So a month on we have Oz showing interest at UAUD$1.65. And NZ has stalled with only 2 bids, the best at NZ$2.03. Perhaps the best way to get something out of KMD at the moment is via their up to 60% off sale.
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Was in my local store yesterday picking up a few Xmas goods. Asked the store manager how things were going this year, he said that they were a bit ahead of last year and thought the styles this year were better. I noted that stock levels looked lower and he suggested that the ordering system had improved a lot.
As a follow-up to my earlier posts. The return to investors in the Hauraki No.2 fund for their 25% ownership of Kathmandu was 3.4x the original capital. This represented a 41.7% compound annual return. The general impression created was that the float was a bit of a damp squib for the owners. Well, I beg to differ.
..as well you should...no surprises there i suppose...in my world there is saying..."always leave something for the next bloke (shella i suppose to..)"...and in my experience ...30 plus years its done me well....aint lost heaps...aint made heaps...made enough though...just average...cheers...
Today's IPO pricing works on the basis of tendering the shares to the highest bidder, or at least, the highest price at which the offering will be taken up.
I doubt that the concept of leaving money on the table has very much to do with it, from the vendor's point of view.
;)
..thats my point..."they"...extract the last cent out of the deal...maximise the "good" in the product...and sell...leaving behind a "bright future"...but then some of us see futures in products that are at a "low"...after a while i have realised that when "everything is rosy in the garden"...then what are the chances of "things getting better"...from a situation of "things" ...being ..."great"...Look at tiger...what were the chances of his situation actually improving....from perfect...having said that I am aware of the saying "never stand in front of a "moving train"...so ....I really havent a clue....just plugging along....cheers...
KMD's next profit announcement will be very interesting. If they cant meet forecast the shares will get hammered.
Yes a great IPO indeed......... Yeah Right.
Wish there is an IPO like this every month. Easy money.
All the stock you want and all the stock you can sell in the first week for a profit yo the Aussies.
BRING THEM ON!!!!
Kathmandu done a bit better then Meyer since floating .... on the ASX KMD only down 5% while MYR down 11% from the IPO price.
Both down though the ASX up 3-4% since they both floated.
Another not so good sign is that both are not that far off the lows they have achieved.
Easy money for some in the early days but will be interesting where both are in 6 months time
That Meyer store in Melbourne is a dogs breakfast of a place ... is undergoing a major fit out but heck it is a mess.
Kathmandu stores in Wellington don't seem to have to had too many shoppers in them this week
...Whatsup....what a perverted point of view...more so given the time of year...how dear you slay these kind folk beavouring away behind ...ummm...somewhere...trying to mmmmm..do good stuff.....darn it....you know what i mean....shame on you.....anyways..
PS ...hope you have a good one...
I don't wish to be an apologist for Kathmandu as I no longer have an interest in them, nor do I wish to. However, I am amused at the trash that is being written in this thread. It matters not whether the previous owner was an individual, a private equity fund, or whatever. They will be selling to maximise their return. The market determines the price according to the demand for the shares, presumably after the buyers have done due diligence.
In the case of Kathmandu there is no evidence whatsoever that their float will turn out to be a dud for those who elected to get on board. Quite the contrary. It has been a hugely successful business to date with a marvellous track record, a record that would easily eclipse most of the better companies on the NZX boards.
It is correct that in the recent IPO it was mainly the Aussies that came to the party. But what does that tell us ? Since when have the Aussies been inferior in their judgement than New Zealanders ?
Let us wait to see if this outfit meets its prospectus projections. Then cast judgements, but any conjecture at this point is plain drivel.
...dear cat you put your point very well...and it is appreciated....however i would venture to say that the opinions put forward are from folk who have experience have ..."lost some skin" over their investment lives....hence their posts....to state same is "drivel" is very very very brave...and perhaps somewhat arrogant....position to take....but good on you anyways.....I wish you well....
I think JC will have the last laugh on KMD.
Just watch this space.;)
disc: not a sh, did not buy any in the IPO
CaN IT HOLD $1.60? :eek:
How low can this dog go? :eek:
Er? What last laugh?
The private equity interests who bought from her are the ones laughing like hyped-up-on-P gang members all the way to the bank. Bought from her for $1 in 2006 and sold for $4 equivalent - a profit of over 300%!!!!
She must be bitter as twisted Invercargill lemon that they stole the company from her.
It's the Australians who bought the hype who are wearing the losses from the IPO. Bloody good job too! Great IPO for NZers who sold to the Ozzies.
http://www.nzherald.co.nz/news/print...ectid=10605033
Sp now at $1.55. With flat retail sales as indicated by WHS and MYR will be testing times for alternative clothing stores. Trading at a high PE, one wonders if KMD can meet forecast. We saw what happen to PPL sp when they miss forecast.
Those that have been saying.... Great IPO... Yeah right mate.
Get over it, Dr Who.
Great IPO for Private Equity Investors.
Great IPO for Staggers.
Lousy IPO for Ozzie investors, so great IPO for NZers who took a quick profit.
How often do you get an IPO where you can get all the stock that you want and flick it out in volume for a nice profit day 1 and day 2?
No point stating the obvious about KMD missing forecast - all stocks get punished if they miss forecast, some more than others. Tell us what will happen if KMD exceeds forecast - what will happen?
Before we get too carried away lets remember that demand for this IPO was weak - hence its low listing price. The indicative price range was AUD$1.65 to $1.90 but listed at $1.70.
The Private Equity investors would have been happy enough with this price - but it wasn't as good as they would have liked.
Staggers made a profit - but 4% (less brokerage fees and tax) didn't, IMO, reflect the risk atttached to this listing. Especially off the back of Meyers listing which, as I recall ended their first day down 8%.
As for investors - this has been in downwood trend since day three of listing.
I'm struggling to see how this could be described as a "great" IPO in any sense of the word.
Only in the sense of a successful stag - as Balance keeps on telling us!
:D
But the company is listed, adds some additional (moderate) depth to the market. Now has the job in front of it to attract long term investors.
Question of reading the tea-leaves.
Risk attached to the listing? Read thru' the thread - everyone got so negative that the IPO was going to be priced right fort a stag. And you can get as much stock as you want - not often with IPOs do you get that privilege. No brainer there.
Private Equity made 300%+. So they did not make 350%. Big deal!
As for investors - they were warned, weren't they?
As I recall, JC got around NZ$275 for her 51% and 49% tranches. At listing these canny Private equity investors got NZ$426m so I’m not sure how it’s figured they made 350% on their investment. $426m less listing fees ($20m??) less the AUD$40m I’m sure they would have liked if the issue price was $1.90 less what they have borrowed / spent growing KMD since the ’06 buyout. No public offering and no uptrend in price – despite overall AUX / NZX market improvements since then. I reckon the Private Equity investors were well pleased to get out with what they did.
I don’t reckon its reading the tea leaves. I reckon it’s a lucky break by some punters who were swayed by their brokers and given a mere 4 hours on day one to quit their holding. Sure the stags (only 10% of shares held by NZ’ers) made a “profit” but not of a size I’d be crowing about as the coin could so easily have fallen on the other side.
Ok, it's clear you have no idea how private equity deals work so watch the numbers dance for your pleasure.
$275m was funded by capital/equity of $78m and debt of $197m.
The PE investors received $316m from IPO = $426m less listing fees of $15m & KMD received $85m.
$316m divided by $78m = 300%+ profit.
Tea leaves were easy to read if you care to read carefully. The ozzies loved this IPO and KMD made KMD an index stock in both ASX and NZX, ensuring after market support. After the disappointment of Myer, KMD was going to be priced by the institutions 'cheap'.
$426m - $15m - $85m = $326m.
But whatever the profit, then they have to pay back the $197m debt??
What's $10m between JC and the PE investors?
The debt is left in KMD and reduced by the $85m mentioned above. It has also been reduced by cash flow generated by KMD in the last 3 years.
That's how PE works. Magic, huh?
Mind you, the PE investors in Yellow Pages and Independent Liquor are probably sitting on multi-billion dollar losses.
Romoured to be around $550 mil in Independent Liquors case but then again its most probably a limited liability vehicle partnership in which case the original "seed " money -$100mil, from the PE investors is "lost" and the real leverage investment is left with the fianancer!
I don't have the PE figures - but I have no doubt they were happy enough with this particular listing. But my point being that they would have preferred a listing at $1.90 - making another $40m on their original $78m. There probably is something to be said for " a bird in the hand...."
The Ozzies may have loved this listing - but are probably rueing the decision as they have seen their investment fall 10% in a month or so and those keen buyers in the first few days have dropped more. I can't see much advantage being an index stock if playing this one is like catching a falling knife. Good luck to buyers in the short term. Those that bought MYR after listing would probably be less unhappy.
As an aside, wouldn't the PE owners have paid off some of their debt over the past few years?
http://www.smh.com.au/business/alcop...0106-ludr.html
"Independent Liquor, which was sold to the private equity firms PEP and Unitas in December 2006 for $NZ1.3 billion"
"The business is believed to be worth about $700 million, which is sharply lower than the price two private equity operators bought it for three years ago"
On those numbers you wouldn't think there would be much equity left for the PE guys....
The magic, according to Cycats enligtening posts, wasn't so great for Hauraki No 2 with their Bild NZ investment or Vision Senior Living. I suspect we probably hear more about the "Good News" stories rather than the reality of these investments which is that they are risky and that investors in PE need a great return to reflect that risk.
Funny thing with the $15 IPO expense, the exchanges get about $2m between them, $2 lawyers another $2m and the final $10m goes to the Lead broker... Goldman Sachs.
Oh wait who were the PE owners? Goldman Sachs, paying themselves for listing, convenient.
Getting a tad off topic but getting the funding isn't too hard. Just look at how easy it was for Hotchin and Watson or any of the other finance companies who raised $billions. Or we could just look at is as a matter of scale your mom and pop can do this with say real estate as a very crude example.
Your mom and pop can leverage, for example 90 - 100% on real estate and could probably get 66% to purchase equites - same as the PE guys.
The PE guys spent around 4% on the sale of KMD (for legal advice and a flash brochure and a network of punters) and this excludes what they spent tarting up KMD for sale. Your mom and pop would spend less than this when it comes to selling their real estate.
My analogy obviously has weaknesses. Like real estate buyers probably aren't mugs enough to believe a seller if that seller was to say, for example, "This house has two bedrooms but we are planning on converting the back yard into sleepouts creating 6 more rooms" or saying "we're making $350 a week and project to be making 15% more next year". Nor would people, in Fendalton, for example, believe that nearly half the value of their property is in the "Fendalton" brand.
But the mugs are out there - if you produce a big flash colourful sales brochure (Pegasus Town comes to mind) focussing on the really neat things in your real estate neighbour hood, which may serve as a distraction from some important detail - like someone is going to release a load of cheap rental properties for WINZ clients in the neighbourhood.
But each to their own. PE investors know they go into a high risk environment - lets not be fooled into thinking that every PE investment returns 300% in 3 years. Some may, others will take big hits which brings your 300% return down. Good on those with the wherewithall and desire and risk profile to get into PE. If this is you, Balance, then good on you. I'm sure all here will celebrate your 300% sucess, and will no doubt comiserate when you let us know the losses your PE investements have made.
It doesnt matter how one twist and turn or how much money PE make, it still stands that this was a crap float for the investors who took up the IPO. Who gives a hoot how much the PE make? As an investor, we are most concern about how much we make.
It will hurt much more when JC comes out with new chain of adventure clothing store that sells 50% cheaper than KMD clothing.
From the beginning it was obvious that the public investor will get nothing out of this float. A good lesson to be learnt here for the mum and dad investor. But sadly I doubt mum and dads have learnt anything from this.
Agreed. Though I'm not sure there is anyone here that has bought since listing so doubtful anyone is going to make anything.
It might be more of a case of pondering how much people who did buy and hold will loose. It will also serve as a beacon for future PE IPO's. Sure we can refer to FTX and draw conclussions but one bad deal shouldn't necessarily spoil future opportunities. That would be a bit like saying "People lost their shirts in '87 so i'm not investing in shares ever again."
I suspect this IPO will be another lesson for investors in IPO's. For the sake of current owners I'm hoping we don't see a repeat of reknown investing techniques (such as the "Belg") but thats a wee way off yet.
Don't kid yourselves for 1 sec that KMD will serve as a beacon for future PE IPO's. There have been FTX, FRE, VTX, PPL, JBH, FRU etc. They are all different and as they should be.
One thing for sure - 'Wall St learns nothing and remembers nothing." Multiply that 10 times in NZ and Australia.
Also, you and Dr Who seem to think that everyone buys into IPOs as long term investments. They do not.
Also, notice Westpac has just disclosed a shareholding in KMD? They manage billions so a $20m loss here and there is nothing. Learn something from that.
Bugger!
SP now above IPO price.
NPAT 4.4m without extraordinary's is a 50 PE.
Actual result 11m loss.
NTA is -12 cps!
Why is this up 7%
Presentation said full year NPAT will be $31m after allowing for IPO stuff
That puts KMD on a PE of about 15 after todays rise ... and 15 is where the market players put things until they work out what really is going to happen
Plenty of growth to come they say
Maybe, just maybe, this is an IPO where everybody won
MYR and KMD included in the S&P index or something like that end of this month. Dont know the exact date. So a combination of meeting target and index buying? It would be good if they can sustain the earnings.
...wow....gee the SH's of this outfit are a staunch lot.....not....
....mmmm...very quite here ...mmmmm
Added to the S&P "All Australian" 200 index... they're stealing our stuff again! :p
Another great Tui billboard for KMD and yet another great magic show escape specialist, private equity.
http://www.stuff.co.nz/business/indu...orecast-profit
I was busy earlier and when I read the first paragraph 'Sales from all stores exceeded the forecast sales
per the prospectus issued by Kathmandu at the time of its IPO last October by NZ$5.5 million. i assumed great thats good ....... but obviously not as it transpired
Didn't make margin forecast?
What is the point of forums if you can't say "I told you so" occasionally.... :p
....mmmm...touche.....Lizard......
I could never see what the attraction was here. You've had two players, being Cameron and private equity squeeze all the value they think they can extract from KMD in the last 5 years. On top of that you have a retail environment which is soft plus increased competition in this leisure/outdoor market.
Not too mention that i think everyone has got their head around this "sale" business and that the retail price in KMD is a joke. THe sale price is the retail price and if you are dumb enough to buy there outside of the sales then you deserve whats coming.
Well its SALE day on the NZX. A million shares sold at $1.76, which is a good discount of the RRP of $2.50. Better be quick, these shares are racing out the door. Store is open till 5.00pm tonight so get in quick for a bargain at never to be repeated prices - until the next sale that is.
LOL mini....gud1 bro! ( I might even drive from Kathmandu to Briscoes and get a double bargain while Im at it)
Well you'd better be quick. Supply chain is working in overdrive to keep up with demand. Back up the truck - another 100,000 has just gone out the back. C'mon, Live The Dream, get some of this clearance stock while it lasts! Go on - you know, in your heart of hearts that you really do want some KMD in your bottom drawer. Impress your friends with this iconic brand - you could pull the script out at your next dinner party - just imagine the envy of your ALF holding guests as they see the real hard core adventure enthusiast in you.
Though on a more serious note 2,000,000 crossed in Oz today at $1.40 in one trade so someone was happy to exit/buy.
And then there was deafening silence from all the come-out-of-the-closet-critics for 3 months until yesterday.
What's the point of being critical now when the sp is below IPO price?
Even hindsight charlies do better than that!
Great IPO for those who bought for a stag and who flipped out as well when the sp went well above IPO price.
Poor ozzie cousins - they are left to suck the kumara on this one!
From an observation point of view, KMD stores are empty. One of their largest stores, Macquarie Shopping Centre (250,000 customers per week) has gone. Wife wont let me buy KMD shares.
???
Footsie said it would be good for a quick stag. Now you agree... credit where credit is due. No hindsight charlie there!
??? there was only a 5% gain in the IPO in listing (hardly a stellar stag) and it was all down hill from there. KMD has only been above IPO price for 3 months of its life - the rest well below. The Mid Feb buyers@ $1.90 (below IPO) will have done the best if they sold out mid April @$2.55. Other than that, quite unspectacular.
I refuse to be an apologist for Kathmandu. However, I think there needs to be some balance in arguments from posters. As I have claimed before, it is a highly successful business. To date we have to say it has expanded successfully into Australia and although it is highly leveraged it still seems to be making a profit. It is hardly the only business around that is not currently priced higher than its IPO. Just as an aside, can anyone explain why Fisher Funds have put money into this business? I would have thought their track-record was pretty good in picking winners and that they do the hard yakka homework. Fisher does tend to be in for the long haul however, and rides the ups and downs.
Yes it was a very successful business,but I think their business model of 3 large sales a year is weak.With retail being terrible here and in Aussie I think they will struggle.Halinsteins and Briscoes have surprised me with their good reults ,great retailers with strong reputations for supplying good products at fair prices.I brought some CVT not that long ago at 85cents when Fishers sold out,so they do not allways get it rightI
From an operational point of view KMD is a great company and probably will continue to be one going forward.
In spite of percey's 'weak model' it makes superior margins than BGR and HLG
A reported Gross Margin of 63% is fantastic .... and so is a EBIT margin in excess of 20% - compared to BGR at 7% and HLG at 13%.
Rod is true retailer ... buying and selling stuff and making a buck on the way through but interestly not as many bucks as HLG do.
At a 20% EBIT margin (63% gross) after all the sales you wonderwhat sort of margins KMD make on the ticket price eh ..... but one thing the prices are high before the discounting ..... so isn't that clever retailing
I agree with cycat64 - we shouldn't be thinking KMD is a dud .... it's just that it'd previous owners did a great job in seducing punters into paying over the top for a good company
KMD will continue to thrive .... pity the shares are overpriced at the moment ... I'd buy them at 120 odd and seeing they have left a bad taste with many punters I reckon I'll get my way
Amazing what the 'halo effect' does eh .... all of a sudden HLG and BGR have great management and are well run .... while KMD is a dog. On financial performance I'd rather own KMD
Retail sales in NZ are all that bad ..... last 12 months sales are up on the previous year and with low inflation prob volumes have held up probably well
Its not all gloom and doom really .... just that growth experienced in the past has gone away for a while
Chart from Stats NZ
Go down to your local mall and ask any retailer what their sales are this year compared to last year over the last 3 or 4 weeks.Top retailer may be down 10% while others could be down over 30 to 40%.
retailers have huge leverage with on going liability of rents,usually set when turnover was a lot higher.With ratchett clauses no relief there.you will note a lot are having sales just to buy a months credit.In the book trade there is a huge problem with largest retailer trying to take supplier terms from 30 days to 60 days.Book publishers,and book trade very concerned.You will note Leemings trying to get themselves a months extra credit by offer 20% disc on all white wear.I just brought a pair of Rockford shoes{made just north of Auckland,in China] were $265. In the end I paid $ 89.90.Unemployment on the raise,electricity prices,food prices,GST, all increasing.Retail is not the place for an astute investor at present.
Unless, of course, you subscribe to the "buy straw hats in winter" school of investing.Quote:
Retail is not the place for an astute investor at present.
Personally, I like to see the trend turn upwards first.
Very interesting article in today's NZ Herald "Proof of debt in payment";A North Shore cabling company is stunned to learn it may have to repay $37,000 it earned last year because it should have known the firm it did work for was insolvent.I do not think I would be happy being a retail supplier in some areas today.
ow the market has digested a lot of recent earnings announcements from retailers I think that many (or at least those that make markets move) have realised that KMD is a brillant company with a very profitable business model
My prediction is that KMD shareprice will outperform the likes of BGR, PPL, MHI etc over the next year .... watch this space
Dr - about 6 times this years EBIT and an estimated PE of around 14-15 (to be confirmed) when result out
Shareprice still about where it dropped to after the announcement so looks like all the damage has been done .... and other retailers like BGR haven't gone anywhere in August either
retail will come out of the doldrums soon and I still believe that KMD will be one of the better bets
A great company, great managed and massive margins and a growth startegy for the nextfew years to keep things pumping
The good retailers make sure they keep their customers,by selling good products at fair prices.It is called reputation,brand loyalty,honest reliabitliy.When looking to buy a retail stock,think if you want to keep dealing with someone who sells you something for $200, and next day it is in their mailer for $100.The Aussie election is not good for retail.Rising unemployment is not good for retail.SCF problems not good for South Island business.Empty shops is not good for retail.The upturn is not insight.
So Kathmandu drops 11% yesterday on ... no news? Can someone enlighten me as to what happened?
cheers
Greg
Thanks Percy, seems a bit extreme, but thems the markets!
cheers
Greg
So KMD is along with Infratil the most popular stock picked by analysts for 2011 (NZ Herald)
Must have caught on to those high margins and that the market over reacted to slightly missing the prospectus gross percentage
Just remember bear markets start shortly after when consumer spending growth rates peak ... and conversely end when consumer spending starts to pick up again.
In spite of what you read in the papers NZ retail sales reached their nadir in the September 2009 quarter and have slowly got better each quarter since .... and on an annual basis are now 2.5% ahead of last year with a definite uptrend in place
Where the retail spend cycle is current is a signal for better times for the NZ economy ... and shares ... and probably retail shares
Again the headlines in Oz are all gloom and doom but retail growth remains positive
So maybe the 3 guru stockpickers have it right ... and my belief is that KMD is still the best NZ listed retailer to bet on .... with punters benefiting from not only an upturn in market conditions but from the store expansion program underway
Figures from Paymark show nationally there was a 6.7% decline in the number of transactions,compared with Boxing Day last year.
Total value of transactions also declined 2.8%.
No region recorded an increase this year.
With the increase in GST sales would need to be up 2.5% to be the same as last year.So retail sales remain poor.
Is one day indicative of what the real story is. The same people said before Xmas that sales were up for the first 21 days of December
Weren't there more Boxing Day Sales happening before Xmas as well ..... and one shop owner I talked to said gift vouchers were becoming very popular so punters may have been using those on Boxing Day
Stats NZ made this comment in the October sales release Sales trend - The sales trend for total retail has been rising since February 2009, up 6.6 percent since then. The trend is at its highest level since the series began in May 1995. The monthly rate of increase has been steady, averaging 0.2 percent over the past year.
I agree times are tough out there for retailers at the moment ... after all we are essentially in the middle of a 5 year recession ..... but things are getting better according to the data .... sales wise at least .... it's just that deflation is hurting them a bit and many haven't managed to get costs down to the new norm
I'll stick to my story in that retail stocks leveraged for growth with a store expansion program on the go is a good bet in this environment
[url]www.theaustralian.com.au colorado at risk of defaulting loans.
"the retail apparel industry in particular has experienced declining margins and market size."
I do not expect Colorado are alone, although I think it is the big ticket retailers who are suffering the most.
Thanks for that percy .... on one hand good to see private equity losing money because of high levels of debt but sad to that such greed impacts the day to day operations of a profitable well run business
Looks like punters won't be sucked into providing cash to these greedy predators in 2012 now ... IPO off the table I would say
Looks like punters won't be sucked into providing cash to these greedy predators in 2012 now ... IPO off the table I would say[/QUOTE]
They are not alone.Redgroup who own Whitcoulls and Borders are in the same "leaky" boat. !!!
They are not alone.Redgroup who own Whitcoulls and Borders are in the same "leaky" boat. !!![/QUOTE]
Anybody who borrows more than they can afford deserve what they get eh ... as well as the greedy suppliers of that dosh ..... they deserve to lose as well
The worlds gone mad with debt and now we (all) are suffering ..... the world needs to stop borrowing as much and get back to old fashioned values