WHS - Warehouse Group [Archive] - Page 5

Snoopy

05-06-2012, 03:57 PM

HLG has a 8% margin (NPAT9,028/ revenue $108,572) excluding its hedge gains - from the 6 month unaudited accounts. (8.9% from the 2011 full accounts)

Would you pay twice as much to buy HLG (8% margin) than you would to buy WHS (4% margin)? You would need to consider volatility of margins etc???

With HLG you are in the lead so far CJ. 8.9% is very impressive, particularly when HLG management were grizzling about high shopping mall rents over that time period as I recall.

However, I think your point on volatility of margins is valid.

Over a very short time frame, co-incident with a sale for instance, you may very well generate a fantastical margin figure. Over longer time-frames such blips should even out. That is why IMO using a six monthly figure is probably not a fair comparison.

My gut feeling (which may be wrong!) is that food retailing is likely to be less volatile that general retailing.
This is one reason why in tougher times I feel comfortable with my own retail investment sitting in food.

SNOOPY

h2so4

05-06-2012, 04:23 PM

winner69

05-06-2012, 04:24 PM

So the WHS margin is forecast to be somewhere near:

$64m/$1638m= 3.9%SNOOPY

Punters say the Red Sheds finding it hard to compete with Bunnings ..... last Annual Report for Bunnings in NZ to June 11 shows sales of $585m with NPAT of $2m ..... that razor thin margin of 0.3% puts WHS in good light eh

Maybe, just maybe, WHS ain't doing that bad

percy

05-06-2012, 07:04 PM

[QUOTE=winner69;375242]Punters say the Red Sheds finding it hard to compete with Bunnings ..... last Annual Report for Bunnings in NZ to June 11 shows sales of $585m with NPAT of $2m ..... that razor thin margin of 0.3% puts WHS in good light eh

Am I allowed to ask the question;Why bother?

arcticblue

06-06-2012, 12:45 PM

Does anyone have the margins for MHI already calculated? I would have thought their's were quite good. Not sure about their turnaround though.

06-06-2012, 01:20 PM

Does anyone have the margins for MHI already calculated? I would have thought their's were quite good. Not sure about their turnaround though.

2012 Half year 9% (NPAT 26,297 / Rev 288,846)
2011 Full year 8% (NPAT 39,985 / Rev 489,330)

Both ignoring currency movements which are reported below the line.

h2so4

06-06-2012, 02:01 PM

percy

06-06-2012, 02:11 PM

macduffy

06-06-2012, 02:12 PM

It's interesting that MHI has a very low turnaround, something like 312 days. Low turnover is something they have been consistent with and that's probably because they are a manufacturer as well as a retailer.

Yes, I wouldn't put too much emphasis on stock turnaround, unless one is very strictly comparing like with like. For example, jewellery 'keeps' rather better than fried chicken!

;)

h2so4

06-06-2012, 03:17 PM

Imagen the Chicken would be really Fowl after 3 days.

Haha I get it. :)

06-06-2012, 03:37 PM

Yes, I wouldn't put too much emphasis on stock turnaround, unless one is very strictly comparing like with like. For example, jewellery 'keeps' rather better than fried chicken!

;)Yes but it also increases your working capital requirements. Accepting that MHI is a manufacturer as well, if they could double their turn around, their inventory levels would half and that would free up cash which can be paid as dividends/reinvested in growth.

Re KFC, they would get food deliveries every day or two. they would have screwed very good deals out of the bun and chicken companies such that they are on a "just in time" inventory system. (note. KFC guaranties their chicken is fresh* (*unless they have to use their frozen reserves)). They would forecast the days sales, add a 20% margin and order than amount. It becomes difficult over the christmas/NY period when this may not happen and sales volumes are up (location dependant) as storage becomes an issue..

h2so4

06-06-2012, 03:45 PM

Yes, I wouldn't put too much emphasis on stock turnaround, unless one is very strictly comparing like with like. For example, jewellery 'keeps' rather better than fried chicken!

;)

Yeah more conventional figures like margin might be more appropriate but drilling down gives you a better understanding of the businesses economics.

I'm not worried whether it's chickens or diamonds.

h2so4

06-06-2012, 04:08 PM

Yes but it also increases your working capital requirements. Accepting that MHI is a manufacturer as well, if they could double their turn around, their inventory levels would half and that would free up cash which can be paid as dividends/reinvested in growth.

Re KFC, they would get food deliveries every day or two. they would have screwed very good deals out of the bun and chicken companies such that they are on a "just in time" inventory system. (note. KFC guaranties their chicken is fresh* (*unless they have to use their frozen reserves)). They would forecast the days sales, add a 20% margin and order than amount. It becomes difficult over the christmas/NY period when this may not happen and sales volumes are up (location dependant) as storage becomes an issue..

This sort of explains how some low margin businesses make fat profits. The inventory can be likened to a bond that is continually reinvested many times during the year.

craic

06-06-2012, 04:55 PM

Just read todays large catalogue from WHS. Reductions in many areas are quite remarkable - possibly low enough to suggest a cash flow problem? I started this thread yonks ago but I have not had shares in WHS for years.

Balance

06-06-2012, 05:56 PM

Snoopy

07-06-2012, 02:51 PM

Using inventory turns to get some business economic insights, HLG gets their 8% every 67.6 days compared to WHS who get their 4% every 89 days and

RBD an incedible/credible 2.7days for 6%. RBD probably smokes any retailer on the NZX.

SSD, I am very relieved to hear that my freshly fried KFC chicken is on average only 2.7 days old. Naturally that is the transition time from when it arrives as freshly dead bird rather than how long it has been sitting in the warmer! But it is all good to know.

Your comments on inventory turn are very poignant. However, I believe they are tangential rather than additive to this margin discussion. Why so?

Imagine two pallets containing sports shirts are unloaded off the boat in New Zealand. One pallet, containing sports shirts, goes off to the Warehouse. The second pallet containing All Black shirts goes off to the Rugby Union. The shirt colours differ. But both pallets of shirts came from the same factory in China with a cost price exactly the same to their respective buyers. Once in the respective buyers hands, this is where these shirts take different paths.

The Warehouse advertises a big sports shirt special. The result is all of their shirts are sold within one month. 'Everyone gets a bargain' so the net profit on each shirt is a modest $1. The promotion is so successful that the Warehouse orders another identical pallet of shirts. Once again there is a promotion of this second batch of shirts, and they sell out. The net profit margin is again one $1 per shirt. Flushed by this success, the Warehouse continues their winning formula shirt promotion for a total of ten months in a row with the same results.

In parallel to this, the original second pallet lands on the doorstep of The Rugby Union. The RU drip-feeds their All Black premium branded shirts onto the market spread over the full ten months of the rugby season. The net profit on each "All Black" shirt is $10.

Two scenarios have been painted. And now comes the key question: Which of the Warehouse or the Rugby Union has made the biggest margin on their shirts? From a product perspective the answer is easy. The Rugby Union makes $10 on each of their shirts compared to the Warehouse making only $1. The 'Net Margin' competition shows a win to the Rugby Union by a factor of 10:1. But this is not the full story.

'Margin' in management accounting terms means something a little different. It is impartial to whatever product or marketing chain has been used to achieve it. Management accounting 'margin' is really a measure of using capital efficiently. That is different to the 'Net Margin' and 'Gross Margin' bandied about by retailers selling stuff. Back to our original example.

The amount of capital used to buy the original pallet of sports shirts was the same in both the cases of the Warehouse and the Rugby Union. The Warehouse sold their stock quickly and recycled that capital, ten times in fact. The Warehouse did not need more capital to run their ten months of sales on sports shirts than the rugby union did for their single ten-month promotion of All Black shirts. At any one time both had only one pallet of shirts in stock. On a 'per shirt' basis, the Warehouse earned $1x10=$10 on their 'sports shirt capital' over ten months. The Rugby Union also made $10 on their 'shirt capital' over the ten-month rugby season. The "margin" (net profit / gross sales) in management accounting terms is therefore identical for both the Warehouse and the Rugby Union!

Here lies the point of the pallet shirt parable. It does not necessarily matter what the stock turnover rate is. Selling more goods over a shorter timeframe can be just as good as selling fewer upmarket goods with higher gross margins. The management accounting term 'margin' is disinterested as to how the dollars were earned. 'Margin' already takes into account stock turn. There is no need to go to another level of analysis of 'stock turnover' on its own to judge which retailer is doing the best job.

SNOOPY

Snoopy

07-06-2012, 03:08 PM

Would you pay twice as much to buy HLG (8% margin) than you would to buy WHS (4% margin)? You would need to consider volatility of margins etc???

I would say that 'long term' a retailer with an 8% margin would be worth twice the price of a retailer with a 4% margin, everything else being equal. But buying the retailer with the highest margin might see you pay top dollar on the basis of that retailer having an exceptional season. Next season if the margin reduced, your buy might not look so smart.

Here is my previous estimate of the Warehouse margin for FY2012

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%

Repeating that same calculation for the four previous years gives the following results:

FY2011: $76.0m/$1667.7m= 4.6%
FY2010: $83.4m/$1672.7m= 5.0%
FY2009: $85.2m/$1720.8m= 5.0%
FY2008: $80.9m/$1735.0m= 4.7%

This means that FY2012 is looking to be a rogue year on the downside. If you were looking at buying WHS I would say on the basis of this one statistic that now is a good time to do so. Of course that is not the same as saying that WHS is the best retailer to buy!

SNOOPY

Snoopy

07-06-2012, 03:13 PM

Am I allowed to ask the question;Why bother?

Because generally when retailing is depressed so are the retailers share prices. So now is one of the best times to look at buying retailers. Of course this strategy will not work in this instance if WHS goes into a death spiral. IMO though this is very unlikely. Investment is about playing the odds while other investors are gripped by irrational fear.

SNOOPY

Balance

07-06-2012, 03:15 PM

I would say that 'long term' a retailer with an 8% margin would be worth twice the price of a retailer with a 4% margin, everything else being equal. But buying the retailer with the highest margin might see you pay top dollar on the basis of that retailer having an exceptional season. Next season if the margin reduced, your buy might not look so smart.

Here is my previous estimate of the Warehouse margin for FY2012

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%

Repeating that same calculation for the four previous years gives the following results:

FY2011: $76.0m/$1667.7m= 4.6%
FY2010: $83.4m/$1672.7m= 5.0%
FY2009: $85.2m/$1720.8m= 5.0%
FY2008: $80.9m/$1735.0m= 4.7%

This means that FY2012 is looking to be a rogue year on the downside. If you were looking at buying WHS I would say now is a good time to do so. Of course that is not the same as saying that WHS is the best retailer to buy!

SNOOPY

Disagree, Snoopy.

WHS is returning to a discount format to regain market share so margins are going to take a step down.

Question then is whether WHS can increase sales to compensate for reduced margins (me does not think so) or reduce costs further to offset (service is already lousy so how is WHS going to cut costs further).

Best outcome for WHS is for Tindall to set aside his ego and sell to Woolworths.

Knowing him, it will not happen as he and fellow directors are still smarting over how they had their butts kicked in Australia, and came back to NZ with tails between their legs.

macduffy

07-06-2012, 03:33 PM

Best outcome for WHS is for Tindall to set aside his ego and sell to Woolworths.

Knowing him, it will not happen as he and fellow directors are still smarting over how they had their butts kicked in Australia, and came back to NZ with tails between their legs.

I don't know Stephen Tindall but would think it very unlikely that Woolworths are still interested in buying WHS. Their original stake was bought to block WHS's groceries ambitions, as was Foodstuffs', and that's now a dead issue. Besides, WOW's general merchandise operations aren't exactly booming and are now taking a very much second fiddle place to the newer hardware businesses.

Snoopy

07-06-2012, 03:54 PM

Disagree, Snoopy.

WHS is returning to a discount format to regain market share so margins are going to take a step down.

Question then is whether WHS can increase sales to compensate for reduced margins (me does not think so) or reduce costs further to offset (service is already lousy so how is WHS going to cut costs further).

Everyone is entitled to their opinion Balance. Yours may end up being the right one.

I wasn't aware WHS ever left their 'discount format'. The sales deterioration is noticable ($1,735m to $1,638m over five years), but not I would have thought terminal. Look at it another way. If WHS were able to lift their sales by $100m (a 5% lift) while keeping all fixed costs the same, that $100m in extra sales could make a significant difference to their bottom line. Perhaps that is how management see their way back to the growth path?

SNOOPY

Snoopy

07-06-2012, 04:40 PM

At the moment HLG's margin is very high, but so too is its stock price. But how realistic is it to expect that HLG will be able to maintain its margin at that level in the coming months given the change in the economy, both here and in Australia where HLG does a fair chunk of its business? I don't see how it can do that. The exchange rate has come back sharply over recent weeks, which will put the price of the clothes it imports from China up, and consumer sentiment in the retail sector in both countries has turned flat. Both of these I would have thought would start to put the squeeze on HLG's margins, and ultimately, its share price. The WHS too is facing the same economic issues here in NZ in the retail space.

Many retailers have hedging arrangements so they can lock in the price of their future stock pegged to a known number. I don't know the situation of HLG as regards this. Of course hedging is really only a buffer, because ultimately all of these things run out. But a very effective buffer it can be.

I would tend to think WHS is less exposed because if people feel the pinch they can always trade down. My impression is that WHS have positioned themselves below HLG in terms of clothing price points. This is a reason I like 'discount retailers'. In theory they should be less affected by any retail recession. But then again I usually hold shares rather than look to trade them.

SNOOPY

Snoopy

07-06-2012, 04:43 PM

So I suppose one observation and question I have is just how much weight should one put on the historical record of a company's margins in the process of judging its future profitability and share price?

Retail recessions are not a new phenomenon. I guess a key question would be, how did the retail share you are thinking of buying cope when it all turned to custard before?

SNOOPY

07-06-2012, 04:56 PM

Retail recessions are not a new phenomenon. I guess a key question would be, how did the retail share you are thinking of buying cope when it all turned to custard before?

SNOOPYAnd we have just gone through one. Look at historical margins like Snoopy did with WHS and if they are fair constant and range bound, then you have to expect that they should be reasonably accurate. Compare it to something like the airline industry where they swing from profits to losses (Qantas just annouced a 90% drop in forecast profit!) then it would be hard to place any reliance on historical margins as their would be no pattern.

From memory, so I could be wrong, one thing HGL has said is in its favour is that it has very short lead times. It can change its range very quickly (important for girls cloths) which is different to say a Nike store where the fashion is determined by the previous northern hemisphere seasons fashion and quantities may be ordered seasons in advance since they will all be batch made.

BIRMANBOY

07-06-2012, 05:12 PM

Very interesting discussion and analysis, Snoopy, thanks for posting it. I wonder if your comment above might well be foretelling and forewarning of the future. At the moment HLG's margin is very high, but so too is its stock price. But how realistic is it to expect that HLG will be able to maintain its margin at that level in the coming months given the change in the economy, both here and in Australia where HLG does a fair chunk of its business? I don't see how it can do that. The exchange rate has come back sharply over recent weeks, which will put the price of the clothes it imports from China up, and consumer sentiment in the retail sector in both countries has turned flat. Both of these I would have thought would start to put the squeeze on HLG's margins, and ultimately, its share price. The WHS too is facing the same economic issues here in NZ in the retail space.

So I suppose one observation and question I have is just how much weight should one put on the historical record of a company's margins in the process of judging its future profitability and share price? I mean markets are forward looking, and I guess we invest in shares with the future in mind. We want the future share price to be more than what we paid. But in retail surely the current and upcoming economic conditions that will impact on the company are equally as important to deciding what retail company to invest in or to maintain an investment in, and in assessing whether its share price is over-or under priced? On that basis I now feel the HLG share price is overvalued, but I'm not so sure about WHS? So I'm wondering if the best time to buy retail stock is really when the share price is depressed, or whether it's better to buy when the economic outlook and consumer confidence is picking up?
Yes interesting philosophical question.....as Clint said in "Dirty Harry".."are you feeling luck punk"? Are you a contrarian? The most profound statement ever uttered in share/stock/whatever is "BUY LOW SELL HIGH". Problem is of course is whats "high" and where is "low". Since my crystal ball has a poor track record I make a practice of never buying anything unless its at a price that is historically low when viewed over a period of 2 to 5 years. Of course it could go lower..and sometimes does but the upside is that humans like a bargain and sooner or later there will be an upsurge in interest. (disclaimer...try to ignore death spirals but as long as fundamentals are sound and your stock isnt investing in new untested territory) WHS fits this ...its a sound business aimed squarely at what the average Kiwi wants...a huge selection of goods at good prices. Times are tough globally and tough going in NZ for many...this is why WHS is successfull, has been successfull and will be sucessfull for the forseeable future. Your average share trader presumably with some disposable income is NOT the target audience for WHS..so all the comments as to service etc are irrelevant. I bought more at 2.51 and if it goes down to below 2 I'll buy more again. The dividends are where the rewards are to be had. Its impossible to pick the perfect time to buy or sell so in my view it makes more sense to buy on an "average costing" basis and now is a good time.

percy

07-06-2012, 05:29 PM

I would tend to think WHS is less exposed because if people feel the pinch they can always trade down. My impression is that WHS have positioned themselves below HLG in terms of clothing price points. This is a reason I like 'discount retailers'. In theory they should be less affected by any retail recession.

SNOOPY
Usually it is the other way round.Bottom of the market retailers such as WHS or PPG suffer most,while middle ground HGL and top of the market retailers such as Ballantynes just criuse along.

h2so4

07-06-2012, 08:28 PM

Your comments on inventory turn are very poignant.

SNOOPY

SD, you are right. Cheers mate.:)

Something screwy in your example.

NZRU earns $10 net profit on sales of 1 pallet of stock. WHS earns $10 net profit on sales of 10 pallets of stock.

Clearly all things are not equal.

In this case the NZRU margin is 10% and WHS margin is 1%

modandm

07-06-2012, 10:58 PM

Yes interesting philosophical question.....as Clint said in "Dirty Harry".."are you feeling luck punk"? Are you a contrarian? The most profound statement ever uttered in share/stock/whatever is "BUY LOW SELL HIGH". Problem is of course is whats "high" and where is "low". Since my crystal ball has a poor track record I make a practice of never buying anything unless its at a price that is historically low when viewed over a period of 2 to 5 years. Of course it could go lower..and sometimes does but the upside is that humans like a bargain and sooner or later there will be an upsurge in interest. (disclaimer...try to ignore death spirals but as long as fundamentals are sound and your stock isnt investing in new untested territory) WHS fits this ...its a sound business aimed squarely at what the average Kiwi wants...a huge selection of goods at good prices. Times are tough globally and tough going in NZ for many...this is why WHS is successfull, has been successfull and will be sucessfull for the forseeable future. Your average share trader presumably with some disposable income is NOT the target audience for WHS..so all the comments as to service etc are irrelevant. I bought more at 2.51 and if it goes down to below 2 I'll buy more again. The dividends are where the rewards are to be had. Its impossible to pick the perfect time to buy or sell so in my view it makes more sense to buy on an "average costing" basis and now is a good time.

+1

Well said sir.

If people think HLG compares with WHS in terms of quality they are dreaming. All it would take for HLG to go under is Uniqlo or the Gap or Zara to roll out 50 stores in nz. Which they could easily do. Could you say the same about WHS and Walmart - no. There simply aren't the sites avialable.

percy

08-06-2012, 08:32 AM

Yes interesting philosophical question.....as Clint said in "Dirty Harry".."are you feeling luck punk"? Are you a contrarian? The most profound statement ever uttered in share/stock/whatever is "BUY LOW SELL HIGH". Problem is of course is whats "high" and where is "low". Since my crystal ball has a poor track record I make a practice of never buying anything unless its at a price that is historically low when viewed over a period of 2 to 5 years. Of course it could go lower..and sometimes does but the upside is that humans like a bargain and sooner or later there will be an upsurge in interest. (disclaimer...try to ignore death spirals but as long as fundamentals are sound and your stock isnt investing in new untested territory) WHS fits this ...its a sound business aimed squarely at what the average Kiwi wants...a huge selection of goods at good prices. Times are tough globally and tough going in NZ for many...this is why WHS is successfull, has been successfull and will be sucessfull for the forseeable future. Your average share trader presumably with some disposable income is NOT the target audience for WHS..so all the comments as to service etc are irrelevant. I bought more at 2.51 and if it goes down to below 2 I'll buy more again. The dividends are where the rewards are to be had. Its impossible to pick the perfect time to buy or sell so in my view it makes more sense to buy on an "average costing" basis and now is a good time.

"average costing" ? Maybe,although I lot of successful investors are happy to add to their holding when shares reach "new highs".That way they know the direction,or trend is confirmed and the market is free of "averaging downers."

BIRMANBOY

08-06-2012, 02:24 PM

"average costing" ? Maybe,although I lot of successful investors are happy to add to their holding when shares reach "new highs".That way they know the direction,or trend is confirmed and the market is free of "averaging downers."

How does one ever "know" what is in the future? How do you know its not a false signal...how do you know its not going to buck the apparent trend line and reverse? Too many unknowns for me. I am sure there are success stories but I'll leave that to those who embrace the surety? of mathematical models. KISS ..keep it simple is the way for me..if you buy low based on historical information then its got to be one of two reasons. Either the company is going down the sh**er or its fallen out of favour for some reason which is not apparent. WHS is certainly not toilet material so this leaves the the drop due to emotional/psychological/rumour/speculative reasons. Perfect opportunity to buy..for me...However for others its a clarion call to abandon ship. Each to his own.

Snoopy

08-06-2012, 02:57 PM

Just had a quick look at the operational earnings per share figures.

FY2012 (Forecast): $64m/311.2m= 20.6cps
FY2011: $76.0m/311.2m= 24.4cps
FY2010: $83.4m/311.2m= 26.8cps
FY2009: $85.2m/311.2m= 27.4cps
FY2008: $80.9m/311.2m= 26.0cps

Not really a very good picture. I don't believe Warehouse is in a death spiral, but nor do I believe a turnaround is imminent. Yes if WHS were able to lift their sales by 5% ($100m) then things might turn around. However, the overall market is not expanding greatly, so that $100m in sales must be taken from others. If they were to take just half those sales back off Briscoes (for example) then Briscoes sales would have to drop back 12% to below what they were at the depths of the 2009 recession. This seems less plausible.

If WHS drop their dividend back to 21cps, effectively paying all of their forecast earnings out as dividends (a best case scenario) then we are looking at a net dividend yield of 8.4% or a gross yield of 12%. Given the uncertain outlook for the Warehouse going forward and their track record of the last five years this is probably fair. But by the same token WHS would be looking a little overpriced at $3.

I think it is always worthwhile checking out historical precedent. But the thing you are buying (in this case WHS) does change with time. Buying Warehouse today and thinking that the share price may one day get up to say $4 ever again is probably unrealistic. But as a solid part of a yield portfolio, I think WHS as an investment can still make sense.

SNOOPY

discl: do not hold

Snoopy

08-06-2012, 03:11 PM

Usually it is the other way round.Bottom of the market retailers such as WHS or PPG suffer most

Well the Warehouse sales are down around 5.5% over five years

FY2012F: $1638m
FY2011: $1667.7m
FY2010: $1672.7m
FY2009: $1720.8m
FY2008: $1735.0m

As for Postie Plus
FY2012F: $113.1m
FY2011: $115.73m
FY2010: $113.77m
FY2009: $110.37m
FY2008: $107.66m

SNOOPY

percy

08-06-2012, 03:43 PM

Well the Warehouse sales are down around 5.5% over five years

FY2012F: $1638m
FY2011: $1667.7m
FY2010: $1672.7m
FY2009: $1720.8m
FY2008: $1735.0m

As for Postie Plus
FY2012F: $113.1m
FY2011: $115.73m
FY2010: $113.77m
FY2009: $110.37m
FY2008: $107.66m

SNOOPY

Not a good place to be for either WHS or PPG.PPG have to give away margin for cash flow,while WHS has to give away margin to attract customers.Others such as $2 shops,Farmers,Whitcoulls and Paper Plus,Smiths City,Dick Smith,JBHiFi ,Leemings etc offer specials to keep their customers.Dick Smith and Leemings are hardly profitable,in fact shareholders had to put in more cash.
So life is not so simple for WHS who face extra wage increases,rentals,insurance etc.With decreasing turnover life starts to look very difficult.
But the real fun is with Mitre 10 Mega,and Bunnings.Let's not forget Bunnings sales of $585mil for a NPAT of $2mil.Now $2mil profit would depend on how you did your stocktake.!!!!!!!

Snoopy

09-06-2012, 02:20 PM

If people think HLG compares with WHS in terms of quality they are dreaming. All it would take for HLG to go under is Uniqlo or the Gap or Zara to roll out 50 stores in nz. Which they could easily do. Could you say the same about WHS and Walmart - no. There simply aren't the sites available.

I have here the sales figures for HLG for the five years to FY2012

FY2012: $213.145m (estimate)
FY2011: $205.485m
FY2010: $207.139m
FY2009: $198.197m
FY2008: $193.748m

It is a tough retail market out there and I think those HLG sales figures are very impressive. I am not familiar with Uniqlo or the Gap or Zara but frankly I wouldn't bet against HLG in a fashion war with any of those, or anyone else really. Unlike WHS, the Glasson 'formula' is making gains in Australia.

It is a different business and a different business model compared to that which the Warehouse uses. HLG doesn't have those key real estate sites, but the HLG business model doesn't appear to need them. As a business I would rate HLG above the Warehouse. As to whether it would be a better value for money buy for the investor, that is another question.

SNOOPY

Snoopy

09-06-2012, 02:36 PM

Usually it is the other way round.Bottom of the market retailers such as WHS or PPG suffer most,while middle ground HLG and top of the market retailers such as Ballantynes just cruise along.

Have just posted the annual revenue figures for HLG, and vey impressive they are too.

Ballantynes is not a listed company. But the Wellington equivalent, Kirkaldie and Staines (KRK) is listed. Here are their retail sales figures for the five years up to this one:

2012: $36.441m (estimate)
2011: $35.598m
2010: $36.585m
2009: $38.351m
2008: $40.365m

Naturally even if the Ballantynes figures were readily available they wouldn't be that useful because of the distortionary effect of the Christchurch earthquake.

But I think these figures give a lie to any illusion that upmarket retailers are less affected by recessions. On the contrary the opposite looks to be true. In percentage terms the sales decline for Kirks is twice that of the Warehouse.

SNOOPY

percy

09-06-2012, 03:24 PM

Snoopy

09-06-2012, 03:38 PM

Something screwy in your example.

NZRU earns $10 net profit on sales of 1 pallet of stock. WHS earns $10 net profit on sales of 10 pallets of stock.

Clearly all things are not equal.

In this case the NZRU margin is 10% and WHS margin is 1%

I would phrase that

"In this case the NZRU gross margin is 10% and WHS gross margin is 1%"

The management accounting term 'margin' means a different thing, which is why this kind of confusion can easily arise.

SNOOPY

Snoopy

09-06-2012, 03:45 PM

On reflection I was foolish to quote Ballantynes. However I think the 'more upmarket' retailers such as BRG,HLG prove my point that they have continued to do well compared with 'down market' retailers such as WHS and PPG.
It is also interesting to note Rod Duke and Tim Glasson are both exceptional retailers.One only has to enter one of their stores to see why they do well.The stores are inviting,good displays,and the flow is good,product is good and fairly priced.Go into a Wharehouse or Postie Plus store and the opposite is the case.
Remember if you give people what they want you will get what you want.

I do agree with you about Rod Duke and Tim Glasson being exceptional retailers. However I would tend to class these two as middle market retailers rather than upmarket. There are plenty of middle market retailers out there not doing so well. Pumpkin Patch? Smiths City?

SNOOPY

percy

09-06-2012, 03:58 PM

I do agree with you about Rod Duke and Tim Glasson being exceptional retailers. However I would tend to class these two as middle market retailers rather than upmarket. There are plenty of middle market retailers out there not doing so well. Pumpkin Patch? Smiths City?

SNOOPY

Pumpkin Patch have lost the plot.God knows if they will survive and in what form.Smiths City is extremly well run business.The board is excellent,and CEO Rick Hellings is a brilliant retailer.I believe they are trading well in a difficult market.Leemings/Bond and Bond,are not.JBHF are still loosing millions in NZ operation.SCY own their own finance company,while the others use GE Money.Not sure how Harvey Norman are doing.Very difficult business to understand as they are a franchise operation.In Moorhouse Ave store there were 3 or 4 different fanchises,beds,furniture ,electrical.etc
SCY.Directors,and Hellings have large shareholdings.

emearg

09-06-2012, 04:50 PM

Have just posted the annual revenue figures for HLG, and vey impressive they are too.

Ballantynes is not a listed company. But the Wellington equivalent, Kirkaldie and Staines (KRK) is listed. Here are their retail sales figures for the five years up to this one:

Is Kirks like Ballantynes? I think Kirks is very upmarket and Ballantynes is mid to high? Sadly many of Kirks target market has passed away which may be behind the reducing revenue figures? My Grandmother is of the generation that loved Kirks. Flocked to their sales. But sadly she is too old to go anymore, and most of her peers have passed away.

Everytime I pop into Kirks I am disappointed by their snotty staff and overpriced offerings. I prefer to shop at places like Living and Giving. Nice offerings and you don't require lube...

h2so4

09-06-2012, 05:50 PM

I would phrase that

"In this case the NZRU gross margin is 10% and WHS gross margin is 1%"

The management accounting term 'margin' means a different thing, which is why this kind of confusion can easily arise.

SNOOPY

I'm pretty sure that in your example there were no other costs or taxes to be deducted. Therefore gross margin and margin will be the same.

How long has NZ been like this?

Lizard

09-06-2012, 06:28 PM

I think the "main shopper" in a family has an advantage in retail investment - for me, shopping is a chore that I undertake with methodical diligence.

It is no surprise to me that Pumpkin Patch sales fell (my kids announced that they were not going in "there" any more), nor that Glassons were doing rather well (half of their allowance seemed to end up there)... I know that Briscoes has had my trade for a few years in sheets, towels and wine glasses (though am pretty sure they could do better, given the number of times I walk out of there empty-handed!). Not surprised when supermarket spending fell (it reaches a point where we're all prepared to shop around for the best deals when food starts taking up 40% of the weeks pay!). Kirks - a good formula that is going down-market to capture the next generation... witness the men's wool perma-crease trousers... same brand, 10 years, maybe a 10% price increase? Cufflinks are back "in". Christmas shop - every year of course (though I think they are starting to cut corners!). Ballentynes? Well I have to admit they used to be rather the thing - amazing values to stay closed on a Sunday and miss out on the mall trade...God help them. I'm afraid it's mostly Farmer's these days for the mid-life woman on a budget. The Warehouse - well its time is coming.... I've been in there a little more frequently of late and the customer service has made a marginal improvement...hey, the price is even getting closer to the $2.40 which might pique my interest...

Disclaimer: Consult your Retail Therapist before investing in retail stocks of any kind...

percy

09-06-2012, 06:57 PM

Lizard,
You have really let the team down>>>>!!!!!!!!
You can shop 24/7 at Ballantynes thanks to their wonderful web site,run by our good friends estaronline.com who also do Briscoes.
You will be pleased to know the MD is Mary Devine who ran Ezibuy,another estar customer.
www.ballantynes.com

winner69

09-06-2012, 07:10 PM

I'm afraid it's mostly Farmer's these days ...

Farmers ain't too bad these days .... picked up a neat Norsewood jersey the other day with 30% off bringing it doen to $60 odd .... maybe a bit more expensive than Postie eh Percy but a nice jersey all the same

percy

09-06-2012, 07:22 PM

Farmers ain't too bad these days .... picked up a neat Norsewood jersey the other day with 30% off bringing it doen to $60 odd .... maybe a bit more expensive than Postie eh Percy but a nice jersey all the same

Well I like Farmers too.Brought a couple of cheap jerseys from Postie Plus.They are OK but will look to The Farmers to replace the rubbish one I paid over $60 from Swanndri.Fluffed up after hardly been worn.

winner69

11-06-2012, 06:14 AM

But the real fun is with Mitre 10 Mega,and Bunnings.Let's not forget Bunnings sales of $585mil for a NPAT of $2mil.Now $2mil profit would depend on how you did your stocktake.!!!!!!!

Percy you cynic - Bunnings wouldn't adjust stock figures.... just like Heartland wouldn't conveniently understate their impairement provision or change the discount rate used to value financial instruments ... they wouldn't would they!!!!!!!!!

percy

11-06-2012, 08:13 AM

Percy you cynic - Bunnings wouldn't adjust stock figures.... just like Heartland wouldn't conveniently understate their impairement provision or change the discount rate used to value financial instruments ... they wouldn't would they!!!!!!!!!

No,I was pointing out that with such small profit margin it would not take much to turn $2mil profit into a loss.Stocktake,shrinkage,higher rent,insurance increase. etc.$11.25 mil turnover everyweek for $38,410 profit a week.?? No room to move.Why bother for .003%.?wouldn't want Bank to increase bank fees.
Back to stocktake.No one can be 100%,so again $2mil is neither here nor there,but with a net profit of only $2mil it is certainly here.!!

Snoopy

12-06-2012, 03:06 PM

Snoopy wrote:
I would phrase that

"In this case the NZRU gross margin is 10% and WHS gross margin is 1%"

The management accounting term 'margin' means a different thing, which is why this kind of confusion can easily arise.

SSD replied:
I'm pretty sure that in your example there were no other costs or taxes to be deducted. Therefore gross margin and margin will be the same.

Glad to see someone is awake SSD. There were no other costs or taxes to be deducted as you observed. So I should have used the term 'net margin', not 'gross margin'.

However I obviously wasn't clear enough in my long winded explanation (post 1074 in this thread). There are three margin terms I was talking about:

1/ Gross Margin
2/ Net Margin
3/ Margin (which I have renamed 'Management Accounting Margin' to avoid confusion with the other two).

'Margin' in management discussion terms, which is what this forum is all about, means definition number 3 if there is no further qualification given. Go back and read that post 1074 with this in mind (I have made bold the important bit) and it should make more sense.

SNOOPY

h2so4

14-06-2012, 12:39 PM

Glad to see someone is awake SSD. There were no other costs or taxes to be deducted as you observed. So I should have used the term 'net margin', not 'gross margin'.

However I obviously wasn't clear enough in my long winded explanation (post 1074 in this thread). There are three margin terms I was talking about:

1/ Gross Margin
2/ Net Margin
3/ Margin (which I have renamed 'Management Accounting Margin' to avoid confusion with the other two).

'Margin' in management discussion terms, which is what this forum is all about, means definition number 3 if there is no further qualification given. Go back and read that post 1074 with this in mind (I have made bold the important bit) and it should make more sense.

SNOOPY

SD: The net profit margin for those two businesses is 10% and 1%, and that’s my point.

In your example many investors would automatically assume that the 10% profit margin business NZRU is better. In fact when you take into account turnovers they are the same and if the 1% profit margin business WHS could squeeze in just one more turnover they would in fact be in front on net profit.

Turnover is another piece to the puzzle when combined with net profit margin.

macduffy

14-06-2012, 01:14 PM

Ballentynes? Well I have to admit they used to be rather the thing - amazing values to stay closed on a Sunday and miss out on the mall trade...God help them

A bit off the WHS thread here, but percy, I think lizard was referring to the ladies-wear chain, Ballentynes - not the Christchurch department store Ballantynes.

And re Pumpkin Patch, isn't it rather a reaction of a child growing up to rebel against wearing their gear? After all, what 'big' kid wants the world to know he/she wears "Pumpkin Patch"? Isn't that for babies?

:ohmy:

Snoopy

14-06-2012, 02:42 PM

SD: The net profit margin for those two businesses is 10% and 1%, and that’s my point.

In your example many investors would automatically assume that the 10% profit margin business NZRU is better. In fact when you take into account turnovers they are the same and if the 1% profit margin business WHS could squeeze in just one more turnover they would in fact be in front on net profit.

Turnover is another piece to the puzzle when combined with net profit margin.

I agree with everything you have put in that post SSD. Now I take your punchline

"Turnover is another piece to the puzzle when combined with net profit margin."

and move one step onwards.

The question is, how do you take turnover into account? Some might think it is too difficult but it really isn't. The 'Management Accounting Margin' ( Annual Net Profit/Gross sales ) measures exactly that. Not sure if I have communicated that clearly before.

SNOOPY

percy

14-06-2012, 03:08 PM

A bit off the WHS thread here, but percy, I think lizard was referring to the ladies-wear chain, Ballentynes - not the Christchurch department store Ballantynes.

And re Pumpkin Patch, isn't it rather a reaction of a child growing up to rebel against wearing their gear? After all, what 'big' kid wants the world to know he/she wears "Pumpkin Patch"? Isn't that for babies?

:ohmy:
I think you are right and being a South Islander forgot about BallEntynes,so apologies to Lizard.
Pumpkin Patch.I have fond memories of walking past their Northlands Mall store just before they listed, in the company of a couple of excellent retailers I know.They really thought PP were fabulous retailers.I pointed out that most brokers were picking Feltex,because of their strong brand.!!! Yeah right.!!At that time the store looked really colourful and exciting,and was very busy.A week ago I walked past the store,and it was queit,flat and boring.So with overseas troubles,slow down in retail in NZ and Aussie,landlords wanting higher rents I think they will struggle.All retailers seem to want to give their stock away just to stay in business.From what I hear retail has slowed down yet again.I notice the chemist at Barrington Mall has more staff than customers each time I walk past his shop.I suppose it is too cold here for germs.!!!!

h2so4

14-06-2012, 05:28 PM

I agree with everything you have put in that post SSD. Now I take your punchline

"Turnover is another piece to the puzzle when combined with net profit margin."

and move one step onwards.

The question is, how do you take turnover into account? Some might think it is too difficult but it really isn't. The 'Management Accounting Margin' ( Annual Net Profit/Gross sales ) measures exactly that. Not sure if I have communicated that clearly before.

SNOOPY

SD Turnover x net profit margin.

Snoopy

15-06-2012, 03:12 PM

SD: Turnover x net profit margin.

Yes that certainly would be one way to combine the value of turnover and net profit information. The problem I see with that equation is that it will spit out answers in dollars. I think any answer should be more useful than that. I will try to explain what I mean with a simpler example.

If I told you that the net profit on selling a single shirt was $10, is that very useful? If the shirt cost the retailer $10 then net profit margin is 100%. If the shirt cost the retailer $20, then the net profit margin is 50%. Knowing the net profit as a dollar figure, doesn't give you an indication of how good the retailer is. To find out how good the retailer is, you need to divide the net profit by the cost of the stock to create a 'net profit margin' (a dimensionless percentage).

To make it useful you need to turn your

"Turnover x net profit margin"

into a percentage figure of some kind.

SNOOPY

winner69

15-06-2012, 05:33 PM

h2so4

15-06-2012, 06:32 PM

Yes that certainly would be one way to combine the value of turnover and net profit information. The problem I see with that equation is that it will spit out answers in dollars. I think any answer should be more useful than that. I will try to explain what I mean with a simpler example.

If I told you that the net profit on selling a single shirt was $10, is that very useful? If the shirt cost the retailer $10 then net profit margin is 100%. If the shirt cost the retailer $20, then the net profit margin is 50%. Knowing the net profit as a dollar figure, doesn't give you an indication of how good the retailer is. To find out how good the retailer is, you need to divide the net profit by the cost of the stock to create a 'net profit margin' (a dimensionless percentage).

To make it useful you need to turn your

"Turnover x net profit margin"

into a percentage figure of some kind.

SNOOPY

One turnover x net profit margin is a percentage figure.

percy

15-06-2012, 07:04 PM

Retailers use performance indicator known as GMROI. In it's simplest form it is Gross Margin %age X stock turns. The result is the return on the investment in stock. Example say a 30% GM and 6 stock turns gives a GMROI of 1.8 - read as $1.80 return on a $1.00 of stock/inventory

Higher the better the better

A measure that can make comparing high margin / low stock turn items and low margin / high stock turns to see who does better.

Try it on your examples you have played around with in earlier posts ... Interesting

Nice to see % age stock mentioned.Most retailers who go broke have too much over valued aged stock.Realisable/disposal price is nowhere near book value.From an investor's view it is impossible to judge the true value of someone like WHS ,BGR,MHI,or PPG's stock.Best way is to walk around a store and judge for your-self.Out of fast selling items,stuck with slow moving items sticks out.WHS used to be out of lollies after Xmas,and slow to restock.Then in clothing out of stock of larger sizes,with only selections of small sizes.In NZ you do not see a lot of thin shoppers in the Warehouse.!!! In retail you make money selling products.No stock of any item means no sales.Better to have slighty higher stock level with lower stock turns,which will result in higher profits.And so we go back to"if you give peoplw what they want,you will get what you want."

h2so4

15-06-2012, 07:14 PM

h2so4

15-06-2012, 07:44 PM

Nice to see % age stock mentioned.Most retailers who go broke have too much over valued aged stock.Realisable/disposal price is nowhere near book value.From an investor's view it is impossible to judge the true value of someone like WHS ,BGR,MHI,or PPG's stock.Best way is to walk around a store and judge for your-self.Out of fast selling items,stuck with slow moving items sticks out.WHS used to be out of lollies after Xmas,and slow to restock.Then in clothing out of stock of larger sizes,with only selections of small sizes.In NZ you do not see a lot of thin shoppers in the Warehouse.!!! In retail you make money selling products.No stock of any item means no sales.Better to have slighty higher stock level with lower stock turns,which will result in higher profits.And so we go back to"if you give peoplw what they want,you will get what you want."
Well percy, after you have picked over all the jumpers there is not much left.:) I hope you managed to get a good pair of fingerless mittens for the winter.

winner69

15-06-2012, 07:53 PM

rsists
In effect what you are finding out is how much mula has to be invested in stock and how quickly that money makes a profit and how quickly that money is reinvested.

Spot on Sulphuric .... and the better they do this the higher the market values their stock

Here is WHS, HLG and BGR relative performance

Note how HLG with its higher margin and higher stock turns essentially (in simple terms) makes $2.79 gross margin for every buck invested in stock ..... compared to WHS at $1.45 and BGR at $1.70.

As a consequence HLG trades at 3.8 times book value whereas the other two are a lot lower. HLG shareholders have been rewarded with a lot more MVA than BGR and WHS shareholders

Relative to HLG maybe BGR at 2.1 times book value is still slightly undervalued. Then again on these comparisons WHS at 2.9 book value is overvalued (esp relative to BGR). The takeover premium in WHS still persists

percy

15-06-2012, 07:56 PM

Well percy, after you have picked over all the jumpers there is not much left.:) I hope you managed to get a good pair of fingerless mittens for the winter.

It is so cold here at present dare not expose any part of the body,so full mittens.It is pouring down at present,snow on the hills.If you get time tomorrow night watch a bit of the All Blacks vrs Ireland game.Look at how the crowd is dressed.I am heading over Arthurs Pass to Greymouth on Sunday,so that should be fun!!Have plenty of jumpers thanks.

Snoopy

16-06-2012, 02:20 PM

One turnover x net profit margin is a percentage figure.

I would say:

'One Stock Turn x Net Profit Margin' is a percentage figure.

or in the more general case

'Number of Stock Turns x Net Profit Margin' is a percentage figure.

But 'Turnover' refers to the amount of cash going through the tills over a given period of time (usually a year). Turnover does not mean the same as Stock Turn! You may think I am being a pedant here. But the problem is if you take words that commonly mean something else and use them in a context and meaning that is best known only to you, then people will not understand what you are saying.

While I am being a pedant I will dob in myself as well.

Earlier in this thread I said: Margin = (Net Profit/Sales Revenues)

I then tried to deobfuscate that by saying: Margin Accounting Margin = (Net Profit/Sales Revenues)

On reflection I think the term I should have used was: Operating Margin = (Net Profit/Sales Revenues)

This is a different metric to 'Gross Margin' and 'Net Margin'.

SNOOPY

Snoopy

16-06-2012, 02:46 PM

HLG with its higher margin and higher stock turns essentially (in simple terms) makes $2.79 gross margin for every buck invested in stock ..... compared to WHS at $1.45 and BGR at $1.70.

As a consequence HLG trades at 3.8 times book value whereas the other two are a lot lower. HLG shareholders have been rewarded with a lot more MVA than BGR and WHS shareholders

Relative to HLG maybe BGR at 2.1 times book value is still slightly undervalued. Then again on these comparisons WHS at 2.9 book value is overvalued (esp relative to BGR). The takeover premium in WHS still persists

This has been a most enlightening thread with a lot of retail knowledge coming out of the woodwork. There are plenty of contributors to this thread who know a lot more about retailing than I do, and I am not just referring to Winner (his post happened to be the last in line which is why I responded to it.)

Nevertheless from an investor perspective I don't believe I have to know as much as the rest of you do. As an arch-typical 'lazy investor' I believe in doing as little work as possible to satisfy my needs. I can get near enough to the same result as Winner by considering the 'operating margin' only.

Think about it: Operating Margin = (Net Profit)/(Sales Revenue)

So, the greater the 'stock turn' the greater the 'net profit'.
And the greater the 'gross margin' the greater the 'net profit'.

True I will not find out what the 'gross margin' actually is nor what the 'stock turn' is. But I don't have to know those figures. It is the retailers job to decide whether they gain their net profit by selling stuff slowly with a high gross margin or sell at a lower gross margin but make their money by selling a greater quantity of stock quickly. However they choose the do it I can consider them operating a retailing 'black box'. I don't have to understand exactly what they are doing because the net result will all come out in the wash, and be reflected in the 'Operating Margin' figure.

The managers of the store may find the 'stock turn' figures and 'gross margin' figures useful. But as an investor I don't need to worry about those figures. 'Operating Margin' captures all of the information I need to know to make a sharemarket investment decision.

Of course if you consider GMROI and 'Operating Margin' the relative proportional comparison will not be exactly the same between BGR, HLG and WHS. 'Net margin' is derived from 'Net Profit' and that means operating costs and interest are taken into account in one metric and not the other. Another point of difference could arise if the stock level at the end of the year is significantly different to the stock level at the end of the year. Pick any one statistic and there are always ways to pick a hole in the argument it presents.

In general though, I do think that operating margin is a sufficient statistic for answering the question:

"Which retailer has the highest margins?"

I think the rest of you have been working too hard on this!

SNOOPY

winner69

16-06-2012, 04:35 PM

Snoopy - I thought you had correct earlier but I think you are now confusing the punters out there.

The commonly accepted definition of Operating Margin is Operating Profit / Revenues where Operating Profit excludes interest and tax .... in most cases EBIT though profits from capital sales and associates can throw a spanner in the work. The WHS accounts are a great example of setting this out

Your Net Profit (after tax) / Sales is generally called Net Margin

When you say which retailer has the highest margins are you suggesting that these are the best bets (investment). Would this preclude ever investing in the likes of WOW?

Things like GMROI, Gross Margins and stockturns are only a measure how well the investment in stock is managed. The cost of doing business is just as important .... like even HLG and their high margin and stockturns which generated $116m of Gross Margin last year would be a basket case if the expense base was $120m eh. That is where you Net Margin comes in

You are right - the 'lazy way' works quite well (I wouldn't call you a lazy investor anyway Snoopy ... you seem quite active).

But operating a business (esp retail) one would hope that they are not lazy. Most of those mentioned would know the GMROI of every SKU they sell at any one time. Shareholders wouldn't want them holding onto stuff that doesn't sell or having too many low margin slow moving items would they.

What can be interesting is assessing how the market sees the relative value of growth v margin and what would be rewarded more (for shareholders of course) - a 1% increase in margin or a 1% increase in growth. It is those sort of things that the big shareholders look at (instos) and apply pressure on the company to pursue the strategy they see fit

h2so4

16-06-2012, 07:04 PM

Winner: You dont hear that often. "That Acid Man he's spot on" Thanks

SD: Your right, cheers mate

Snoopy

18-06-2012, 12:10 PM

Snoopy - I thought you had correct earlier but I think you are now confusing the punters out there.

The commonly accepted definition of Operating Margin is Operating Profit / Revenues where Operating Profit excludes interest and tax .... in most cases EBIT though profits from capital sales and associates can throw a spanner in the work. The WHS accounts are a great example of setting this out

Your Net Profit (after tax) / Sales is generally called Net Margin

Winner if you turn to page 47 of the FY2011 annual accounts of the WHS themselves say:

"The operating margin is defined as operating profit divided by revenue."

If you then go to page 30, the Income Statement, you will see that the WHS states 'Operating Profit' and subsequent to that adjusts for gain on disposal of property asset,s adjustments for financial instruments, and equity earnings of associates. After that they take off interest expenses and tax.

It looks like those accounting boffins at WHS are in full agreement with you. Even to the extent of weeding out those profits from capital sales and associates which as you can may throw a spanner in the works. IOW you are dead right! Sorry for any confusion I may have caused others over the nomenclature!

Nevertheless I do prefer the 'net margin' measure (Net Profit (after tax) / Sales), what I have been using all through this thread, myself.
Why? Because in the past whenever I have borrowed money I have always had to pay the interest on it. Furthermore I always seem to end up paying tax on income I earn as well. It doesn't seem credible to me to use EBIT when as a small shareholder owner there is no way of getting out of paying the 'I' and 'T' bits. So I intend to keep using 'net margin' even if that term itself draws up a slightly confusing meaning in my brain (it sounds a little too much like 'net profit' and 'net profit margin' for my liking.)

SNOOPY

Snoopy

18-06-2012, 12:17 PM

What can be interesting is assessing how the market sees the relative value of growth v margin and what would be rewarded more (for shareholders of course) - a 1% increase in margin or a 1% increase in growth. It is those sort of things that the big shareholders look at (instos) and apply pressure on the company to pursue the strategy they see fit

Perhaps I am a little naive in these matters. But surely institutions wouldn't try to influence WHS management to this extent? Isn't it up to WHS management to decide this stuff? Why would some merchant banker shareholder think they know more about retailing than WHS management do? And wouldn't a 1% increase in margin produce exactly the same shareholder benefit as a 1% increase in overall sales? Why would an institutional shareholder care which way management went if the result was the same?

SNOOPY

Snoopy

18-06-2012, 12:29 PM

Your Net Profit (after tax) / Sales is generally called Net Margin

When you say which retailer has the highest margins are you suggesting that these are the best bets (investment). Would this preclude ever investing in the likes of WOW?

Woolworths Australia is a very special retailing case. My understanding of their business model is that they work on high turnover and bloody mindedness towards suppliers to the extent that they sell their good to the end line consumer before they have to pay the supplier for them.

The term 'operating margin' is almost superfluous, because technically you could say WOW never own the goods they sell so the operating margin is to some extent irrelevant!

As for using 'net margin' as an investment tool in general I think care is required. It doesn't take any more that a slow coming winter for sales of winter clothes to dip well below expectations. Retailers have to sell their stock off anyway at whatever price they can get and hey presto the margin in the end of year accounts goes down. Such an event is often not indicative of what might happen the next year.

What I look for in 'net margin' is evidence that given a steady state trading environment a company has the ability to increase it. That is not the same as saying that a retailer must increase their margins each year before I would consider investing.

Perhaps the greatest benefit of 'net margin' is to identify those retailers that year after year slowly see their 'net margin' ground down. A five year negative 'net margin' trend would be a big red flag to the investing me.

SNOOPY

Snoopy

19-06-2012, 01:35 PM

Smiths City is extremly well run business. The board is excellent,and CEO Rick Hellings is a brilliant retailer.I believe they are trading well in a difficult market.Leemings/Bond and Bond,are not.JBHF are still losing millions in NZ operation.SCY own their own finance company,while the others use GE Money. SCY.Directors,and Hellings have large shareholdings.

To give WHS a bit more context, I think it is interesting to look at Smiths City sales over the last 5 years.

SCY sales

2012F: $221.0m
2011: $220.7m
2010: $226.1m
2009: $227.0m
2008: $252.4m

I could have included the 2007 sales figures to make it look worse, but even so Smiths City sales are down 10% as the GFC has tightened its grip. Part of the problem is that those people who wanted to buy a $3000 flat screen TV five years ago only have to pay around $1500 for the same thing now. And it is unlikely the customers will take that $1500 saved and get a second set for the bedroom! It would be interesting but probably too competitor sensitive if Smiths City were to release their unit sales figures.

To some extent WHS is suffering from the same problem in their 'consumer electronics' department. The 'consumer electronics' collapse is I think a retail wide phenomena, not an internal company problem.

An ace that SCY holds is that they run their own finance company. The finance arm did grow 10% in FY2011 with revenues up from $10m to $11m. But it is still just 5% of total sales and not material to the future of the company in its own right just yet.

SNOOPY

percy

19-06-2012, 03:05 PM

Yes you are both right and wrong at the same time.SCY sold their low profit margin building division to Carters so turnover did drop.
Like WHS they do suffer price reductions.
The finance company is very much material to SCY.They are the only retailer of house hold/electrical goods who have their own finance company,so are in a better position to match competitive finance offers.
You will note they have expanded without coming back to sahareholders for more funds,and pay a modest divie.
atailer

winner69

19-06-2012, 04:13 PM

modandm

20-06-2012, 10:14 AM

guys just to help out (maybe)

when insto's are talking margins they are referring to operating margins

Operating margins is EBIT/Revenue

This is not the same as gross margin - ie sales-cogs

And yes Instos will have the ear of management - they are the ones that set the price of securities. If they want to see a dividend increase or share buyback or a focus on margins CEO's will hear about it and consider it as part of strategy and decision making. Of course the insto's don't run the companies so management don't have to listen if they don't think it's the right strategy

winner69

20-06-2012, 10:48 AM

percy

20-06-2012, 03:15 PM

I'd say SCY finance arm is critical to the business. If you look at half byear finance made $1.4m while retail lost money. See segmental reporting

Always been like this, a marginal retail business propped up by property and a finance arm

I have not followed very closely for a couple of years,but you are right on the money as always.They have/do well developing sites for their retail premises.Buy store/site do it up/build as sell off developement with a good retailer as tenant.[them].
With price decreases, increase in insurance ,wages,kiwi saver,increase rents,foreign exchange,fuel cost for delivery and service vehicles, and huge amount of competition it is a very difficult place to be.

Snoopy

21-06-2012, 03:52 PM

Yes you are both right and wrong at the same time.SCY sold their low profit margin building division to Carters so turnover did drop.

That was in the first half of FY2007 Percy. So the turnover statistics that I quoted, from FY2008 were not affected.

SNOOPY

percy

21-06-2012, 05:17 PM

That was in the first half of FY2007 Percy. So the turnover statistics that I quoted, from FY2008 were not affected.

SNOOPY

stand corrected.

Jim

23-06-2012, 05:13 PM

I saw that this dog's closed at $ 2.51 yesterday the yield is almost 8%. I think it is worthwhile to pick up some and don't forget that WOW and Foodstuffs jointly own 10% and WOW might take over this dog and turn it into a swan. And the share price will rocket

upside_umop

23-06-2012, 05:21 PM

Foodstuffs and WOW each own 10% (not joint)...both hold blocking stakes from each other and of course S Tindall who wanted to privatise it back in the day...

Snoopy

26-06-2012, 03:51 PM

WHS fits this ...its a sound business aimed squarely at what the average Kiwi wants...a huge selection of goods at good prices. Times are tough globally and tough going in NZ for many...this is why WHS is successfull, has been successfull and will be sucessfull for the forseeable future. Your average share trader presumably with some disposable income is NOT the target audience for WHS..so all the comments as to service etc are irrelevant. I bought more at 2.51 and if it goes down to below 2 I'll buy more again. The dividends are where the rewards are to be had. Its impossible to pick the perfect time to buy or sell so in my view it makes more sense to buy on an "average costing" basis and now is a good time.

I think Birmanboy has got it right and WHS is probably a dividend play from here on in. So perhaps it is a good idea how WHS stacks up as a 'five year average' ordinary dividend buy?

The dividends over the last five financial years are as follows:

2012F: 13.5c, 5c
2011: 15.5c, 6.5c
2010: 15.5c, 8.5c
2009: 15.5c, 5.5c
2008: 15.5c, 5.5c

Average dividend is 21.3cps, which is equivalent to 30.4cps gross. Assuming an 8% gross yield, this equates to a WHS share price of $3.80 (!)

SNOOPY

26-06-2012, 04:06 PM

Assuming an 8% gross yield, this equates to a WHS share price of $3.80 (!)The interesting point here is that we are meant to be coming out of a recession, so why is the dividend falling not rising. That is the reason why the SP isn't $3.80.

Snoopy

27-06-2012, 03:03 PM

The interesting point here is that we are meant to be coming out of a recession, so why is the dividend falling not rising? That is the reason why the SP isn't $3.80.

The WHS dividend is falling because WHS is making less money! But you already knew that CJ. I guess what valuing a share on its past five years of dividends, and seeing that figure so far ahead of the current share price tells you is that the FY2012 year is not going well!

Part of this underperformance is self inflicted as WHS pours money into revamping their stores around the country. The store nearest to me in Riccarton was revamped a month or so ago. I am not quite sure what the relaunch was meant to achieve. There was a special flyer in the mailbox. I know there were some Riccarton store only bargains for a couple of weeks. Otherwise I didn't see much difference. So will I be visiting WHS more often as a result? In a word, no.

Interested to hear others views of WHS revamping as it cascades through the country.

SNOOPY

upside_umop

27-06-2012, 03:22 PM

They're spending circa $400m doing this aren't they Snoopy? I'd say this will impact dividends severely in the next few years....

Snoopy

27-06-2012, 03:31 PM

They're spending circa $400m doing this aren't they Snoopy?

Not sure. I am not a shareholder but no doubt someone who is will confirm one way or the other. If true that is a very large capital expenditure!

I'd say this will impact dividends severely in the next few years....

Revamping the KFC stores did work for Restaurant Brands. So I'm not sure if you can write of the WHS revamp strategy just yet.

SNOOPY

discl: former holder, sold out in 2006

winner69

27-06-2012, 03:43 PM

The interesting point here is that we are meant to be coming out of a recession, so why is the dividend falling not rising. That is the reason why the SP isn't $3.80.

Some might say that the recession was just a boom period unwinding and that from here on the current is the norm for few years

Balance

28-06-2012, 08:38 AM

Not sure. I am not a shareholder but no doubt someone who is will confirm one way or the other. If true that is a very large capital expenditure!

Revamping the KFC stores did work for Restaurant Brands. So I'm not sure if you can write of the WHS revamp strategy just yet.

SNOOPY

discl: former holder, sold out in 2006

Revamping and repositioning can work.

Observation is that it tends to work when it is done quickly and comprehensively (as in Smiths City and Farmers) or when there's not much real competition (KFC). Contrast Pizza Hut's revamp with that of KFC - not that much competition in the chicken space but heaps in pizza.

WHS's revamp and repositioning are being done piece meal amidst fierce competition from Briscoes, Bunnings, K-mart, 2 dollar stores, online retailing etc.

Market is saying that strategy will not work and end result will be reduced profits, reduced dividends and higher debts.

Tindall should have sold to Woolworths and redeploy his funds and energy to global online retailing.

Balance

28-06-2012, 02:32 PM

Revamping and repositioning can work.

Observation is that it tends to work when it is done quickly and comprehensively (as in Smiths City and Farmers) or when there's not much real competition (KFC). Contrast Pizza Hut's revamp with that of KFC - not that much competition in the chicken space but heaps in pizza.

WHS's revamp and repositioning are being done piece meal amidst fierce competition from Briscoes, Bunnings, K-mart, 2 dollar stores, online retailing etc.

Market is saying that strategy will not work and end result will be reduced profits, reduced dividends and higher debts.

Tindall should have sold to Woolworths and redeploy his funds and energy to global online retailing.

Smiths City results out - profits double that of last year, on 0.8% increase in sales.

Can the Warehouse do the same 5 years from now?

winner69

13-08-2012, 12:21 PM

Hoop

13-08-2012, 12:39 PM

Wow - Warehouse jobs on the Daily Deals bandwagon

Following the trend eh (mind you an Apple Macbook Pro for $1599 not too bad

Some retail guru was described this sort of behaviour "Grouponisation and the race to the bottom"

Yep it's a race...if you can't beat them join them :D.

Love the name Red Alert...used to play that game all the time back when my hair wasn't grey...(sigh!!:()

macduffy

13-08-2012, 12:47 PM

Another Red Alert?

No, not Aberdeen FC this time, nor ManU, nor the NZ Labour party. Okay, I don't get the latter but I believe it does exist!

emearg

01-11-2012, 07:47 PM

I wonder how the red alert concept is going? I have clicked into it several times late in the day and they have plenty of stock remaining. Either they had a lot to start or it isn't selling. Quite different to 1-day and some of the others that often sell out in minutes/hours. Again I point out that it is hard to make valid comparisons as we don't know how many items are in stock to start but it doesn't give me a good feeling...

BIRMANBOY

01-11-2012, 09:11 PM

These things are a numbers game..people click in from curiosity, need, bargain hunting and fear of losing the item they didnt know they wanted. Its all about boosting visibility and training shoppers to have a look. I use similar methods in my business and it definitely boosts sales PLUSSSS you get to direct interest to where you need to move product. Now that gives me and I assume WHS a "good feeling". Online sales are increasing every year..this is smart retailing and its very cost effective as a big bonus.
I wonder how the red alert concept is going? I have clicked into it several times late in the day and they have plenty of stock remaining. Either they had a lot to start or it isn't selling. Quite different to 1-day and some of the others that often sell out in minutes/hours. Again I point out that it is hard to make valid comparisons as we don't know how many items are in stock to start but it doesn't give me a good feeling...

biker

10-12-2012, 09:35 AM

The best at the best price (65mil) - Noel Leeming. WLG bought NLG today. Any views?

winner69

10-12-2012, 09:58 AM

The best at the best price (65mil) - Noel Leeming. WLG bought NLG today. Any views?

Warehouse got a bargain methinks .... $65m for $600m sales is pretty cheap .... Leemings only made a loss cause of the high (unsustainable) interest bill ..... hope PE took a haircut on this

Should be +ve for WHS shareprice

Stranger_Danger

10-12-2012, 10:12 AM

I think it is a dumb move. Time will tell.

Balance

10-12-2012, 10:28 AM

I think it is a dumb move. Time will tell.

Question that must be asked is what expertise WHS brings to Noel Leeming?

10-12-2012, 10:31 AM

I think it is a dumb move. Time will tell.Big move either way. Expanding outside their bargain area into an area where the competitors sell exactly the same products. They should be able to strip out some H/O costs and get efficencies with buying maybe? I wonder if they took on the debt.

The BOWMAN

10-12-2012, 10:37 AM

Interesting, Noel leeming and Bond and Bond has always been hand in hand. So they are separated now seems to be a lose lose situation for both side of the trade.

Balance

10-12-2012, 10:41 AM

Big move either way. Expanding outside their bargain area into an area where the competitors sell exactly the same products. They should be able to strip out some H/O costs and get efficencies with buying maybe? I wonder if they took on the debt.

Telling that WHS has not mention the debt situation?

According to NLG's last set of accounts, there's $113.6m of debt in the account.

If WHS takes on that debt, then it's not a good acquisition - i.e.. $179m to buy $8m to $12m of EBIT.

winner69

10-12-2012, 11:10 AM

Good point Balance

Maybe I thought in haste and assumed no debt .... but then all they say is a $65m share acquisition eh

Additional debt would make the sums different

Hoop

10-12-2012, 11:27 AM

Increasing the exposure to an deflationary environment is bad enough...but...taking on debt with the hope of paying it off from the profits earn't within this deflationary market.....yeah right!!

macduffy

10-12-2012, 11:48 AM

Interesting, Noel leeming and Bond and Bond has always been hand in hand. So they are separated now seems to be a lose lose situation for both side of the trade.

Just to clarify, the acquisition also includes all Bond and Bond stores.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10853046

Must say I'm also sceptical about this move on WHS' part which signals an abrupt switch from their traditional discounting model. Let's hope they know what they're taking on.

Stranger_Danger

10-12-2012, 12:20 PM

Big move either way. Expanding outside their bargain area into an area where the competitors sell exactly the same products. They should be able to strip out some H/O costs and get efficencies with buying maybe? I wonder if they took on the debt.

My analysis doesn't even go that deep. A dog buys another dog. What result do they want, puppies?

Hoop

10-12-2012, 12:59 PM

My analysis doesn't even go that deep. A dog buys another dog. What result do they want, puppies?

....fleas!!!

People and businesses are afraid of deflation and so they should be.
Deflation used to be common... In the USA deflation ruled most of the 19th century during its technical revolution...businesses these days have forgotten what deflation is all about and how to survive during an era of deflation which can last for decades. The last generation that experienced it are dead and it seems the successful methods of operating within an deflationary environment have died with them.

Deflation atm is localised mainly within the tech area ....how are the major businesses handling it atm?? Panasonic $9.6 B loss Sony Q2 loss $198M Samsung $17B loss LG q4 $98M loss.. I think its safe to say that the best brains in the market/product department haven't come to grips to how to operate/market their products to be a successful business within a deflationary environment....yet..

They should dust off some old 19th century economic business textbooks..eh?

Now the Warehouse folk .............ah...she'll be right mate.

percy

10-12-2012, 01:36 PM

Makes sense in some ways;
Gives WHS access to better brands.They have had too many problems with poor TVs etc.
Helps both WHS and Leemings/Bond and Bond "bulk up" to buy product at better prices.
Also helps inlogistics/warehousing.
With larger buying group,should be able to compete with NAFTA[spelling may be wrong] which includes JB Hi FI and Smiths City.
Head Office costs/distribution etc at Leemings should be able to be cut.
Makes sense for WHS and stops Leemings going broke.
Margins are very thin and with price deflation/obsolete product it is a very difficult section of retail to be in.
Went for a bit of a look at Warehouse Extra on Blenheim Road last night.Wife looked around while I read a good book on Bruce MacLaren.
Only section that looked busy was the returns department.!!!!!!!!!!!

emearg

10-12-2012, 01:39 PM

This announcement makes me happy that I sold my WHS shares years ago and decided that BGR was a better retailer. Stick with what you know Rod Duke and don't go buying into the most incredibly competitive retailing business imaginable!

In my view there are too many electronics retailers. And they have far too many staff. A trip into Noel Lemmings a few weeks ago on a week day resulted in me being pounced on by four staff over the 10 minutes I was in their shop. They were far too aggressive which made me wander down to Harvey Norman and spend my money there. That and the fact they don't sell Bosch which was a pity.

How can they be making a decent margin when they have constant sales, will reduce prices even further when you start playing them off against each other, Cherrytree (I'm not a member) and the internet in general??!

Synergies? Well yes but at what cost and will they be worth it?

Personally if I was a shareholder and I got a vote in this decision I would vote against it.

ratkin

10-12-2012, 03:21 PM

NoeL Leemings are a nothing store, they sell nothing that makes a person want to go there. They not
cheap and they sell stuff you can buy in any of the other big box retailers.

Our toaster broke down last week , went online to check out prices and range , Noel Leemings stocked
the same as Briscoes , except they were all aroiund thirty dollars more expensive.

If The warehouse want to make a success of it , they will have to make them far more competitive price wise .
they could also lay off half the staff , the ones that follow and pester the customers as soon as they walk in the door

Blendy

10-12-2012, 06:01 PM

I wonder how well Noel Leemings do being part of FlyBuys, and whether this will change?

percy

10-12-2012, 07:28 PM

I wonder how well Noel Leemings do being part of FlyBuys, and whether this will change?

Don't think they will want to change this,as it [flybuys] are a big part of Leeming's business.

10-12-2012, 08:20 PM

Don't think they will want to change this,as it [flybuys] are a big part of Leeming's business.
I would have thought it was one of their main selling points. A sony tv is a sony tv so unless you compete on price, you compete on something else, ie. flybuys.

ENP

10-12-2012, 08:50 PM

The mood at TWL certainly seems to be very up-beat about the purchase, especially from Mark Powell.

Looking over the numbers, and the competitive nature of electronics, I'm not so sure if it was the right move. Obviously, the ability to get into the lucrative brands such as sony, panasonic, etc for TV's and the likes is good. However, one only has to look at the fall from grace of JB HIFI, Harvey Norman, etc over the past few years to see how much of a competitive and cyclic industry it is, one that is very dependent on the loosening of credit and spare cash to spend for consumers.

Saying this however, TWL has tried expanding into Australia and failed. Tried matching Foodstuffs and Progressive by going into grocery and failed. What else is there left to do with regards to expansion. Warehouse Stationary and Warehouse stores are just about everywhere they need to be all over NZ. Opening new ones will only take away sales from current stores. As what has been seen with some of it's new stores.

Retail sector and TWL as an investment... I wouldn't go near it right now personally.

Halebop

10-12-2012, 09:05 PM

The Leeming purchase makes sense to me.

The purchase price isn't particularly expensive and the retail cycle is at a low.

WHS can't even offer a browngoods product that would entice me to look let-alone purchase. Whitegoods are worse. Buying Noel Leeming side-steps a supply chain issues for WHS (Major retail competitors stopping manufacturers from supplying). Economies of scale must be available from both volume and procurement perspective, perhaps even marketing. There are potential opportunities from a "store-with-a-store" perspective if WHS doesn't have the pulling power in this category.

Demographically, first home buying (and therefore white & brown goods sales) will pick up in the next 3-4 years - probably just enough time for WHS to position.

stoploss

10-12-2012, 11:35 PM

CEO said they purchased this debt free on the news tonight , so maybe a bit of a bargain ....

Jaa

11-12-2012, 07:01 AM

WHS are pretty good operators in their core space.

They have very good buying teams (including an office in China), very efficient warehousing and distribution in NZ, some of the best IT systems in NZ business and a solid marketing department. These are all things they can help NLG with which has never really been able to invest in much.

11-12-2012, 07:56 AM

CEO said they purchased this debt free on the news tonight , so maybe a bit of a bargain ....Without debt, the purchase price does look at lot more appealing and increases their presence immensely. Will be interesting to see what the do with it (ie. whether synergies will be behind the scenes H?O stuff only or something bigger (store within a store)).

Jaa

11-12-2012, 08:46 AM

Guffaw, guffaw ... The others must be absolutely crap then.

Generally they are, spreadsheets and access databases (ie stopgaps) everywhere.

I had the pleasure to work a bit with the WHS team once and the difference couldn't have been greater. NLG was always at the other end, all kinds of incompetence on the smell of an oily rag.

Hoop

11-12-2012, 10:19 AM

It seems ST posters investors and Mr Market are not worried about the deflationary environment.
I think this deflation environment factor is just as important or more important than the synergies and almagamations of similiar operations, increased efficiencies, availabilities and accesses to new suppliers and customers, as well as extra efficiencies through shared data bases that the company as a whole will be able to obtain though this buy up.

So I'll harp on about this deflation thing like a dog with a bone.....as doing business in a deflationary environment requires a whole new set of skills, a change of operating behaviour, thinking and a set of business strategies to try these disciplines together ....

If a company decides to enter into a deflationary segment of business they should already have a business strategy available to cope with that environment they are entering. WHS Investors should educate themselves so as to identify the behaviour and strategies that WHS will adopt and they will be in a position to judge if WHS has made the right set of choices.

Amazingly there is scarcely any data on the internet about application of business strategies during deflationary times....I now know why big tech companies are having big losses. I thought there would be info from Japan as they have had a type of deflationary environment for 20 years now yet the research is hard to find

I found this little very simple snipet from http://www.gaebler.com/Business-Strategies-for-Deflationary-Times.htm...unfortunately it hardly scratches the surface but it gives shareholders an idea of what they should be looking at and researching for more detailed info when investing in a company that is operating in an deflationary sector of the economy. The shareholders can then be able to question the company on its business strategies that it adopts.

Strategies for Business Owners

Plan for multiple scenarios. Scenario planning is the best business defense against deflation. A typical scenario might see across the board price decreases and belt-tightening. If you've planned ahead, you will be prepared to deal with the possibility of supply cost increases while the prices you charge for your products is forced down.
Avoid long-term vendor contracts. If you believe that deflation is likely to occur, avoid locking yourself into long-term contracts with suppliers and vendors. Instead, let the market dictate the cost of supplies and buy short-term. Conversely, you'll want to lock your customers into long-term contracts as soon as possible.
Consider buying capital. If you've planned ahead, deflationary periods can be ideal times to purchase capital, especially when equipment prices drop at a rate that is equal to or greater than the average rate of deflation.

JPW

11-12-2012, 10:39 AM

I was listening to Mark Powell on News Talk ZB last night and thought he explained the purchase decision of NL rather well. He seemed pretty down to earth and honest.

Forsyth Barr not seeing real value in the purchase.

They've also downgraded their recommendation from "hold" to "reduce".

http://www.nbr.co.nz/article/warehouse-downgraded-after-non-core-leeming-buy-dw-133794

winner69

11-12-2012, 10:54 AM

Hoop - I think The Warehouse and others have been struggling with price deflation for a few years now .... most have been selling more things and making less money

Maybe greedy landlords and staff with expectations of a pay rise every year need to play a role ..... then they can get even more ecrewed by councils and rates and electricity companies with their power bills .... sad world eh .... tearing itself apart in an unsustainable way

winner69

11-12-2012, 12:49 PM

Hoop - below are the price deflators from Stats NZ Retail Sales data - the %ages are how much prices have fallen over the last 2 years

Yes appliance stores the biggest falls but you can see that even department stores (The Warehouse) have suffered a fair bit of deflation as well

Tough for a lot though - food and fuel just keeps going up

ratkin

11-12-2012, 12:53 PM

The Leeming purchase makes sense to me.

The purchase price isn't particularly expensive and the retail cycle is at a low.

Is the cycle reaally at the low? The internet is changing things for ever.
The Comet stores that just went broke in the UK were quite similar to Noel Leemings
The big box retailers just cannot compete with the etailers. NZ is behind in that
respect but it wont be long before we catch up.

Another personal anecdote, was on the phone to my old mum in England the other day,
she was complaining her TV had broken down and being 85 was a bit stressful for her
as not easy to get to shops or know what to buy.
Thought i would do good deed and went on Amazon UK and bought her a sony Bravia,
it arrived on her doorstop the next day, and was far cheaper than she could of bought
from any of the big box retailers

winner69

11-12-2012, 01:06 PM

Prices (and product costs) down 20% - maintain gross margin %age and keep operating costs the same - means one needs to sell about 25% more units to make the same amount of money - that is a heck of a lot of extra TVs eh

winner69

11-12-2012, 01:10 PM

...... was on the phone to my old mum in England the other day,
she was complaining her TV had broken down and being 85 was a bit stressful for her
as not easy to get to shops or know what to buy.
Thought i would do good deed and went on Amazon UK and bought her a sony Bravia,
it arrived on her doorstop the next day, and was far cheaper than she could of bought
from any of the big box retailers

Ratkin --- that's one of the nicest things I have heard for ages

You are a hero - esp to you Mum eh

I'm sure Santa will be nice to on christmas morning

BIRMANBOY

11-12-2012, 03:41 PM

Thats not good deeds old son...thats called filial duty. Whats wrong with some Pizza Hut vouchers? Smiles ALL year round Sparky not just Xmas. Bah humbug to all and to all a big ham.
Actually, it is bloody heartwarming. Good job, always nice to be able to look after your Mum.

I did my good deeds earlier in the year when my Mum was recovering from spinal surgery, then a double hip op. Basically cooked her dinner (pre-made and easily repeatable) for several weeks, helped her gad about. One of the nice things about being self employed as an investor is that when things like this happen, you can easily slot in your good deeds around business.

Tis the season, and all that. Hope everyone can use the blessings from a positive year's investing to help put smiles on the faces of loved ones.

emearg

12-12-2012, 11:10 AM

The internet is changing things slowly but surely. Have you wondered how long it will be before you can go directly to the big ticket item manufacturer and buy direct cutting out the retailer completely? Pretty easy to hop onto the Panasonic, or Sony, or whoever's website, select the product you want pay via credit card and it is delivered to you. Why have a retailer at all? Some will want one for comfort, but as long as the manufacturer can provide support warranty support how much value does a retailer retailer add? Now that will be a real problem for these types of stores!

This approach is less likely to effect most of the lines stocked by Warehouse, Briscoes etc. But large appliance retailers?

An example of sorts was recently we were looking for LED downlighting for the kitchen renovation. Over a grand at Lighting Direct. Over $700 at Bunnings. Almost $500 on TradeMe. $220 delivered to the door when ordered direct from China. Like I said, the internet is changing things...

12-12-2012, 11:24 AM

Emearg - Apple does that (ie. with iphone, ipad, ipod) but then they are very strict so their prices are constant, whether bought directly from them or a retailer. To offer a lower price, you have to parallel import them.

arcticblue

12-12-2012, 12:06 PM

Emearg - LED lights, do you have a recommendation for where to get them from?

Cheers,
ArcticBlue

PS: sorry I know it's slightly off topic.

Halebop

12-12-2012, 12:12 PM

The internet is changing things slowly but surely. Have you wondered how long it will be before you can go directly to the big ticket item manufacturer and buy direct cutting out the retailer completely?

For a manufacturer channel conflict dictates what you can and can't do. If you try to disrupt the status quo your retailers (Both online and bricks and mortar) retaliate via alternate manufacturers and volumes suffer.

BIRMANBOY

12-12-2012, 05:45 PM

Well SP is still dropping which is slightly strange since the media/publicity/ forums seem to be equally divided on relative merits of the purchase. I guess the punters dont like change. Personally am happy to see it drop so I can buy more but just goes to show the effects of change and uncertainty on the market.
I did go online last weekend and purchased some stuff from WHS stationary.....fast, efficient and very user friendly. Delivered free on Monday. LIke it...opening up a whole new market of buyers for WHS. Their programmers are on to it. I did a google search for Twix bars since my usual source New World has discontinued them. Lo and behold one of the early results said WHS..click click...if you buy more than $50 get free delivery..good oh so added some stationary supplies and gum. I see this online portal as being a game changer and hugely positive for the future.

henry

12-12-2012, 06:20 PM

On noel leemings end of year report 2012 it had listed stock holdings of around the $81 million mark up for $70 million the year before, so it was possible high than this when the warehouse purchased the other day. sounds like a good deal based on stock holding alone, and it was basically a fire sale on Gresham part???

Anyway market doesn't look + on it...

macduffy

12-12-2012, 07:04 PM

Hi henry.

Welcome to the forum!

Good spot on the year-end stock numbers. I wonder though just how much stocks might have been run down since that date, given the liquidity problems that they were probably experiencing? Price deflation in this sector might also be an issue but either way it doesn't appear that WHS overpaid for the business. Providing they can now make it earn a dollar, of course!

Cheers

janner

12-12-2012, 07:21 PM

For a manufacturer channel conflict dictates what you can and can't do. If you try to disrupt the status quo your retailers (Both online and bricks and mortar) retaliate via alternate manufacturers and volumes suffer.

You may well be correct Halebop.. But I think that eamearg is pointing in the right direction..
Manufacturers do not want to be bothered with rats and mice buyers..

Distributors do ..

Import the containers .. Devan.. Store.. and deliver to order..

Mainfreight maybe ???

janner

12-12-2012, 07:28 PM

Sorry .. Not explained well ..

Manufacturers working in with Distributors.. All on line..

The possibilities are huge for the distribution industry..

All bad news for the retailer..

emearg

13-12-2012, 01:51 PM

For a manufacturer channel conflict dictates what you can and can't do. If you try to disrupt the status quo your retailers (Both online and bricks and mortar) retaliate via alternate manufacturers and volumes suffer.

Right now that may be how it is done (I wouldn't know) but is that how it will be done in five or ten years? That is a very long time in this age of rapid change. We should mark our diaries and check back in 2017 and 2022...

The big appliance dealers won't be worth much if they aren't making a reasonable profit. I'm going to suggest that is why WHS got such a good price. I think there needs to be consolidation. I think WHS should merge the brands. Do they need Noel Lemming and Bond & Bond? They would cut costs dramatically by just having one customer facing brand. I'm not sure the benefit of brand loyalty is worth keeping an entire chain going?

The market doesn't seem to be liking the news. Down again today.

percy

13-12-2012, 02:08 PM

[QUOTE=emearg;387640]

The big appliance dealers won't be worth much if they aren't making a reasonable profit. I'm going to suggest that is why WHS got such a good price. I think there needs to be consolidation. I think WHS should merge the brands. Do they need Noel Lemming and Bond & Bond? They would cut costs dramatically by just having one customer facing brand. I'm not sure the benefit of brand loyalty is worth keeping an entire chain going?

Consolidation will happen with buying,distribution,head office and other overheads,but they will keep the retail brands.

13-12-2012, 02:14 PM

percy

13-12-2012, 02:25 PM

I dont see the point in the two brands. Aren't they competing on price with themselves (I am sure B&B would price match NL and vice versa if you got a sale person to offer a discount). And take Newmarket for example. Stores across the road from each other means rent/wages and other opex is twice what it should be.

Yes true ,but it is the buying terms,distribution where the costs are.Same warehouse can supply Warehouse,Warehouse Stationary,Leemings and Bond and Bond.
You will note Smiths City does this with Smiths City ,Power store,LV Martin and Furniture Concepts and Clearance Centre.They take out back office costs.Often same suppliers,often different models.
Electrical retailers get big end of year extra rebates and discounts depending on volume of sales.Without Leemings WHS had difficulty getting good TVs etc to sell.
You will watch Dick Smith go out the door without a big brother.

macduffy

13-12-2012, 03:05 PM

It's logical to assume that Gresham Group bought NLG with the intention of flicking it on in early course, possibly NLG and B&B separately if the right buyer(s) came along. And why go to the trouble of expensive redundancy payouts and system rejigs if that's the intention?
So then the game changed and no-one was interested and it became a matter of cutting losses and exiting the scene. I'd question whether there is much brand loyalty involved, except where the Fly Buys membership is involved but that can be handled. LV Martin was a bit different, having a strong franchise in the Wellington region but I doubt whether NLG or B&B have any similar strong positions. Happy to be put right if this is not the case. So I now expect WHS to have to bite the bullet with store mergers and closures if they're going to make this acquisition pay.

13-12-2012, 03:52 PM

MacDuffy - agree with most but NL and B&B would never be separated. there is a reason McD's has kept its hands on the georgie pie name for 20+ years after closing - you dont give a competitor an established brand.

I foresee no pay rises and no hiring at NL/BB for the next few years as they let natural attrition and store mergers take care of the below management staff level. Management should see what they've got coming and find another job if they can. Leases in duplicate or non prime areas wont be renewed.

macduffy

13-12-2012, 04:35 PM

Point taken CJ.

My musing on the possible separate sales of the two brands envisaged a scenario where two buyers appeared for Gresham to negotiate with. Unrealistic as things turned out, of course!

Still possible that WHS will rebrand the B&B stores, keeping B&B as a non-operating subsidiary. Unless their market research tells them not to!

Stumpynuts

14-12-2012, 11:53 AM

fungus pudding

14-12-2012, 12:01 PM

Stumpynuts

14-12-2012, 12:39 PM

For the uneducated, what has fly buys got to do with anything?

Umm, the uneducated masses out there would be heavily bombarded with WHS advertising promoting flybuys and therefore much easier to influence.

TBH I would highly doubt that WHS would introduce flybuys seeing as they already have their own bizrewards scheme (even though their bizrewards scheme is a crock of sh*t)

Flybuys would bring in the punters though IMO

emearg

14-12-2012, 01:17 PM

Has anyone thought about the possibility that WHS in the future may roll out Fly Buys across their entire brand range eg. Warehouse, WH stationery, NL/B&B.

You could be right but for this purchaser receiving loyalty rewards that I may or may not redeem (before they expire) on something I may or may not really want doesn't influence my spending at all. I look for cash saving up front. Or at least some other benefit.

Who covers the cost of the Flybuys? Does the retailer contribute? I presume so in the following comments...

Such rewards are never free. i.e. they are built into the price.

Do WHS really want to increase their prices slightly to cover the cost? Or will they accept a lower margin?

What would draw this punter back to WHS is quality. Quality product, quality service and quality support. I got sick of buying crap and no longer shop there apart for pet food on special. The last straw was a nice quite expensive stainless steel jug which developed a serious fault. I think it shorted internally. It took out the oven fuse which it was plugged into. 30 Amp I think? Anywho, I took it back with receipt in hand. I had big argument with the girl who said the warranty had expired and it was all too bad. I explained that it wasn't a general wear and tear issue (like the lid breaking) but it was a series internal fault. She wasn't moved. I requested the manager's ear. The manager granted the refund without any apology, nor any regret for the fact I had to drive 20kms to get a suitable fuse which wasn't cheap! That was it for me! Too many strikes and they were out.

Recently I found the box in the attic and noted the product came with a two year warranty. So as well as the girl being stupid and having a bad attitude the WHS system didn't even have the correct warranty loaded for the product when she scanned it.

Why would I shop there when I can go to Briscoes, buy better quality product and when things go wrong I can talk to somebody pleasant and return an item without even having the receipt (was a present in the example running through my head right now)

Right! Rant over! The Warehouse needs to up it's game and buying Noel Lemmings ain't going to help one little bit!!!

14-12-2012, 01:34 PM

Emearg:
- Flybuys can convert into AIR airdollars so they will be used (if you fly a lot)
- cost is on the retailer so agree, not good for WHS
- I see the opposite to you re quality. WHS is where you get a bargain. NL allows them to target the premium market while keeping WHS focused where it should be.

ratkin

14-12-2012, 01:53 PM

The warehouse has been going downhill since the 1990s. Back in those days the shops were crowded and you really could get a bargain.
Not anymore

emearg

14-12-2012, 02:00 PM

- I see the opposite to you re quality

You see quality product, quality service and quality support? Gosh! Please tell me which WHS you go to and I will switch! It will be worth the drive!! The three around Wellington central are shocking!

14-12-2012, 02:21 PM

You see quality product, quality service and quality support? Gosh! Please tell me which WHS you go to and I will switch! It will be worth the drive!! The three around Wellington central are shocking!Sorry. I meant direction. You want WHS to move up in quality but that isn't what its brand is based on.

Contain your laughter but by buying NL, they can use that brand to offer a higher quality product, quality service and quality support.

Blendy

14-12-2012, 03:33 PM

Has anyone thought about the possibility that WHS in the future may roll out Fly Buys across their entire brand range eg. Warehouse, WH stationery, NL/B&B.

Yes that was one of the considerations I had with my flybuys comments the other day. But i would doubt WHS would add flybuys - the costs would be too great and they don't need to attract loyalty. But i would expect they would keep it for NL as it's obviously an added value there.

fungus pudding

14-12-2012, 03:44 PM

Umm, the uneducated masses out there would be heavily bombarded with WHS advertising promoting flybuys and therefore much easier to influence.

TBH I would highly doubt that WHS would introduce flybuys seeing as they already have their own bizrewards scheme (even though their bizrewards scheme is a crock of sh*t)

Flybuys would bring in the punters though IMO

But if they thought it worthwhile, they would simply join. No real need to rush out and buy a chain of electronic retail stores to offer fly buys.

waikare

15-12-2012, 08:02 AM

Hi there,

Has anyone thought about the possibility that WHS in the future may roll out Fly Buys across their entire brand range eg. Warehouse, WH stationery, NL/B&B.

That could potentially become a game changer.

Flybuys and any other loyalty rewards system has a built in factor into the price we pay for the goods. Myself I would much prefer a cash discount.
The wife and myself have been collecting flybuys for many years, and by the time you have accumulated sufficient points to by bar of chocolate they expire. I am guessing this will apply to many others also.
Last year when I upgraded my TV at N.L. when asked if I could forgo my flybuy points for a cash discount , he said this couldn’t be done, but would offer me a large discount on any other product in the shop I may wish to purchase.
They only winners here are the loyalty rewards operators.

emearg

15-12-2012, 09:03 AM

Flybuys and any other loyalty rewards system has a built in factor into the price we pay for the goods. Myself I would much prefer a cash discount.
The wife and myself have been collecting flybuys for many years, and by the time you have accumulated sufficient points to by bar of chocolate they expire. I am guessing this will apply to many others also.
Last year when I upgraded my TV at N.L. when asked if I could forgo my flybuy points for a cash discount , he said this couldn’t be done, but would offer me a large discount on any other product in the shop I may wish to purchase.
They only winners here are the loyalty rewards operators.

Interestingly I see the Flybuys as a negative in some cases. For some they will draw in the customers and for others that will be repelled. Your comments support my thoughts. Last time I wanted a TV I went to NL and tried to get the price down but they stuck to their guns on the basis they offered Flybuys and it was a wonderful deal because of them. I didn't agree and went and spent the money else where.

Good for some, bad for others. Worth offering on that basis? Maybe? Maybe not?

emearg

15-12-2012, 09:09 AM

When shopping recently I was in a big box retailer and noticed another customer scanning the barcode on some fridges. I got chatting and discovered he was using his smart phones pricespy application to find the lowest web advertised price. It's available for Android and iPhone. A nice quick way to figure out how much you can squeeze the retailer. NL is usually at the expensive end of the list. Probably because they offer Flybuys. They need to keep up and adapt to different ways that shoppers find out information.

Stumpynuts

15-12-2012, 02:06 PM

LOL, the flybuys aspect is a very interesting aspect part of this NL purchase isn't it?

One does wonder that if WHS were in future to capitalise off their NL purchase by rolling out premium products across their entire WHS brands, not just red sheds but the stationery side as well. Also consider the supply-chain aspect - Would WHS because of their NL purchase be able to secure larger quantities of more premium brands at lower direct costs and keep retail prices the same or lower retail prices of premium products to match those of current WHS brands?

Would WHS use the store within a store concept as well? ie. walk into WHS to purchase general goods only to have people enticed by shiny TV's in the NL section of WHS?
Or vice-versa with someone coming to buy a blender or new food processor and at the same time walking over to buy some cheaper WHS brand food&drink small goods, or buying a vacuum cleaner in the NL section and then decide they want to purchase a new rug for the living area?

Of course any real smart consumer would take their time and shop around before buying or more commonly buy online, ignoring the marketing aspects of flybuys. But then if that sounds like you then you're probably not WHS' target market then are you?

ratkin

15-12-2012, 02:35 PM

Stranger_Danger

15-12-2012, 03:06 PM

I have a similar app you just point the camera at the barcode and it brings up a price comparison website

What I don't get, is why not just shop online? In other words, why are you in a shop at all?

This "price comparison" stuff really isn't a comparison at all - you're comparing someone that has rental, stock and staff overheads to someone who does not!

To utilise those extra overheads, then force a comparison against someone who doesn't have them really makes no sense to me unless people don't see any value in shops. Which takes me back to the original question, if there is not value in shops, why not just shop entirely online?

The only other rationale, and I must admit the welfare state pops into my head at this point, is that a lot of people like the convenience of shops, expect to be able to look at / touch / try things in a shop but then buy online for the rest of history, they know deep down that if everyone acted like them the whole system would fall over, but are betting that not everyone will!

I will....bow out at this stage and avoid getting philosophical.

BIRMANBOY

15-12-2012, 03:21 PM

So the question arises...were you smart enough to invest in Amazon early? And also could you put on your stargazers hat and see WHS as an early genesis/uptake of the NZ version of Amazon. I could certainly see that happening and could anyone else position themselves in that place....cant think of one. WHS is a longterm BIG buy for me.
What I don't get, is why not just shop online? In other words, why are you in a shop at all?

This "price comparison" stuff really isn't a comparison at all - you're comparing someone that has rental, stock and staff overheads to someone who does not!

To utilise those extra overheads, then force a comparison against someone who doesn't have them really makes no sense to me unless people don't see any value in shops. Which takes me back to the original question, if there is not value in shops, why not just shop entirely online?

The only other rationale, and I must admit the welfare state pops into my head at this point, is that a lot of people like the convenience of shops, expect to be able to look at / touch / try things in a shop but then buy online for the rest of history, they know deep down that if everyone acted like them the whole system would fall over, but are betting that not everyone will!

I will....bow out at this stage and avoid getting philosophical.

Jaa

15-12-2012, 05:28 PM

The reason why NLG went with and kept two brands often right beside each other was that they did some market research and found out that the average shopper goes into two appliance stories before making a purchase. They also ensured the two appeal to slightly different groups and stock slightly different products and/or brands. I would judge this a pretty successful strategy based on NLG's 25% market share in a crowded market. Most consumers would have no idea that Bond and Bond and Noel Leeming are owned by the same company.

Also all this analyst talk about a low margin is a bit silly. Yes margin is important but so is the quantum!! 1% margin on a $1000 TV is worth more than a 10% margin on a $50 piece of furniture. Even though both will have similar transport, storage and display opportunity costs.

percy

15-12-2012, 07:29 PM

ratkin

15-12-2012, 08:37 PM

Stranger_Danger

15-12-2012, 09:21 PM

GTM 3442

16-12-2012, 10:00 AM

Which suggests The Warehouse bought the wrong company.....

Do the Warehouse do finance at all these days ?

I recall some tie-in with Westpac many years back, but nothing since, if I recall correctly.

ENP

16-12-2012, 10:40 AM

Do the Warehouse do finance at all these days ?

I recall some tie-in with Westpac many years back, but nothing since, if I recall correctly.

http://www.thewarehouse.co.nz/red/catalog/cards-insurance

emearg

16-12-2012, 11:58 AM

What I don't get, is why not just shop online? In other words, why are you in a shop at all?

This "price comparison" stuff really isn't a comparison at all - you're comparing someone that has rental, stock and staff overheads to someone who does not!

To utilise those extra overheads, then force a comparison against someone who doesn't have them really makes no sense to me unless people don't see any value in shops. Which takes me back to the original question, if there is not value in shops, why not just shop entirely online?

The only other rationale, and I must admit the welfare state pops into my head at this point, is that a lot of people like the convenience of shops, expect to be able to look at / touch / try things in a shop but then buy online for the rest of history, they know deep down that if everyone acted like them the whole system would fall over, but are betting that not everyone will!

I will....bow out at this stage and avoid getting philosophical.

You should check out Pricespy. Here is an example http://pricespy.co.nz/product.php?p=1131821

You will note it is comparing lots of retailers that have stores. So it seems a fair comparison to me....

emearg

16-12-2012, 12:05 PM

I will tell you all now how the warehouse should proceed , it is in my opinion the only way they can make this work.

They need to sell everything on a buy now pay later basis , they need to ruthlessly exploit the less well off sections of society , sell them stuff on the never, never at exhorbitant interest rates. These are the people who cannot buy online because they dont have the money to buy the products outright.
They should also move into the rent to own sector like thorn group . From there they can start to move into the lucrative short term loan market "payday loans"
Will they do it ? who knows , but if i was running the company i would be taking advantage of my greatest asset , the multitudes of poor and financially challenged masses that walk into my shops every day

That would be interesting!

Such an approach would certainly change the brand image!

The extra overheads in selling stuff to people who can't or won't pay may be more undesirable than you think. Huge numbers of staff required to chase the debts, most of which end up with debt collectors and are never recovered. There is a segment of the population (a chunk of your new target market) that buys stuff with no intention of ever paying. That is what they do. Different names, addresses are used on a daily basis. I say this having done a bit of credit recovery work for a large telco in the 90's. So perhaps things have changed with improved technology? I suspect they haven't though!

Think of the huge additional working capital requirements. How much stock to WHS have at any one time? Imagine if most of that wasn't being paid for for two or three months? If at all.

Still, it would do wonders for debt collectors and softball bat retailers...

Balance

16-12-2012, 12:58 PM

That would be interesting!

Such an approach would certainly change the brand image!

The extra overheads in selling stuff to people who can't or won't pay may be more undesirable than you think. Huge numbers of staff required to chase the debts, most of which end up with debt collectors and are never recovered. There is a segment of the population (a chunk of your new target market) that buys stuff with no intention of ever paying. That is what they do. Different names, addresses are used on a daily basis. I say this having done a bit of credit recovery work for a large telco in the 90's. So perhaps things have changed with improved technology? I suspect they haven't though!

Think of the huge additional working capital requirements. How much stock to WHS have at any one time? Imagine if most of that wasn't being paid for for two or three months? If at all.

Still, it would do wonders for debt collectors and softball bat retailers...

Will not happen.

Steven Tindall directs the company in his own image - as a deeply religious individual.

Stranger_Danger

16-12-2012, 02:51 PM

Really?

I must confess, "hallelujah" isn't the first word that comes to mind when I enter a Warehouse store. The first thing I notice is that the exact sort of people that Ratkin et all would seek to attract, already in the store, already spending money they don't have. All he proposes is going after their existing core customer more ruthlessly.

I don't claim to be a religious person, but if I wanted to get into heaven, importing a whole lot of stuff from third world slums and selling it to the people who no longer have manufacturing jobs would not be the way I'd choose to go about it.

BIRMANBOY

16-12-2012, 03:22 PM

Come on SD..money and its pursuit has always been the most religious of pursuits. One of the wealthiest orgs internationally is the Vatican.
Really?

I must confess, "hallelujah" isn't the first word that comes to mind when I enter a Warehouse store. The first thing I notice is that the exact sort of people that Ratkin et all would seek to attract, already in the store, already spending money they don't have. All he proposes is going after their existing core customer more ruthlessly.

I don't claim to be a religious person, but if I wanted to get into heaven, importing a whole lot of stuff from third world slums and selling it to the people who no longer have manufacturing jobs would not be the way I'd choose to go about it.

emearg

07-01-2013, 02:40 PM

It is still tough out there:
http://www.stuff.co.nz/business/8150197/Profits-plunge-at-Harvey-Norman

winner69

07-01-2013, 03:09 PM

It is still tough out there:
http://www.stuff.co.nz/business/8150197/Profits-plunge-at-Harvey-Norman

Pretty slack reporting here .... if they had a look at the other Harvey Norman com panies as well they would have found Gerry et al would have done wuite well in NZ last year .... not this profits plunge sort of headline

One of NZ largest property owners as well .... that helps

fungus pudding

07-01-2013, 03:35 PM

macduffy

07-01-2013, 04:33 PM

Pretty slack reporting here .... if they had a look at the other Harvey Norman com panies as well they would have found Gerry et al would have done wuite well in NZ last year .... not this profits plunge sort of headline

One of NZ largest property owners as well .... that helps

The sort of property that Gerry owns rely heavily on healthy retailing to maintain their values. A double whammy, I would think, if profits don't improve.

winner69

07-01-2013, 04:40 PM

Agree .... but then that applies to all who all own big chunks of retail related property

Bunnings is a good case .... haven't made much at all in NZ since they came here with their big boxes ..... but then they hocked off a few sites last year to more than willing investors

percy

07-01-2013, 06:28 PM

Harvey Norman is difficult to understand as each store is made up of 3 or 4 separate franchises,ie one for electrical,one for beds,one for lounge suits.The master francishor GH owns the brand,and charges overheads for buying,rent,promontion,hire purchase etc.So while GH makes a quid the franchisee's may not.
I noted PHB [pharmacy brands] increased their profis while the pharmacies they supplied, revenue and profits were down.
Macduffy's post is "on the money."

kiwitrev

16-02-2013, 01:44 PM

BIRMANBOY

16-02-2013, 03:54 PM

All good thoughts..added 10000 at 2.51.....cock adoodle dooooo!!
Well I'm surprised no-one has thought WHS worthy of a post in recent times. Look at the recovery in SP over past 6-8 mths, up 40% from about $2.50 to closing $3.54 Friday. That's spectacular. In for a modest sum as dividend play which is what this coy is all about and currently returning gross 8%. Half yr report early March will be all revealing and if we believe media reports on retail numbers SP might have room for improvement. Thoughts anyone?

corporateraider

16-02-2013, 05:30 PM

All good thoughts..added 10000 at 2.51.....cock adoodle dooooo!!

What's Burger King got to do with this?

emearg

16-02-2013, 07:49 PM

Well I'm surprised no-one has thought WHS worthy of a post in recent times. Look at the recovery in SP over past 6-8 mths, up 40% from about $2.50 to closing $3.54 Friday. That's spectacular. In for a modest sum as dividend play which is what this coy is all about and currently returning gross 8%. Half yr report early March will be all revealing and if we believe media reports on retail numbers SP might have room for improvement. Thoughts anyone?

Not that spectacular when compared with some of the others.

Check out post 20 for comparison posted a week ago:
http://www.sharetrader.co.nz/showthread.php?9058-Retail-the-sector-to-be-in/page2

Personally I won't be touching them again (owned them about 5 years ago) as they bought a new noose called Noel Lemmings. Their old noose was in Aussi. They should stick to their knitting, but I'm not too sure what that is anymore...

kiwitrev

16-02-2013, 09:29 PM

BIRMANBOY

16-02-2013, 09:38 PM

LOL you mean KFC I assume since they are the chicken kings. Hey its a good fit...I can see KFC outlets replacing the Gardening section in WHS...partnering is the new growth. Zed energy station near us just had an overhaul and added a Burger King drivethrough..very busy. So I'm guessing that recent surge in SP for WHS is a stealth takeover by Restaurant Brands.
What's Burger King got to do with this?

Vaygor1

17-02-2013, 01:52 AM

What's Burger King got to do with this?

LOL you mean KFC I assume since they are the chicken kings. Hey its a good fit...I can see KFC outlets replacing the Gardening section in WHS...partnering is the new growth. Zed energy station near us just had an overhaul and added a Burger King drivethrough..very busy. So I'm guessing that recent surge in SP for WHS is a stealth takeover by Restaurent Brands.

Zed should look at setting up a knackers yard beside the drive through and help BK lower the cost of getting all that juicy horse meat into their burgers.

emearg

17-02-2013, 10:55 AM

emearg
That post you referred is out of date as far as WHS is concerned, showing 20% gain when in fact it is now 40%, so I say again it is spectacular. If you expect to better those sort of gains over 12 mths you would have to be hard to please.

Well naturally the numbers have changed as a week has gone by so here are some fresh numbers for you:
According to NZX.com today, WHS has gained 37.74% in the past year. BGR 64.24%. HLG 41.56%. PPL 80% etc

What I or you expect isn't the point.

The point is that the rise of WHS hasn't been as spectacular as most of the other retail stocks.

So why get so excited about WHS? Why not get excited about retail stocks in general?

Do you believe WHS has a lot further to climb when compared to the other retail stocks? Why?

BIRMANBOY

17-02-2013, 12:25 PM

Good lateral thinking there Vaygor1 ... Phar Lap and chips and hold the mayo will be a challenge for the marketing dept but we can do it. PS dont want to add to the conspiracy theorists armoury but have you ever seen a breakdown of the geographic proximity relationships between Maccas, BK, Mad Butchers and well known racecourses? Can it be coincidence?

Zed should look at setting up a knackers yard beside the drive through and help BK lower the cost of getting all that juicy horse meat into their burgers.

Vaygor1

17-02-2013, 08:20 PM

Good lateral thinking there Vaygor1 ... Phar Lap and chips and hold the mayo will be a challenge for the marketing dept but we can do it. PS dont want to add to the conspiracy theorists armoury but have you ever seen a breakdown of the geographic proximity relationships between Maccas, BK, Mad Butchers and well known racecourses? Can it be coincidence?

Haha. Brilliant piece of work there Birmanboy.

Actually, I sat next to Peter Leitch in Christchurch at the 1st ever Warriors match in history - a pre-season game against Canterbury 18-Jan-1995. He was eating a BK Whopper wit cheese and even back then he managed to get a bit stuck between his teeth.

kiwitrev

17-02-2013, 09:06 PM

BIRMANBOY

17-02-2013, 09:38 PM

OH..oh oh tres droll VG. I'm off to a bed with a smile on my dial and a nice carrot next to my stall for a night-time snack. Thanks for the laughs.
Haha. Brilliant piece of work there Birmanboy.

Actually, I sat next to Peter Leitch in Christchurch at the 1st ever Warriors match in history - a pre-season game against Canterbury 18-Jan-1995. He was eating a BK Whopper wit cheese and even back then he managed to get a bit stuck between his teeth.

emearg

17-02-2013, 10:42 PM

emearg
If you took the time to correctly interpret my original post it was in reference to WHS as a dividend stock, still 8% at this newly elevated level. Most of us can't be in all stocks (perhaps you can) and if divvy is your thing WHS is still an OK bet and likely to get better should they turn the business around as it looks quite possible

My comments were responding to you saying how spectacular the share price recovery was. If you were only focused on the dividend aspect of the stock why talk about the share price recovery?

If you don't want comments about part of your posts leave that part out.

Minerbarejet

04-03-2013, 01:18 PM

Agree. On the ball and above average outfit Torpedo 7.

Halebop

04-03-2013, 04:21 PM

This is the 2nd "capability" acquisition Warehouse have made. Time will tell if execution is successful but it seems their strategy is to fill the gaps. Predictions for the future:

Better electrical product range or Noel Leeming branded stores within Warehouse Stores (maybe even combined with some Noel Leeming store closures)
Improved online offer from Warehouse

They say bad news comes in threes. Do acquisitions?

BIRMANBOY

04-03-2013, 04:32 PM

Thats "bad" news...this is "good " news.
This is the 2nd "capability" acquisition Warehouse have made. Time will tell if execution is successful but it seems their strategy is to fill the gaps. Predictions for the future:

Better electrical product range or Noel Leeming branded stores within Warehouse Stores (maybe even combined with some Noel Leeming store closures)
Improved online offer from Warehouse

They say bad news comes in threes. Do acquisitions?

ENP

05-03-2013, 01:05 PM

It's looking increasingly like WHS have got one of the big management consultancy firms onboard ...

No management consultants. Just a great CEO in Mark Powell.

TWL cannot expand into Australia or grocery anymore and the growth of Warehosue Stationery is slowing a bit with less new stores year on year. So going into more branded products in electronics and now a bigger foothold with online shopping is the most logical place for expansion as well as store refits which is constantly on-going.

Minerbarejet

08-03-2013, 08:48 AM

WHS announcement just gives you enexpectorated error. Makes you want to spit.

Minerbarejet

08-03-2013, 08:54 AM

Good div 15.5

Minerbarejet

08-03-2013, 10:10 AM

Good div 15.5
whs in orbit this am:D

henry

08-03-2013, 11:58 AM

Sony TV's to be sold at the Warehouse and Bond and Bond to Go, The changes are starting to take place. What next???

kiwitrev

08-03-2013, 12:25 PM

WHS have just gone from spectacular to stellar (and more to come)

percy

08-03-2013, 04:13 PM

Sony TV's to be sold at the Warehouse and Bond and Bond to Go, The changes are starting to take place. What next???

More on line deals, as that is where they are achieving real growth.

BIRMANBOY

08-03-2013, 04:23 PM

Hear that rumbling...? Thats me purring.Last two divs have returned annual 8.67% yield on my investment...plus imputation credits. Long may it run.

macduffy

08-03-2013, 04:49 PM

From my post of 13 December.

Speculation becomes reality.

BIRMANBOY

08-03-2013, 04:55 PM

Are we talking the same company? the dividends have been good for years!!! See below. Whats disappointing about those? Also its a long bow that would extrapolate that this is some sort of macro of the NZ economy. WHS has way exceeded many others. Its good for WHS but generally retail is a not a sector to be invested in as a "everyone a winner" scenario. As a general indicator of where NZ is going unfortunately its a double edged sword.... WHS is appealing to the budget minded shopper. So WHS sales up...whoops NZ disposable income has dropped.

Final 2012
6.5
2.79
14 November 2012

Interim 2012
13.5
5.79
19 April 2012

Final 2011
6.5
2.79
16 November 2011

Interim 2011
15.5
6.64
20 April 2011

Final 2010 Special
5.0
2.14
17 November 2010

Final 2010
8.5
3.64
17 November 2010

Interim 2010
17.0
8.37
30 March 2010

Final 2009 Special
10.0
4.93
18 November 2009

Final 2009
5.5
2.71
18 November 2009

Interim 2009
15.5
7.6
21 April 2009

Final 2008
5.5
2.71
19 November 2008

Interim 2008
15.5
7.6
16 April 2008

Final 2007 Special
35.0
17.2
28 September 2007

Final 2007
5.5
2.71
28 September 2007

Interim 2007
12.0
5.91
26 April 2007

Final 2006
5.5
2.71
27 November 2006

Interim 2006
10.50
5.17
24 April 2006

Final 2005
4.00
1.97
21 November 2005

Interim 2005
10.50
5.17
26 April 2005

Final 2004
4.00
1.97
22 November 2004

Interim 2004
10.50
5.17
26 April 2004

Final 2003
4.00
1.97
24 November 2003

Interim 2003
10.50
5.17
22 April 2003

Final 2002
4.00
1.97
25 November 2002

Interim 2002
9.50
4.68
22 April 2002

Final 2001
4.00
1.97
26 November 2001

Interim 2001
8.50
4.19
23 April 2001

Final 2000
4.00
1.97
27 November 2000

Interim 2000
17.0
8.37
24 March 2000

Interim 2000 Special
18.0
8.87
24 March 2000

Final 1999
6.00
2.96
26 November 1999

Final 1999 Special
6.00
2.96
26 November 1999

Interim 1999
13.0
6.40
16 April 1999

Interim 1999 Special
18.0
8.87
16 April 1999

Final 1998
7.50
3.69
30 November 1998

Interim 1998
6.50
3.20
01 May 1998

Final 1997
4.00
1.97
28 November 1997

Interim 1997
6.00
2.96
02 May 1997

I think from a macro perspective on the NZ economy this result is very good for NZ. Ive been invested in WHS for while and for the most part it's been pretty disappointing BUT things are very much on the improve, which is great for the WHS investment, but to see the retail sector in NZ start to show this kind of improvement I think bodes very well for the Economy too, and that for me is of much more importance!!

macduffy

08-03-2013, 05:12 PM

percy

08-03-2013, 05:58 PM

I read turmeric's comment in the sense of WHS' recently improving results auguring well for the retail trade and for the NZ economy in general. Briscoe's result would tend to bear this out, although that company has been a top performer in both good and difficult conditions.

Same store growth is poor.Real growth is coming from on line sales.
Briscoes are finding the same.
Postie Plus would appear to have lost market share to WHS.

BIRMANBOY

08-03-2013, 08:35 PM

I might agree if there was any sustained evidence stretching over a number of years...but all the buzz I hear and see about retailing is its very, very difficult and has been for several years. Most of my customers are retailing and again very few are doing anything other than making ends meet. Major problem facing retailers generally is rising rents and expenses and static sales especially in main st and mall locations. Briscoes Group has done well but my guess is that its on the back of Rebel Sports and not Briscoes or Living and giving or whatever they are called. Every time I have been into Briscoes its a deserted cavern. Successfull retailing in my opinion will be those that can control their rents by owning and lease-backs and incorporating online sales. Retail as a sector for investing needs very carefull selection.
I read turmeric's comment in the sense of WHS' recently improving results auguring well for the retail trade and for the NZ economy in general. Briscoe's result would tend to bear this out, although that company has been a top performer in both good and difficult conditions.

BIRMANBOY

08-03-2013, 08:47 PM

There are too many variables too compare re your GFC point. Firstly they were not getting any online sales at that point. Secondly if WHS sales did fall how do you know disposable income didnt go up? Maybe it went onto pay mortgages, holidays, repay loans etc. etc. Its hard to measure...is there any measure? My comments were based on calculated but unprovable common sense. That is ...any given day people will buy x number of shoes, hammers etc. If they have less money in their pocket they will buy the cheaper (WHS) option. If they have more available they will buy a better quality "brand name" thereby spending more.
Hi BIRMANBOY and macduffy,
Yeah, firstly I was talking about the SP movement since I invested being disappointing, not the dividends, for sure the dividends have been great! Secondly, I dont have the numbers so I will happily be put in place here, but I'm not sure I buy into your argument about WHS sales up = NZ disposable income down. I recall WHS sales falling quite a lot during the GFC so the reciprocal of your argument would suggest NZ disposable income must have gone up, which wasn't the case. Maybe I am misinterpreting what you are saying though?
And yes my comment was intended macduffy says "recently improving results auguring well for the retail trade and for the NZ economy in general."
Hope that all makes sense I am in a hurry so havent had time to read this and think this over too carefully.

macduffy

09-03-2013, 09:04 AM

Briscoes Group has done well but my guess is that its on the back of Rebel Sports and not Briscoes or Living and giving or whatever they are called. Every time I have been into Briscoes its a deserted cavern.

Not so in the latest year. Briscoes and L&G stores EBIT rose 12%, Rebel Sport 13%, ie spread across the whole group.

Interesting too that while their online business is thriving, they are planning a 30% increase to floor space of the main Wellington store.

Apologies :blush:

Meant for the BGR thread

kiwitrev

09-03-2013, 11:11 AM

Food for thought. Morninstar now have a sell on WHS and valuation of $3! Don't know how their highly qualified and paid analysts come to that conclusion. Any views?

BIRMANBOY

09-03-2013, 11:15 AM

Their brokerage figures for the month are a bit low?
Food for thought. Morninstar now have a sell on WHS and valuation of $3! Don't know how their highly qualified and paid analysts come to that conclusion. Any views?

emearg

09-03-2013, 11:21 AM

Every time I have been into Briscoes its a deserted cavern.

Struth!!???? We both live in Wellington and I would state the opposite! They are always busy when I visit. That said I usually go when they are having a sale...which should mean they are always busy!

BIRMANBOY

09-03-2013, 11:43 AM

HAh...two realities...both correct but totally diverging..reminds me of that old Sci Fi show "Twilight Zone". Maybe going in at different time portals? The time between sales is getting shorter and shorter and the amount off is always up to 30%. I never go for sales so thats probably why its deserted
Struth!!???? We both live in Wellington and I would state the opposite! They are always busy when I visit. That said I usually go when they are having a sale...which should mean they are always busy!

BIRMANBOY

09-03-2013, 12:52 PM

Let me repost your original post ..just to remind you

I think from a macro perspective on the NZ economy this result is very good for NZ. Ive been invested in WHS for while and for the most part it's been pretty disappointing BUT things are very much on the improve, which is great for the WHS investment, but to see the retail sector in NZ start to show this kind of improvement I think bodes very well for the Economy too, and that for me is of much more importance!!

Seems to me that is quite clearly is a vote for positive opportunities for retail. So what you "mean" and what you posted are different. Perhaps you should have added a disclaimer at the end such as ....But I wouldnt go so far as to actually invest in it myself. However, be that as it may. Your last sentence doesnt make any sense....or you havent worded it correctly. Now you are saying there is a even lower "shopping segment" than WHS? I love WHS as an investment and mean no disrepect but I dont think there is anything lower is there? MAybe the $1 stores but probably same demographic.
I think the problem with your logic is that is assumes that people ONLY shift into the "WHS consumer income bracket" with their income decreasing (and hence the economy struggling), what you seem to be forgetting is that there is a whole bunch of relatively poor people whose income improves along with the economy pushing them up an into that group of people who shop at the WHS.

You will have a hard time convincing me, and any economist that WHS sales and profit runs counter-cyclical to the broader economy.

Lastly, you seem to have interpreted my comment as a suggestion that retail is the secotr to be invested in, and I want to make it clear I am not saying that.

Jay

09-03-2013, 02:21 PM

Retail - MHI and HLG seem to be doing Ok - hold both done very well so far -- on paper !

Silverlight

11-03-2013, 04:30 PM

Their brokerage figures for the month are a bit low?

Just to clarify Birmanboy, Morningstar doesn't have an agenda, they sell research, that's all, so their sell buy or hold views don't generate any cash for them, and as far as I aware they are not affiliated with any brokerage houses.

BIRMANBOY

11-03-2013, 05:37 PM

Your words to use "agenda" not mine. They sell research and apparently act as advisors..thats their business and obviously people who buy the product feel its worthwhile. There must be some pressure to come up with info and presumably those who are buying will want value for money. If they fail to deliver the punters will go elsewhere so must be keeping most happy. Your clarification appreciated. I was under the false impression they were brokers.
Just to clarify Birmanboy, Morningstar doesn't have an agenda, they sell research, that's all, so their sell buy or hold views don't generate any cash for them, and as far as I aware they are not affiliated with any brokerage houses.

Vaygor1

12-03-2013, 09:24 AM

Just to clarify Birmanboy, Morningstar doesn't have an agenda, they sell research, that's all, so their sell buy or hold views don't generate any cash for them, and as far as I aware they are not affiliated with any brokerage houses.

Morningstar must have some kind of affiliation (possibly only as a service provider) with ASB Securities. As an ASB Securities customer, I see Morningstar's logo on the vast majority of ASBSecs webpages.

This topic has come up in various other threads but I'll state again that I take their recommendations with huge grains of salt. I have no idea how often they get it right, but their advice in all the shares that I am/have been exposed to has been found wanting.... long periods between updates, errors and omissions, advice that with hindsight would have cost me a fortune if I'd followed it.

I am of the view though that their intentions are sincere, like any company with a degree of integrity they are trying to provide a service, look after their customers, and make a buck in the process.

12-03-2013, 09:47 AM

Vaygor1 - I think ASB pays for that service, for the benefit of their clients, since they dont do inhouse research. Given everyones thoughts on Morningstar, I do wonder if ASB should save their money and just give us cheaper brokerage - thats why we are with them.

TimmyTP

12-03-2013, 10:21 AM

Morningstar sells its analysis, price, fundamentals and so on to anyone with willing to sign a cheque. ASB is re-branding (or not in some cases) Morningstar's data: likely that includes company profile, historical data and possibly even L1/L2, in addition to the analysis.
Other brokers - and perhaps trading systems vendors - are re-selling exactly the same data, with their own facade of varying depth.

Morningstar is a global data vendor, who acquired Aspect Huntley Pty about 6 years ago. When I met them last year, I got the feeling that their research and technology might be suffering a little from this globalisation - my personal impression only. In any case, as far as I could tell, all of their NZ research comes out of Australia Square in Sydney, so I suppose one can understand why some of their analysis can appear to be bland or worse. Possibly there is some temptation for them to provide 'what they can get away with' rather than serious, in-depth analysis.

Having said all that, I read a report written recently by researchers employed directly by one of Australia's largest institutions, which featured analysis of my employer. The parts I could directly verify were 63.7% nonsense, so the lesson for me was "if you want a thing done well, do it yourself".

Disc: I work for a trading systems vendor and we re-vend some of Morningstar's data (company info, not prices) in some regions, although not Australia or NZ.

gv1

12-03-2013, 10:26 AM

Its true morning star recommendation doesn't stand up.

macduffy

12-03-2013, 10:27 AM

Away from the subject of the thread - WHS - but several years ago I had a short term subscription to "Huntley's Your Money Weekly", a Morningstar newsletter.

Not very effective from my point of view because, like most of such publications, they take a very rigid line on their idea of "value", stocks are either correctly, under or over-valued by their calculations at any point in time and they call recommendations accordingly, Hold, Buy, Reduce, Sell and variations on these calls. Didn't seem very suitable for taking a longer view and holding long-term, IMO.
Furthermore, I didn't think that their research on NZ stocks was as thorough or accurate as that on Aust stocks. Possibly not the same attention given to them or resources available, but possibly also because I was more familiar with the local companies and thought I knew them better!

percy

12-03-2013, 11:09 AM

BIRMANBOY

31-03-2013, 01:00 PM

Just received WHS dividend in the bank..nice, plump and full of chocolately goodness...a happy bunny! Coming back from its highs hopefully will produce a few buying opps.

Jim

31-03-2013, 03:14 PM

Received mine and spend some of it on chocolates/goodies at the big red shed. All involved in the big red and blue shed

kiwitrev

31-03-2013, 07:12 PM

Some divvy recipients may be tempted to buy more shares in this seemingly never ending low interest enviroment, after all it's probably the best place to tuck a few $ (particularly for those with a "Cyprus" concern)

kiwitrev

24-04-2013, 02:31 PM

What can I say, nudging $4. Birmanboy I know you will be also be feeling the love. By the way we have two Birmans. WHS getting back as a dominant retailer. Lots going on, the moss has stopped growing.

Banksie

24-04-2013, 02:41 PM

THE WAREHOUSE GROUP LIMITED
Sale of Silverdale Centre
Following the marketing of the Silverdale Centre, announced on 8 March 2013, The Warehouse is pleased to advise that it has entered into unconditional contract with DNZ Property Fund to sell the Silverdale Centre. The recently completed shopping centre has over 23,000m2 of fully leased area on leases to a range of tenants including The Warehouse, Warehouse Stationery and Noel Leeming.
Settlement of the sale is expected to be completed on 1 July 2013. Once completed this sale is expected to realise gross proceeds of $78 million. The sale proceeds will be reinvested in the business in line with the priorities identified in the company's strategic plan.

ENDS

Wish I had some spare cash to get into this one.

BIRMANBOY

24-04-2013, 03:15 PM

Yes KT positively purring here. We have three rather elderly but very lovable fur children. I must admit to feelings of greed ...always have a hankering to sell up when faced with sizeable cap gain sitting looking at me. WHS has been having a dream run. Hope you are enjoying it.:)
What can I say, nudging $4. Birmanboy I know you will be also be feeling the love. By the way we have two Birmans. WHS getting back as a dominant retailer. Lots going on, the moss has stopped growing.

kiwitrev

24-04-2013, 03:28 PM

Always easy to get carried away when times are good, but, if as I suspect BB, you are probably like me-take the solid divs. If you cash up the next decision, as always, is where to invest the funds. It's nearly always an easier decision to buy than it is to sell when sitting on gains. It's called holding your nerve until you feel the time is right to exit.

macduffy

24-04-2013, 03:29 PM

Yes, WHS' business is looking to be in better shape these days and the SP is doing very nicely. I just wonder though how much of that is due to WHS and how much to the state of the market generally? A rising tide and all that.

Still a long way to go to the heady heights of 2006/07 but I don't expect a repeat of the takeover talk of those days. Still, $4ish is nice.

:)

BIRMANBOY

24-04-2013, 03:44 PM

Yes I call it Jekyll and Hyde time. My plundering internal pirate says ..I'll take me some of that loot and the conservative me in cardigan, walk shorts and knee socks likes the solid divs and worries about finding another similar if I sell it off.... Havent figured out how to solve it so usually do nothing:laugh:
Always easy to get carried away when times are good, but, if as I suspect BB, you are probably like me-take the solid divs. If you cash up the next decision, as always, is where to invest the funds. It's nearly always an easier decision to buy than it is to sell when sitting on gains. It's called holding your nerve until you feel the time is right to exit.

kiwitrev

25-04-2013, 08:07 AM

Hi Macduffy.Thanks for your post, always enjoy them for being constructive. Regarding the 'rising tide' comment I obtained the following information from Yahoo NZ Finance site. Very useful in comparing any stock to stock. Movement in % compared to NZX50.
WHS NZX
1 month 15 4
3 mths 25 7.5
6 mths 22 13
YTD 33 11
1 yr 52 29
2 yr 11 10
No contest clearly. No doubt there will be other stocks that have done as well if not better than WHS but no concerns WHS resurrection is on back of rising tide(albeit a small component).

macduffy

25-04-2013, 03:29 PM

Thanks, trev.

Yes, WHS has really galloped away from the NZX50 over this last year! Better management leading to better performance?

bull....

03-05-2013, 02:11 PM

was in the warehouse today havnt been there for a while was pretty busy i was surprised for time of the day maybe they are really turning around this time.
Also noted jb hifi upgrade today and harvey norman upgrade and im thinking maybe they got noel leaming at the bottom of the cycle which was pretty clever but ill reserve judgemnt to see if they can turn the clever buy into better performance for that group after their next results come out.
Anyway retail seems a pretty good space to be in at the moment.

BIRMANBOY

06-05-2013, 05:22 PM

How about $5 ish? On a roll and not much selling so appears to be long haulers controlling SP.
Yes, WHS' business is looking to be in better shape these days and the SP is doing very nicely. I just wonder though how much of that is due to WHS and how much to the state of the market generally? A rising tide and all that.

Still a long way to go to the heady heights of 2006/07 but I don't expect a repeat of the takeover talk of those days. Still, $4ish is nice.

:)

kiwitrev

07-05-2013, 07:58 AM

BBoy
Don't forget this is only early days in the turnround process so this rally can extend further. Mark Powell deserves a lot of kudos for implementing new strategy. Further good news in media today WHS now have large range of Sony products to offer.

kiwitrev

07-05-2013, 11:00 AM

And now the new staff wage scheme announced today. That's a vote of confidence by management
re future prospect of WHS.

07-05-2013, 11:21 AM

And now the new staff wage scheme announced today. That's a vote of confidence by management
re future prospect of WHS.or just them pissing away more shareholder wealth. The new policy will become a self fulfilling prophecy. They pay higher than market to retain good staff but they will also retain bad staff as they cant get a job that pays as well elsewhere. The good staff may move on to bigger and better things elsewhere.

Having said that, many years ago I had a few friends working there and the employee culture/moral etc was great (for what was a entry level job). A few are still there in more senior positions. Maybe they are trying to maintain/regain this?

bull....

07-05-2013, 11:50 AM

having a trained workforce that stays with a company long term is smart if you have ever worked in retail you will know what a pain in the behind it is to have to hire, train and hope that they will turn out to be a good employee.
heres a article on similar strategies used http://www.theatlantic.com/business/archive/2013/03/the-trader-joes-lesson-how-to-pay-a-living-wage-and-still-make-money-in-retail/274322/

I forgot to add their is a clear divide starting to take shape in NZ retail now in regards to wages ,on one side is the retail who will pay good like whs , rbd , etc and on the other side is places like food stuffs , mc donalds etc one can clearly see the talk going around schools about who the good ones are to work for and the shift in culture that could take place if ya get the drift.

Banksie

07-05-2013, 12:30 PM

07-05-2013, 01:02 PM

Banksie

07-05-2013, 01:47 PM

...tip

Whats that??? around here we just call them d*ckheads, and demand another beer ;).

BIRMANBOY

07-05-2013, 01:50 PM

Tipping is not something I would encourage for the following reasons. (a) tends to reward something that should be normal behaviour (b) will give employers a reason to keep wages lower. (c) does nothing to stimulate economy because tips are mostly "black economy" and dont get reported..Govt loses out on taxes etc. (d) once its entrenched you're stuck with it and no way back. I lived in the US for 20 odd years and as we all know tipping is part and parcel of life there. The only good thing about tipping is if you own or operate a service business your costs are obviously going to be lower in the wages dept. This doesnt help the employee of course and if you have a "bad day" and get SFA in tips then we have grumpy employees. As an employee better to know what you are getting rather than feast or famine. I had a part time job driving a limo in NY and sometimes would get tipped $100 for a job or the next job could be $11 an hour and a $10 tip...not worth the effort.
Then how about skipping the middle man and tip. I have used it to great effect to ensure good service during the night. They will always serve you first if they know they will keep any change. (only downside is it requires you to carry cash).

BIRMANBOY

07-05-2013, 01:57 PM

Yes totally agree...training staff endlessly is a waste of valuable time...would be smarter, retain value and free up managerial expertise to pay a bit more and reduce turnover. Another "war story"...(boringggg ) As a manager of business with 30 employees I spent 90% of my day training, firing and hiring because the owners refused to pay a decent wage. Poorly trained, short term employees LOSE sales and waste selling opportunities.
having a trained workforce that stays with a company long term is smart if you have ever worked in retail you will know what a pain in the behind it is to have to hire, train and hope that they will turn out to be a good employee.
heres a article on similar strategies used http://www.theatlantic.com/business/archive/2013/03/the-trader-joes-lesson-how-to-pay-a-living-wage-and-still-make-money-in-retail/274322/

I forgot to add their is a clear divide starting to take shape in NZ retail now in regards to wages ,on one side is the retail who will pay good like whs , rbd , etc and on the other side is places like food stuffs , mc donalds etc one can clearly see the talk going around schools about who the good ones are to work for and the shift in culture that could take place if ya get the drift.

07-05-2013, 02:22 PM

Whats that??? around here we just call them d*ckheads, and demand another beer ;).Aaron - is that you???

Tipping is not something I would encourage for the following reasons. I am too cheap to tip 95% of the time. I tip to reward really good service, where they have had to deal with complicate sitaution (eg. Aaron Gilmore), or to pre-empt good service.

As an extreme example of the last, at Oktoberfest in Munich, if you ask for change from your 10 Euro, it is unlikely the beer lady will come back to your table in a long time. THey are constantly busy so it makes sense they look after the tables that look after them.

bull....

07-05-2013, 03:19 PM

heres another article along similar lines to the last

http://www.newyorker.com/talk/financial/2012/03/26/120326ta_talk_surowiecki

BIRMANBOY

07-05-2013, 04:05 PM

4.25 and $5 looming? Has been an exceptional run for WHS..Obviously being perceived as good value so nice to see.

Lawt

07-05-2013, 10:04 PM

We were discussing the "living wage" at the club the other night. Would we be willing to pay an extra 50c for a jug of beer knowing everyone was getting a decent wage. The consensus was yes. I am not saying this will push up prices, but the long and the short of it is people prefer to spend or invest their money ethically.

But that completely misses the point doesn't it?
It's not what you'd be prepared to pay, it's what they'd be prepared to pay.

So they get an extra X in their pay packet - but so does the burger flipper at maccas, the grocer, the trolley boy, the gas station attendant etc etc. Would your barman now be prepared to pay all of these people their "fair" share from your extra 50c? What we would see soon enough is that the living wage was soon inadequate.

Ever noticed that what you thought was a good idea when you were drunk or stoned was not such a good idea when you sober up.
This is one of those times.

Banksie

08-05-2013, 08:40 AM

Ever noticed that what you thought was a good idea when you were drunk or stoned was not such a good idea when you sober up.

Nope - drinking my coffee and it still seems like a good idea, not sure that last beer and whisky chaser was though ;).

BIRMANBOY

08-05-2013, 09:55 AM

Economists argue about the wage-price spiral back and forth and you could spend years debating it....thats not the point here. The point is that by paying someone more you create an environment where workers feels "loved" and valued and appreciated as you will no doubt recognise when you yourself got a raise. This makes for a more productive, happier employee which in turn should encourage a better work place environment which should boost sales and profitability. The employer also gets a "feel good" factor which also encourages positive work. So the worst case scenario is, as you suggest, a "no financial advantage" but happier employer/employee/workplace. Sometimes the perception is more effective than the reality. Also as the employee sees themself being valued the possibility arises that they see their future in a more positive fashion and improve their skills and employability thereby moving up the evolutionary employment ladder.
But that completely misses the point doesn't it?
It's not what you'd be prepared to pay, it's what they'd be prepared to pay.

So they get an extra X in their pay packet - but so does the burger flipper at maccas, the grocer, the trolley boy, the gas station attendant etc etc. Would your barman now be prepared to pay all of these people their "fair" share from your extra 50c? What we would see soon enough is that the living wage was soon inadequate.

Ever noticed that what you thought was a good idea when you were drunk or stoned was not such a good idea when you sober up.
This is one of those times.