WOW - Woolworths

[Steve]

Any guesses who the ex-Director may be?

Ex-Woolworths executive charged in fraud case (http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10491461)
A former Sydney-based senior executive with Woolworths has been charged with multimillion-dollar fraud.

The 57-year-old man was arrested at his home in the northwest Sydney suburb of Castle Hill on Thursday after an investigation spanning more than eight years.
...
He has been charged with multiple counts of being a director cheating or defrauding, conspiracy to cheat or defraud, receiving a corrupt commission, corrupt inducement for advice, and money laundering.

The man's employment with Woolworths ceased about 10 years ago, the Woolworths spokeswoman said.
...
It was likely the man had regularly travelled overseas in his role representing one or a combination of the Woolworths-operated businesses - Big W, Dick Smith Electronics, Dan Murphy's and BWS - the spokeswoman said.

Officers attached to strike force Whittleford, established in 1999, worked with numerous overseas law enforcement agencies, judicial bodies and financial institutions as part of their investigations, NSW police said.

[cantab]

The most recent update was for 21 - 25% profit growth for 2008.

Why a stock like WOW would get flogged from $35 to $23 is beyond me but who's complaining.

[cantab]

Amazing , a $33 billion company, sales more than NZ GDP, and noone has anything to say, LOL!

[Huang Chung]

OK cantab....

I always look at Woolies as a safe, defensive, exceptionally well run business that, along with Coles, simply dominates the space they operate in.

With such domination in relatively small markets, I keep thinking they have to go ex-growth any time....problem is I've been thinking that for about 5 years, yet they keep producing the goods.

I'm interested in this Indian JV they have. Not material at the moment, but if it were to gain some traction....look out!

[cantab]

Hi Huang Chung, I understand Woolies have a team of 30 or so people sitting in a room fulltime looking at possible acquisitions around the globe. It seems like they do need the odd acquisition from time to time to maintain a high growth rate.

[Huang Chung]

Yet they're not an overly aquisitive company, and what they do acquire tends to be in Oz/NZ.

How much more can they squeeze out of 24 million people?

[The Big Ease]

still on 20 PE.
i wouldnt call it cheap or value just yet.

[cantab]

Yet they're not an overly aquisitive company, and what they do acquire tends to be in Oz/NZ.

How much more can they squeeze out of 24 million people?

Listening to the webcast, in response to a question, it was confirmed that 2009 profit guidance of +11 to 14% and high single digit sales increase reflects longer term growth without an acquisition. It was clear they are looking to do an international acquisition.

[whatsup]

Looks like WOW is getting slammed now, but with a pe of 20 I guess that it would be too much for it to escape this fire storm!!!!!!!!!!!!!!!!

[macduffy]

Well, it's high on my list of stocks that I'd like to buy if it ever gets cheap enough so that's some sort of good news to us non-holders!
Hardly the end of the world as far as shareholders are concerned either, with P/E still over 18 and comfortably above 52 week low.

;)

[cantab]

Woolies to take on Bunnings in Australia by going into a JV with Lowes (2nd largest home improvement retailer in the world)

[Huang Chung]

Indeed, an interesting development cantab.

What do you think about Costco's entry into the Australian market?

[COLIN]

Market must be reading that Bunnings likely to be adversely affected by this move, as WES dropped by about 5% today, notwithstanding that they came out with a "Bring it on!!" challenge to WOW. Both WOW and WES have been on my radar for a little while, given the brightening prospects for the retail sector; WES has performed relatively better over the past 6 months, and PE is lower. Being domiciled in NZ I can only speak from my knowledge of Bunnings in this country, but I should think WOW will find them hard to beat; I use them regularly as I find that their product range is so extensive.
What do others think - should I WOW or should I WES?

[cantab]

Market must be reading that Bunnings likely to be adversely affected by this move, as WES dropped by about 5% today, notwithstanding that they came out with a "Bring it on!!" challenge to WOW.

"Bring it on", heard that one before, could mean trouble ahead, lol.

WES and WOW, both probably worth owning but hold WOW only.

I hope Woolies sticks it up them.

[cantab]

Indeed, an interesting development cantab.

What do you think about Costco's entry into the Australian market?

Huang Chung, interesting alright with Bunnings making over $600m profit with a profit margin of 11% plus.

Costco could affect Woolies pricing and profit margins for some products at some of their stores close to a Costco store. Personally I wouldn't pay a subscription to join Costco just so that I could buy one or more of a limited range of products in bulk but some people will.

Any thoughts yourself?

[Huang Chung]

Well, WOW continues to 'wow' with ever increasing profits, despite our market being so small. Their move into hardware could be interesting. WES obviously has had first dibs at selecting the best sites. Will be interesting to see if they go for the 'big barn' approach like Bunnings, or smaller format stores with a more personalised/expert service as a point of differentiation. Home Hardware (under Dank's) advertises that they are the 'proper' hardware store (I believe the stores are actually owner/operator, with Danks being the supplier). Can't see this really fitting the WOW model though. Still, why did they buy Danks, when they could have by passed them completely (as they have with Mitre 10) and set up a new big box brand?....must be a reason.

Despite the entry of Costco, WOW will probably continue to be successful at milking money out of us. Aldi's have popped up all over the place in the last 10 years, with little impact on WOW. Can 't see the status quo changing all that much.

Still, at current prices, I don't think WOW is any screaming buy.

[cantab]

Nice profit and dividend from Woolies, up 13%

Profit guidance + 8 to 11% growth for 2010

I can live with that

[cantab]

NZ: announcement recently that all Woolworths, Foodtown and Countdown supermarkets will be rebranded as Countdown.

Have to say that since Woolworths took over in NZ things have improved markedly at Countdown. The prices are much reduced and vey competitive, it's great to have lots of inhouse -homebrand products and the newly renovated stores are very convenient and a pleasure to shop in. I also like having my (free) bags packed for me by the friendly staff.

[cantab]

Good to see that the ACCC have approved the takeover of DKS and that Woolies/Lowes have gone unconditional. This is great news for the Aussie consumer in the hardware space.

[h2so4]

OK one eyed cantab. "Bring it on".;):)

[cantab]

OK one eyed cantab. "Bring it on".;):)

Someone famous once said something like that!

[h2so4]

If you are happy focussing on the past that's fine, but this game is all about the future.;)

[Huang Chung]

WWF (Woolworths, WesFarmers) SMACKdown! :cool:

[cantab]

Woolies really set the cat amongst the pigeons with their entry into the Hardware market, as a result Mitre 10 is on the block and could well be going the way of the supermarket wholesaler Metcash. As a long term Woolies shareholder I'm really excited about our CEO Michael 'Deck' Luscombe, in conjunction with our partner Lowes of the USA, bringing to the Aussie hardware consumer a great range of products at everyday low prices.

Being on a 2011 PE of around 15, which in my opinion only is pretty reasonable, I couldn't resist picking up a few more WOW on recent weakness.

[macduffy]

Good move on your part, cantab!

I've wanted to own WOW for years now but they've never been cheap enough for me. About time I sorted myself out and either buy on the next market dip or forget about them!

[COLIN]

Woolies really set the cat amongst the pigeons with their entry into the Hardware market, as a result Mitre 10 is on the block and could well be going the way of the supermarket wholesaler Metcash. As a long term Woolies shareholder I'm really excited about our CEO Michael 'Deck' Luscombe, in conjunction with our partner Lowes of the USA, bringing to the Aussie hardware consumer a great range of products at everyday low prices.

Being on a 2011 PE of around 15, which in my opinion only is pretty reasonable, I couldn't resist picking up a few more WOW on recent weakness.

After debating between WES and WOW, a few months ago, I finally decided to run with WES, and am glad to note that WES has since outrun WOW. Both are great outfits, in positions of super strength, and it may well be that WOW's entry into the hardware field will eventually puncture a bit of a hole in WES, but for the time being it seems to me that Bunnings will represent stiff and unflinching competition.

[h2so4]

Woolies really set the cat amongst the pigeons with their entry into the Hardware market, as a result Mitre 10 is on the block and could well be going the way of the supermarket wholesaler Metcash. As a long term Woolies shareholder I'm really excited about our CEO Michael 'Deck' Luscombe, in conjunction with our partner Lowes of the USA, bringing to the Aussie hardware consumer a great range of products at everyday low prices.

Being on a 2011 PE of around 15, which in my opinion only is pretty reasonable, I couldn't resist picking up a few more WOW on recent weakness.

Buy more when they are on sale....hmm.... makes sense.

Weekend Warriors and Tradies buying power tools from Woolies? Naa. Somehow that just doesn't sit right.

[cantab]

Good move on your part, cantab!

I've wanted to own WOW for years now but they've never been cheap enough for me. About time I sorted myself out and either buy on the next market dip or forget about them!

Macduffy, I've been in the same position and kicked myself for not buying WOW years ago when I first thought about it but they always seemed expensive. I've used the GFC as an opportunity to get a stake in WOW at what I think was a reasonable PE.

If you haven't already, take a look at p 177 of the online annual report which shows the dividend history and DRP price each 6 months since 1993. The consistency and trajectory of the dividend history is a sight to behold. That's what I'm buying. The hardware add-on is just a bonus.

[macduffy]

Yes, you're talking to the already-converted, cantab. Just a matter of getting myself organised - and selling something else!

;)

[cantab]

Colin/h2so4, well done guys on your purchase of WES. Retail should do well for us all. Have to say as a Woolies shareholder I'm looking a bit green at the margins you guys make on home improvement - 11.2% EBIT margin on sales of $5.845m, WOW! and you've only got 18% of the market!

[whatsup]

Bought in the early 90's for approx $ 2.00 a share and I think at their peak they paid $1.00 a share div PER YEAR, now thats a share, a 50% div yield!!!

[winner69]

Colin noted on the WES thread how he was happy holding WES instead of WOW

One would have to be disappointed how the WOW shareprice has gone over the last 12 months. On the bright side the price didn't collapse as much as most Jan to march but then it has badly outperformed the ASX since

Over the year the WOW shareprice is up 5% compared to the overall market of 30% .... and the price seems stuck in the $27-$29 range

The gloss seems to have gone off the future prospects of WOW since they announced the entry into hardware .... maybe the Goldman analyst who reckons they will lose $600 million plus in their first 5 years of operation has put people off .... he reckons that $2 off the WOW shareprice but the underlying impact might be a change in investor sentiment with a rerating down from its current PE of 18 (effectively that rerating has already commenced because the PE was higher a year or so ago)

Interesting times at the big WOW (also the biggest pokie owner in Australia) .... will they pull through in 2010 and make shareholders a little happier than the last 12 months

[winner69]

Obviiously doesn't pay to say things like 'sales slump' when the market is a bit jittery

Back to $26 and a six month low and 15% down from recent highs

Go a bit lower and nearer to the bottom of that trading range and WOE could be a good buy

[meesham]

Obviiously doesn't pay to say things like 'sales slump' when the market is a bit jittery

Back to $26 and a six month low and 15% down from recent highs

Go a bit lower and nearer to the bottom of that trading range and WOE could be a good buy

Yer it copped a bit of a battering yesterday but I think it's holding up reasonably well today, there looks to be a decent amount of support at $26.00. I think if the market is headed for a correction there's be more people buying shares in a "safer" stock like WOW which should help it bounce back a bit.

Disc: I Hold WOW long term

[POSSUM THE CAT]

WINNER 69 check the Australian Papers in the last few days. The competition is hurting both Woolworts & Coles. They are reducing prices on many items & saying any article in any store will be the same not just in stores with an ALDI nearbuy. Also they cannot presure the suppliers to increase prices to ALDI as Aldi has more clout than they have. Nestle Australia tried it. so they parrallel imported Nescafe coffee from overseas and said if you do not like it we will stop dealing with Nestle world wide

[h2so4]

Coles are now selling Laptops.

[POSSUM THE CAT]

H2SO4 Again trying to catch up ALDI were selling them 5 years ago & desktops as well.

[h2so4]

H2SO4 Again trying to catch up ALDI were selling them 5 years ago & desktops as well.

Maybe except WES owns Harris Technology.

[wns]

I bought WOW today. I've always considered them as expensive but believe their share price represents good value at current levels. They are probably my favourite company on the ASX, along with BHP which was my previous purchase. Have you bought any yet macduffy?

[macduffy]

I bought WOW today. I've always considered them as expensive but believe their share price represents good value at current levels. They are probably my favourite company on the ASX, along with BHP which was my previous purchase. Have you bought any yet macduffy?

Not yet, but WOW is looking better all the time.

Signs of the SP turning so I may need to act soon or maybe miss an opportunity.

;)

[voltage]

still expensive in relation to PE more competition?

[wns]

WOW is currently trading at a historically relatively low PE compared to the last 10 years.

Avge ann PE ratio (%) for June 2000 -> June 2009
16.6 19.8 24.0 21.1 17.5 19.1 19.2 21.9 22.2 17.6

Having said that, I don't use PE as a measure of value.

[ratkin]

How do you bargain hunters know that woolworths isnt being rerated longterm? It has always traded at a premium to similar market participants. Maybe with Aldi about , and dubious expansion into home improvement , the premium is no longer justified?

Still a very good stock , and im not trying to put people off , but i wouldnt be suprised to see a few years of going nowhere.
I have some myself , and have done very well out of them , and have no intention to sell. However not topping up either.

Metcash is my main Australian supermarket holding , trades on a lower P.E and the dividends are better

[macduffy]

WOW may well be in the process of being re-rated - mind you, all equity markets are at present! - which is why I'm holding off buying any at this stage.

I agree that Metcash is an attractive stock. More a wholesaler and distributor to independents rather than a supermarket operator, of course. They too may face a rather different future though when/if their takeover bid for Mitre10 goes ahead.

[Toulouse - Luzern]

WOW reported today for H1:
Group Sales +4.2% (reported earlier in Feb)
NPAT +11.4%
EPS +10%

[winner69]

Special note for ENP who on another thread said he was very keen on WOW .... (quote) I'm very very keen on purchasing Woolworths sometime this year or the next. I'm just trying to figure out how to buy low...

ENP .... buy now ... there never really is a low for WOW .... you obviously want to hold forever

Look at the 15 year chart
http://www.findata.co.nz/Markets/StockQuote/ASX/WOW.htm

WOW was overpriced when it was $2 .... WOW was overpriced when ot was $5 ... and i recal in the ealy to mid 2000's it was totally overpriced at $12 .... and no doubt it is overpriced now at $27/$28 .... but one day it will be $40 and then $50 and the $60 .... get the message ..... you are very very keen .... so buy now mate

[whatsup]

Bought in the early 90's for approx $ 2.00 a share and I think at their peak they paid $1.00 a share div PER YEAR, now thats a share, a 50% div yield!!! have a look at this posting of mine on 1/12/09 re buying wow, its a great share but so imho is wes.

[macduffy]

It seems the gloss is fading from WOW with concerns about future growth prospects.

I still like the stock but holding off buying until the trend reverses.

http://www.sharecafe.com.au/article_air.asp?a=AV&ai=17365

[winner69]

Reasonable sales growth but obviously times are still tough for Ausse/NZ retailers at the moment with WOW anoouncing profits won't be as much as first indicated. Maybe the lucky country is actually more stuffed than they think

So back to mid $26 mark and the range from $26-$30 which has been in place since mid 2008 continues

Hanging in there at the moment ... but one day WOW will be worth $40

Interesting to see that grocery sales appeared to be stronger in NZ than Aussie

[RRR]

Quote: Interesting to see that grocery sales appeared to be stronger in NZ than Aussie

Laziness or convenience for the consumer is to blame for their ever increasing profits in my view. Milk/dairy products/vegetables/fruits are way overpriced in all supermarkets. I never buy those stuff from them. I make a trip every week to the local dairy for the milk and the local vege shop for the vegetables and they are much cheaper and I am sure they are making profits!!

I envy the supermarkets-they always make money.

[drillfix]

I honestly dont know how they (woolworths) can say what they have. Every time I walk into a woolies, the cue is a mile long by nearly every check out. Most times I get there, I cant get the bakery bread I want because its always sold out, and sometimes same as the Anzac cookies, so how can they say they are not as profitable?

Perhaps they paid the Directors more, thus making less for shareholders.

I dont hold, but I swear over the past year, things appear to be busier there, (where I live anyway).

[ratkin]

I honestly dont know how they (woolworths) can say what they have. Every time I walk into a woolies, the cue is a mile long by nearly every check out. Most times I get there, I cant get the bakery bread I want because its always sold out, and sometimes same as the Anzac cookies, so how can they say they are not as profitable?

Perhaps they paid the Directors more, thus making less for shareholders.

I dont hold, but I swear over the past year, things appear to be busier there, (where I live anyway).


They have been busier , six percent up on last year , just not as busier as they expected

[macduffy]

Some well-reasoned comment here from Ian Verrender of the SMH.

http://www.smh.com.au/business/woolworths-chief-gives-fresh-food-for-thought-20110124-1a2va.html

Disc: Not holding WOW but always looking for the right opportunity!

[OldRider]

The reaction to the latest WOW announcement is more than I would have expected. My view is that WOW will perform as well as or better than
most other companies in the next year, so either expect wider similar announcements and consequent price drops, or else be prepared to
buy a few as soon as they turn upwards.

[modandm]

WOW = slow and steady - and I'd say it is unlikely the can continue to perform as well as they have so far. Also there are lower cost competitors such as aldi which are growing.

A good share for a retiree but not something to get excited about. Probabally good for 7-9% return on average p.a from now on to forever. Better off buying BHP imho

[Snoopy]

It seems the gloss is fading from WOW with concerns about future growth prospects.


Woolworths has a new idea to restore some gloss.

Woolworths is in the news with the creation of the SCA property fund. The idea of this fund is to float off in one lump all of the supermarkets that Woolworths have developed since the GFC hit, as Woolworths consider their best use of capital is in the retail business, not actually owing the underlying property. This is probably fair enough. However there is a sting in the tail for NZ holders of Woolworths. Existing WOW shareholders will get shares allocated to them in the ratio of one share in the new company for every five shares they already own. However this is being accomplished by the new shares being issued in the form of a combined special dividend and capital return. It is structured this way because Australian shareholders can take advantage of the franking credits associated with this dividend. NZ shareholders cannot do this. So the effect of the SCA issue for NZ based WOW shareholders is that NZ shareholders will be getting a taxable capital return in the form of this special 'dividend'.

NZ shareholders have a chance to vote on whether this capital return goes ahead. Could I suggest to NZ based shareholders that they vote against this scheme. In the grand manner of these events such a gesture will be ultimately futile as there will be too many Oz based shareholders voting in their own self interest for the scheme. However, it would not hurt to make those Aussie based directors take note of a small but significant protest vote from New Zealand!

The other way to get around this is to sell your WOW shares before the entitlement date and buy back in afterwards. That would preserve your capital, but might not be worth in trading fees given the relatively small size of the SCA issue.

SNOOPY

[ENP]

Woolworths has a new idea to restore some gloss.


Unless WOW invests significantly outside on Australia and NZ then the growth and long term return prospects aren't terribly great, taking into account it is priced up around the 20 P/E mark.

Why not sell and buy Coca Cola Amatil instead? It's a similar sort of business but has investments in the pacific, asia, etc and is trading at only 14 times earnings.

[Snoopy]

Unless WOW invests significantly outside on Australia and NZ then the growth and long term return prospects aren't terribly great, taking into account it is priced up around the 20 P/E mark.

Why not sell and buy Coca Cola Amatil instead? It's a similar sort of business but has investments in the pacific, asia, etc and is trading at only 14 times earnings.

You may well be right ENP. I hadn't realized that the PE of CCA had got down to 14. One negative you didn't mention is that for their 'core' product CCA are restricted in what they do by master franchise holder, Coca Cola of the United States.

Getting back to WOW. I know a PE of 20 looks expensive, but for all of my sharemarket memory WOW has looked expensive. I remember opening an e-trade account in Australia with the express idea of selling my WOW that did look overvalued at the time. The price at the time was around $8 IIRC. Needless today I am glad a saw sense and did not sell. But that was then and now is now. Obviously the core supermarket business is getting harder to expand by geographic footprint because of the sheer number of stores that already exist.

The future for WOW growth looks to be their new hardware/ home improvement chain, and perhaps hotels? Did you know that WOW are now the largest operator of pokie machines in Australia?. But there are risks in this strategy. You are right. I do need to have a good look at my WOW investment again.

SNOOPY

[ENP]

The price at the time was around $8 IIRC.

The future for WOW growth looks to be their new hardware/ home improvement chain, and perhaps hotels? Did you know that WOW are now the largest operator of pokie machines in Australia?

I do need to have a good look at my WOW investment again.


Well done on keeping it from $8 all the way to today, enjoying all those dividends along the way. It seems to be a company that centainly meets your income needs.

Yes, I've been watching with some interest around the restructuring and the diversification of it's different businesses. Masters Home Improvement seems to have been the biggest winner for them. I don't like the volatility of the hotels or the gambling however, this doesn't seem to be as easy to predict a consistent revenue and profit from. One only has to look at ASX or NZX listed companies who has these industries as their core business and look and the yo-yo of up and down year by year perfomance from each. Getting out of Dick Smith (even though they sold for a $20 million price tag which was very very low) I thought was a good idea. Getting out of the property of their supermarkets I see the benefits, but then wonder with all the excess funds, where will they deploy it to earn high returns?

I guess it totally depends on what you want out of the investment. Getting a 4.4% odd dividend return that is going to grow each year around 3-5% is not a too bader deal when you look at the income alternatives of bank deposits and government/corporate bonds. You are in a drastically different life stage to myself and we have different objectives as to what we want out of a portfolio.

[Silverlight]

Why not sell and buy Coca Cola Amatil instead? It's a similar sort of business but has investments in the pacific, asia, etc and is trading at only 14 times earnings.

Hi ENP, what if you already own both?

I don't think I would want to own that much Coke, and the scope to invest my WOW dollars into another staple consumer businesses is limited, Metcash maybe, but a lot for risk. For context I hold Wesfarmers already. ;)

[Snoopy]

I've been watching with some interest around the restructuring and the diversification of it's different businesses. Masters Home Improvement seems to have been the biggest winner for them. I don't like the volatility of the hotels or the gambling however, this doesn't seem to be as easy to predict a consistent revenue and profit from. One only has to look at ASX or NZX listed companies who has these industries as their core business and look and the yo-yo of up and down year by year performance from each.


WOW are clever retailers and I wouldn't bet against them. The only problem was that when they came to NZ, I think they met their match against our home grown food co-operative Foodstuffs. Streamlining all the WOW supermarkets under the 'Countdown' brand does seem to have worked for them at least initially. But you do wonder how many costs there are left to cut in New Zealand.

I would say the jury is still out on the Master Home Improvement roll out. They will certainly have to be sharp to compete with Bunnings.

As for the WOW hotel expansion, this was primarily done to expand their liquor retailing in states that only would allow liquor sales from hotels. The rest of the hotel business was an essential add on to the liquor retailing.

The gaming side of things at WOW I have only become aware of recently. I don't think WOW break down what proportion of their hotel earnings come from gaming. But the performance of gaming shares in Australia has been patchy mainly in recent times. There have been various disruptive events in Australia over the last few years (smoking bans, gaming/lottery licence expiries) that means this sector has not performed well. I was looking at using this 'gaming downturn' to expand my investment in this sector. However all of the prospects I looked at didn't stack up well compared to the Sky City shares that I already own. So if anything I will be looking to add to my investment in SKC



Getting out of Dick Smith (even though they sold for a $20 million price tag which was very very low) I thought was a good idea.


Yes I felt a certain nostalgic pang at my purchases from Dick Smith no longer filling my WOW dividend stocking, but it probably is for the best. Electronics retailing is a tough tough business.



Getting out of the property of their supermarkets I see the benefits, but then wonder with all the excess funds, where will they deploy it to earn high returns?


Opening up another 100 hardware megastores will consume that cash quite easily I would think. Whether that can be as profitable as the historic expansion of the supermarket business is another matter.

SNOOPY

[soulman]

Apparrently, Masters has been a loss making biz for them, but they did flagged that earlier.

In the gaming sector, CWN is doing well but rival EGP is pissed poor. Still got a small amount hoping for the Packer/Lim tilt on them. But since Crown is buiding their own in Sydney, EGP has weaken, but do look good value at current prices.

[soulman]

Last day to get some WOW shares to be entitled to the new demerged property group. More like a 28 cents capital return from WOW at SCP final offer price of $1.40.

[macduffy]

I've just added WOW to my watch list.

SP trending heavily down - but when it turns!

:cool:

[winner69]

I've just added WOW to my watch list.

SP trending heavily down - but when it turns!

:cool:

Interesting at the moment eh

Don't know whether it is because Coles are beating them hands down in groceries or punters worried about the huge losses Masters are makihn which don't look like they going away for years or the zillions associalted with the recall of the dodgy electrical wiring.

Prob a combo of all three but sentiment is all bad at the mo

But one day WOW will be a good buy

[h2so4]

I've just added WOW to my watch list.

SP trending heavily down - but when it turns!

:cool:

Thanks macduffy I'll keep an eye on it.

[winner69]

Seems to be a basket case until major changes are made

http://www.smh.com.au/business/retail/woolworths-project-oxygen-leaves-supermarkets-gasping-20141124-11skc7.html

On November 10, Woolworths and its US partner, Lowe's, quietly tipped another $90 million into their struggling hardware business Masters Home Improvement.

According to the latest Australian Securities and Investments Commission filings, it brings total investment in the hardware joint venture to a whopping $2.91 billion – a whisker away from $3 billion. How much more it will need to pump in is subject to debate. The company won't say.

Taking risks: Woolworths chief Grant O'Brien.
Taking risks: Woolworths chief Grant O'Brien. Photo: Christopher Pearce

It is a big bucks investment – and a massive risk. An even bigger risk is the long-term impact on the rest of the Woolworths empire.



Besides the amount of money already sunk into the business, accumulated losses are likely to clock up to more than $1 billion before hardware breaks even. The company previously flagged a break-even date of 2016 but in August was forced to retract that. The market now expects it to break even by 2019, which would mean nine years of losses. There is speculation an impairment charge isn't far away.

If the quarterly figures released late last week by Lowe's are any guide, the losses from the hardware joint venture are getting worse, not better.

The Masters big box hardware chain and a few other hardware companies took a reputational hit in August after the Australian Competition and Consumer Commission announced a recall of dodgy electrical cable imported from China by a company that has now collapsed. An estimated 40,000 homes and businesses were wired with the faulty cable, which, according to the ACCC on October 31, "may become prematurely brittle and break if disturbed, exposing the internal conductors and potentially causing electrical shock or fires".

The cost of the cable recall, which involves ripping out the old cable and rewiring it, could be anywhere between $80 million and an extreme case of $600 million, according to Merrill Lynch. The variation depends on how many homes and businesses will need complete rewiring. In some cases a safety switch might suffice.

Against this unfolding saga, some investors are worried the jaws of death have bounced open across the group, at a time when competition has never been fiercer from Coles, Aldi and Costco, and when, by Woolworths's own admission, it is battling a price perception issue.

They cite Woolworths's first-quarter sales results, which were disappointing in all divisions. The fear is Woolworths will struggle to achieve 2015 earnings guidance of 4 per cent to 7 per cent net profit growth. Merrill Lynch analyst David Errington gave the sales results a three out of 10.

If Woolworths misses its 2015 earnings guidance, the bells will start tolling long and loud for Grant O'Brien and some of the longer-serving members of the board. In 2011 the supermarket giant missed its first earnings guidance in memory and not long afterwards its then CEO retired.

Crunch time

Put simply, it is crunch time for O'Brien and the board. Hardware, Big W, petrol and New Zealand are all under the pump and the jewel in the crown, the Australian supermarkets division, is starting to look shaky with signs consumers are starting to turn away from the stores on the basis Woolworths isn't offering the best prices.

Woolworths has long maintained it offers Australia's lowest-price, full-range supermarket. But if consumers don't think it does, the company has a problem. Perceptions drive consumer behaviour.

Australian food and liquor volumes fell by 2.5 per cent, the lowest volume growth in more than a decade, according to Morgan Stanley, "as food inflation [driven by fresh food/tobacco excise] ticked up, while like-for-like sales growth retraced." The concern is if volumes drop, there will be supply chain implications.

The problem for Woolworths is the hardware business appears to be infecting the performance of its overall operations. Woolworths owns 66.7 per cent of the joint venture with Lowe's, but Lowe's has an escape hatch: a put option, valued at more than $800 million, to walk away with 13 months' notice from next October.

Ironically, the hardware business was dubbed Project Oxygen because its aim was to suck the oxygen out of Wesfarmers by going after its best business, Bunnings, which sits in the empire along with Coles, Officeworks, Target and Kmart. The theory was if it hurt Bunnings, it would reduce Wesfarmers' ability to turn around Coles. Five years on, the strategy has horribly backfired and the perception is Wesfarmers is sucking the oxygen out of Woolworths' best business, food and liquor.

If it wasn't for the capital-hungry hardware business, Woolworths could have smashed Coles in 2010 instead of giving it a free kick. If it had sacrificed margins by launching a wide-scale price war, Coles would have been crushed.

Instead it chose to fatten up its margins in the supermarkets, partly to counteract the losses in hardware. In a recent note, Morgan Stanley made the alarming comment: "Over the past couple of weeks, we have met with a number of leaders in the Australian supermarket industry. A common thread in our discussions has been declining Woolworths in-store execution. Rising out of stocks, declining fresh food displays and tired stores were comments of note. We believe recent cost-out initiatives are beginning to affect store performance."

Comparative targets

Errington wrote a fascinating report in September comparing the remuneration policies of Coles and Woolworths. He found Wesfarmers's targets were more skewed to growth in return on equity, like-for-like store sales growth and a turnaround of Coles, while Woolworths was more skewed to total group sales, earnings targets and earnings per share growth. "On this basis, we consider Wesfarmers's remuneration targets to be more aligned to shareholder interests (based on our view that returns on investment are a more aligned objective to shareholder returns than absolute sales and earnings growth and EPS targets)."

It offers an insight into what might be driving some of the decisions, including rolling out new stores, sometimes in existing catchment areas, and rolling out Masters stores, which boosts total sales. It has also been busy selling some stores and leasing them back with long-term leases (presumably to reduce annual lease costs which boosts profitability).

Merrill Lynch notes the duration of Woolworths's lease commitments is longer than Wesfarmers's. "The longer the lease duration, the higher the financial risk of the lease in terms of close-out obligations [in the event of the lease being closed out]."

A Woolworths spokeswoman said the company was confident its strategy would "continue to deliver growth and solid shareholder returns, and that we will continue our consistent, reliable financial performance". In the past three years shareholder return had increased by 56.7 per cent.

Woolworths is trying to change the price perception to win market share. It launched the "Cheap, cheap" campaign, highlighting long-term price drops such as 85¢ bread, reintroduced red-spot weekly specials and is offering other specials.

If consumers see the campaign as little more than a jingle, it will do little to change their attitude. In the meantime the battle for market share between Coles, Woolworths, Aldi, Costco, Bunnings and Masters will ramp up.

If hardware gets in the way of its precious supermarket and liquor business, the board will need to make some tough decisions or investors will make their own.

Either way, Woolworths has got some serious soul-searching to do. As growth slows, competition intensifies and the price perception of Woolworths is thrown into the mix, its reliance on gross margin expansion and cost cuts to keep profits up will become increasingly difficult.

With the ACCC on high alert for any cases where suppliers are being screwed, it paints a picture of challenging times ahead.


Read more: http://www.smh.com.au/business/retail/woolworths-project-oxygen-leaves-supermarkets-gasping-20141124-11skc7.html#ixzz3Jy8ov0dx

[macduffy]

A strong day for WOW with the SP up over 2%. May be just the feelgood factor from the AGM so I'll look for some confirmation before getting too excited!

[macduffy]

Merrill Lynch predicts that WOW's profit will fall in 2016 and 2017 for the first time in 16 years.

http://www.theage.com.au/business/retail/woolworths-profit-to-fall-for-first-time-in-16-years-says-merrill-lynch-20141204-11zsrz.html

Personally, I'm still interested in a small flutter when the trend reverses!

[theace]

Any latest insights? ... SP seems to be at the lowest .... good buying op?

[macduffy]

Any latest insights? ... SP seems to be at the lowest .... good buying op?

I'm still waiting for the trend to reverse.

:cool:

[theace]

What indicators signal trend reversal?

[macduffy]

What indicators signal trend reversal?

I'm no TA expert so you need to ask Hoop or someone of that ilk. But the basic signs I look for are :

- Reversal of the current downtrend in the shareprice!

- Accompanied, hopefully, by an increase in volumes traded.

- And, an uptick in the Relative Strength Indicator (RSI).

I'm primarily an investor rather than a speculator/trader so I use these simple TA tools to augment fundamental analysis - also rather basic!

Cheers

[Daytr]

WOW obviously are a fuel retailer as well. I'm not sure what the current selloff in oil will do to that part of the business.
Although you would think with cheaper fuel Mum & Dad have more retail spend.
I've been looking for a retail exposure in Oz, but I'm not sure WOW is it.

[Daytr]

More looking for general retail rather than fuel.
Thinking maybe Harvey Norman, or may go Walmart or Home Depot the US

[winner69]

More looking for general retail rather than fuel.
Thinking maybe Harvey Norman, or may go Walmart or Home Depot the US

Harvey Norman surged 10% today ...Gerry happy

Current rave toy is the fitness thing that goes on your wrist ....glorified pedometer

[macduffy]

WOW's results due out today.

http://www.theage.com.au/business/retail/woolworths-masters-bleeding-less-red-ink-20150226-13p3f5.html

[theace]

Have been looking at this a while, and wondering if it is a good entry point at current pricing!

[macduffy]

Have been looking at this a while, and wondering if it is a good entry point at current pricing!

Still a bit too early for me. Technically-wise, the SP is still going sideways and the RSI is weak. Fundamentally, the company doesn't seem to have turned the Masters hardware business around yet and competitive pressure in the supermarket business intensifies. I'll watch and wait meanwhile.

[winner69]

Sounds like the presentation didn't go too well today

The clock is ticking for Woolworths to save itself
http://www.smh.com.au/business/comment-and-analysis/the-clock-is-ticking-for-woolworths-to-save-itself-20150506-ggvbza.html

[Schrodinger]

Sounds like the presentation didn't go too well today

The clock is ticking for Woolworths to save itself
http://www.smh.com.au/business/comment-and-analysis/the-clock-is-ticking-for-woolworths-to-save-itself-20150506-ggvbza.html


Board looks tired and the whole strategy is based on a 2 company duopoly which requires minimal effort. Recommend they replace the fossils with a few leading edge supermarket retailer advisors.

In saying that it looks attractive to enter at these prices for a turn around. Question is how long will that take. I am guessing 6-18 months.

[macduffy]

Still a bit too early for me. Technically-wise, the SP is still going sideways and the RSI is weak. Fundamentally, the company doesn't seem to have turned the Masters hardware business around yet and competitive pressure in the supermarket business intensifies. I'll watch and wait meanwhile.

It hasn't finished its downtrend yet - but when it does, and despite all the current bad press - may well be worth considering. Meanwhile, still watching and waiting!

[winner69]

It hasn't finished its downtrend yet - but when it does, and despite all the current bad press - may well be worth considering. Meanwhile, still watching and waiting!

Business Spectator had a chart analysis. I love Fibs .... we could be at the turning point, if not suppose $23 is the next step down

Woolworths’ price chart might provide some useful insight into how the market views the issue over coming weeks. This week’s low has stopped at the 78.6 per cent retracement of the 2011-14 rally. This is the last of the major Fibonacci retracement levels. A good way to look at these levels is not so much as support that will stop a market falling but more as potentially significant turning points if the market does happen to stop at them.

For longer-term investors using a weekly chart like the one below, ‘stopping’ means a trend change evidenced by the weekly candles starting to make higher lows and higher highs. If the low around this 78.6 per cent retracement remains intact and subsequent weeks’ candles move

[winner69]

Lot been written about what's wrong at WOW

Here is one from the SMH
http://www.smh.com.au/business/comment-and-analysis/woolworths-is-far-from-a-supermarket-20150619-ghsbze.html

Seems strange they keeping the sacked boss on in these times of turmoil. Should have gone somewhere out of the way until he reaches the age of entitlement (like special projects)

Board has to take most of the blame. Not much retail experience and it shows. Again they have known the boss has to go and no succession plan.

WOW needs to give up on Masters. Bite the bullet and write off billions and pay Lowes out. They say maybe $1 billion cash left after liquidating.

Use that to fix the Woolworths supermarkets and get back to basics, even with Aldi, Costco et al around

Soon will be a good time to get in I reckon

[neyney2010]

Lot been written about what's wrong at WOW

Here is one from the SMH
http://www.smh.com.au/business/comment-and-analysis/woolworths-is-far-from-a-supermarket-20150619-ghsbze.html

Seems strange they keeping the sacked boss on in these times of turmoil. Should have gone somewhere out of the way until he reaches the age of entitlement (like special projects)

Board has to take most of the blame. Not much retail experience and it shows. Again they have known the boss has to go and no succession plan.

WOW needs to give up on Masters. Bite the bullet and write off billions and pay Lowes out. They say maybe $1 billion cash left after liquidating.

Use that to fix the Woolworths supermarkets and get back to basics, even with Aldi, Costco et al around

Soon will be a good time to get in I reckon

In summary, they're pretty f**ked up atm.
With Aldi going 'Fresh' as well, WOW and Coles agan have to up their game.

Agree soon will be a good time to get in. (well, top up for me)

[percy]

Soon..???
3 years; very soon.?
5 years;not so soon.?

[neyney2010]

Soon..???
3 years; very soon.?
5 years;not so soon.?

Soon = 6 months to 5 years

[winner69]

Markets a forward looking.

So when they quit Masters and a new boss in the hot seat

And when the squiggly line says so

[winner69]

Then again a Walmart or an Asda could come and tak them out of their misery

Sad for business that still makes billions every year

[macduffy]

And the speculation grows around a WOW breakup.

http://www.scmp.com/business/companies/article/1830170/australias-woolworths-upmarket-food-chain-seen-juicy-buyout

[macduffy]

Downtrend appears to have been reversed. A false dawn? - or time to have a small nibble?

[winner69]

Downtrend appears to have been reversed. A false dawn? - or time to have a small nibble?

Chart looking much better eh Macduffy

Do you reckon that it will continue

Business Spectator article pointed out that in US $ terms WOW market cap down 50% from early last year - still speculating on takeover?

[winner69]

Always seems like 1 step forward then 2 back for WOW these days

Profits down - biggest 1 day fall for a while

[macduffy]

Always seems like 1 step forward then 2 back for WOW these days

Profits down - biggest 1 day fall for a while

I'm still watching them too, winner, but it seems the "recovery" is still some way off.

http://www.smh.com.au/business/retail/woolworths-warns-firsthalf-profit-to-fall-as-much-as-35pc-20151028-gkleoe.html

[macduffy]

Woolworths to pull the plug on Masters.

http://www.smh.com.au/business/retail/woolworths-to-pull-plug-on-masters-after-lowes-exercises-put-option-20160117-gm7ygg.html

About time!!!!

[winner69]

Woolworths to pull the plug on Masters.

http://www.smh.com.au/business/retail/woolworths-to-pull-plug-on-masters-after-lowes-exercises-put-option-20160117-gm7ygg.html

About time!!!!

About time - doomed from day 1 - failed strategy

Market liked this

[winner69]

Macduffy - maybe Anchorage will buy and fx it up and have a billion dollar IPO

[winner69]

Bunnings will be laughing their heads off and all the way to the bank

Plenty more cash for Wesfarmers to give to Coles to make life unbearable for Woolworths supermarkets.

[macduffy]

Macduffy - maybe Anchorage will buy and fx it up and have a billion dollar IPO

Maybe.

Another day, another bunch of eager punters!

[winner69]

A thread for king1212 to read

I wait for the dust to really settle and a period of positive (rather Han mixed) developments before buying in

Plenty of time I reckon

[King1212]

A thread for king1212 to read

I wait for the dust to really settle and a period of positive (rather Han mixed) developments before buying in

Plenty of time I reckon


Thanks winner69

[winner69]

But then again king if you are a bit of a trader/punter now could be as good any time to have a go - but cut your loses if the downtrend continues

You never know now that Masters has been got rid off (or intended to) some BG global player might take them over - WOW cheap as now compared to a year or so ago.

Wouldn't want to be on sidelines if hat happened

[macduffy]

Still too early for me. No real volume yet or Buy strength.

[macduffy]

Still too early for me. No real volume yet or Buy strength.

And still too early!

http://www.smh.com.au/business/retail/woolworths-braces-as-lowes-books-us530m-writedown-on-masters-20160224-gn2xpa.html

[winner69]

Pretty bad result today, even allowing for the huge Masters writedown

Groceries not doing that well - Coles winning hand over fist

WOW lost their way .... and an internal appointment the new CEO ...hmm

[h2so4]

Pretty bad result today, even allowing for the huge Masters writedown

Groceries not doing that well - Coles winning hand over fist

WOW lost their way .... and an internal appointment the new CEO ...hmm

Yeah. Roger (that's Montgomery) blames Aldi who operate on a 2% margin all over the world and only have one tomato sauce bottle on its shelf as opposed to 30 on Woolworths' shelves. Ha!
How do you compete with that?

[Joshuatree]

Location Location Location.... give it awhile then buy back in when they've turned it around and they will.

[macduffy]

The case for shorting Woolies.

http://www.morphicasset.com/blog/woolworths?utm_source=ActiveCampaign&utm_medium=email&utm_content=Morphic+Global+Opportunities+Fund+-+New+blog+post&utm_campaign=1+mar+16+Blog+post

[macduffy]

I couldn't help filching this off another forum.

"WOW's latest TV ad attempts to promote company based on the spurious claim that, once you reach the checkout, your bags will be "packed with pride".

When that's your claimed point of difference, you're better off not advertising. Who on earth wrote that rubbish?!

Q: "Why do you shop at Woolies ma'am?"

A: "Well Aldi have much better prices, their fresh produce is just as fresh as Wollies, but you know I can't help but marvel at how the Woolies checkout chicks shove the stuff in the bags with such pride. Packing pride is very important to me".

[winner69]

Might need a capital raising of $2 billion

http://www.smh.com.au/business/retail/capital-raising-store-closures-may-be-in-store-for-woolies-20160722-gqbiae.html

[winner69]

Couldn't even make Ezibuy work?

Do you think all the bad bits have now been written off macduffy

Seems never ending to me

http://www.sharechat.co.nz/article/5613f6a4/woolworths-writes-down-ezibuy-by-a-309m-and-puts-it-up-for-sale.html?utm_medium=email&utm_campaign=Woolworths%20writes%20down%20EziBuy%2 0by%20A309M%20and%20puts%20it%20up%20for%20sale&utm_content=Woolworths%20writes%20down%20EziBuy%20 by%20A309M%20and%20puts%20it%20up%20for%20sale+CID _e8048bd0afc649149ba11915bd232270&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle5613f6a4woolwo rths-writes-down-ezibuy-by-a-309m-and-puts-it-up-for-salehtml

[macduffy]

The chart was looking promising until a few days ago. Funny how these things seem to be foreseen! But it's not just a matter of selling off the bad bits - they have to make the good bits work better as well.

WOW still a watchlist proposition for me.

[winner69]

The chart was looking promising until a few days ago. Funny how these things seem to be foreseen! But it's not just a matter of selling off the bad bits - they have to make the good bits work better as well.

WOW still a watchlist proposition for me.

Up 8% today

Market always likes big job losses

[macduffy]

Yes, biggest one-day gain in 19 years!

http://www.abc.net.au/news/2016-07-25/woolworths-to-cut-500-jobs/7657166

Now, let's see if they can hold and build on that.

Meanwhile, a lot of Countdown staff worried about keeping their jobs.

[macduffy]

Not a lot of interest in WOW on this side of the Tasman, perhaps, but this is a interesting perspective on the company's recent sale of its fuel retailing business to BP.

http://www.morphicasset.com/blog/woolworths-claytons-capital-raising/

[theace]

Have been notified of the Buyback offer. If I was considering selling .... I don't quite figure out if selling via the buyback scheme, or sell on market. Thought? TIA.

[Snoopy]

Have been notified of the Buyback offer. If I was considering selling .... I don't quite figure out if selling via the buyback scheme, or sell on market. Thought? TIA.


Ace, these Aussie buyback offers are usually structured to maximise after tax returns for Australians. But as a New Zealander, paying tax in New Zealand, your tax bill will be greater if you sell into the buyback offer than if you just sold on market. Unlike Australia, there is no capital gains tax to pay in New Zealand on share investments - yet.

SNOOPY