. Went in there last week, couldn't find what I wanted. Found an assistant who pointed me straight to it. Have been into Warehouse South City and found that OK too. I think you are visiting the wrong Warehouse Percy.

SNOOPY

Congratulations are in order Snoopy;Firstly you did well to find an assistant,secondarly you did well to find one who could understand you,thirdly you did well that the assistant knew where what you were looking for was,and forthly you were lucky you could find an assistant who could communicate with you,even if it was by sign language.Your lucky day.I have never been so lucky.

[macduffy]

I am going to make a prediction. In ten years time the Warehouse will be one of the three largest general retailers in NZ (they are number one at the moment so I think it is a fairly safe bet).

Yes, a bit of a 'non bet' really, Snoopy! I don't know who will be the two general retailers to displace WHS back to third - do we have any others apart from Farmers? KMart? - but a slip to that degree would be very bad news indeed for WHS shareholders, I would think. The NZ market is hardly big enough for three with the scale and scope of present day WHS. Third place would surely mean continued failure to adapt to changing reail conditions.

Disc: Yes, still holding a few.

[Snoopy]

Yes, a bit of a 'non bet' really, Snoopy! I don't know who will be the two general retailers to displace WHS back to third - do we have any others apart from Farmers? KMart? - but a slip to that degree would be very bad news indeed for WHS shareholders, I would think. The NZ market is hardly big enough for three with the scale and scope of present day WHS. Third place would surely mean continued failure to adapt to changing retail conditions.


Personally I expect the Warehouse to be number one in 2022 Macduffy. My previous post had an ambiguity that wasn't intended.

Saying WHS will remain one of the three top retailers does not mean it will slip to number three! However I do note the rise of Briscoes. There is a lot of vacant land in CBD of Christchurch now. Perhaps an ideal situation for the likes of US based Costco to find a suitable site? Farmers are I think owned by smart people. They are already broadening the Farmers brand by opening a specialised farmers kids store at Westfield Riccarton. Just suggesting some out of the box possibilities here. Maybe WHS will not be number one in ten years time? But my bet is that it will still be there. But even if it isn't number one, it will still have scale and still have pricing power. For those reasons I see remaining amongst the top three general retailers as critical. But I don't think WHS has to be number one to remain a power player in the retail game.

SNOOPY

[Snoopy]

Congratulations are in order Snoopy;Firstly you did well to find an assistant,secondarly you did well to find one who could understand you,thirdly you did well that the assistant knew where what you were looking for was,and forthly you were lucky you could find an assistant who could communicate with you,even if it was by sign language.Your lucky day.I have never been so lucky.


Some people just get all the luck Percy! May I suggest on your next visit to Warehouse Barrington you take one of those helmet mounted explorer's lights. Might help you locate what you are after?

SNOOPY

[emearg]

You guys are pretty funny :)

Being the biggest isn't the most important thing. Or being in the top three. Having the highest margins would be more worthy of a prize. Which NZX listed retailer wins that prize?

[Snoopy]

Being the biggest isn't the most important thing. Or being in the top three. Having the highest margins would be more worthy of a prize. Which NZX listed retailer wins that prize?


I am not going to disagree with you Emearg. So how does WHS stack up?

Operating profit for FY2012 is forecast to be between $62m and $66m. Sales for HY2012 were $938m. If we add on last years second half sales of $760m that makes a revenue forecast of $1638m.

Now 'Margin' is 'Net Profit'/'Revenue'

So the WHS margin is forecast to be somewhere near:

$64m/$1638m= 3.9%

How do other retailers compare to that in today's difficult environment? I invite owners of other retail shares to put their own case forward so we can see how WHS stacks up.

I own Restaurant Brands shares and they have just reported. I know RBD is not strictly a competitor for WHS. But they are a competitor from a shareholder perspective, competing amongst potential shareholders for their retail investment dollar. Restaurant Brands in FY2012 made a normalised trading profit of $18.4m on sales of $308.9m

RBD margin was therefore $18.4m/$308.9m= 6.0%

Anyone out there own a retailer that is doing better? It looks like when I was bought out of the Warehouse at $5, my decision to reinvest those proceeds to boost my RBD holdings was a good one.

SNOOPY