WHS - Warehouse Group

[percy]

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

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

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

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

SNOOPY

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

[POSSUM THE CAT]

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

[percy]

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

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

[Snoopy]

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

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

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

SNOOPY

[percy]

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

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

SNOOPY

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

[macduffy]

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

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

Disc: Yes, still holding a few.

[Snoopy]

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

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

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

SNOOPY

[Snoopy]

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

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

SNOOPY

[emearg]

You guys are pretty funny

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

[Snoopy]

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

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

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

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

So the WHS margin is forecast to be somewhere near:

$64m/$1638m= 3.9%

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

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

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

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

SNOOPY