WHS - Warehouse Group

[Beagle]

Kmart.

Kmart is awesome.

Mrs B is a very canny shopper...the Scottish bloodline in her...and tells me exactly what you've just said. K Mart is the real place where everyone gets a bargain. She very seldom bothers with the Warehouse. I sometimes shop at the Warehouse because they have cheap clothes that fit fat dog's lol

[winner69]

True ... but "squeezed" consumers still need to buy stuff - and where better to go than to the place where everybody gets a bargain?

Interesting that when retail market is 'weak' (growth rate slows but never goes below zero) the Red Sheds sales do go backwards

Red Sheds OK in tough times a fallacy .... but this time its different so no worries

[mcdongle]

Mrs B is a very canny shopper...the Scottish bloodline in her...and tells me exactly what you've just said. K Mart is the real place where everyone gets a bargain. She very seldom bothers with the Warehouse. I sometimes shop at the Warehouse because they have cheap clothes that fit fat dog's lol

I went to the warehouse to buy my annual garden tracksuit bottoms. last year $10 this year $15 will make do with the old ones...

[Habits]

I went to the warehouse to buy my annual garden tracksuit bottoms. last year $10 this year $15 will make do with the old ones...

Holey track pants Batman. Pity about the wasted trip

[BlackPeter]

Interesting that when retail market is 'weak' (growth rate slows but never goes below zero) the Red Sheds sales do go backwards

Red Sheds OK in tough times a fallacy .... but this time its different so no worries

.... and I am sure you have as well the data to show that?

Interesting to note that The Warehouse Group had over the last 10 years a revenue CAGR of 7.4% and an earnings CAGR of 3.1%.

However - if we look into the future (well, I know, I use as well analysts predictions when I like them , the forward revenue CAGR shrinks to 2.6, while the forward earnings CAGR grows to 7.6.

Lower revenue growth and higher earnings growth to come ... clearly - the analysts don't read this thread ;

[BlackPeter]

What we don't know is how much of that is the Warehouse platform and how much is the market ? Yet profitability is down from $111m to estimated $40m. How much investment has Nick been throwing at the market platform ? Interim accounts will be interesting assuming they disclose enough information.

Actually - it is not hard to find out what the market did cost the warehouse group. Have a look at slide 25 of their 2021 investors presentation

http://nzx-prod-s7fsd7f98s.s3-websit...961/355769.pdf

I guess what I don't get is how it is possible that grown up accountants don't seem to understand that the Market is the Internet sales and marketing platform of the Warehouse group ... and propose to drop this tool.

Of course is an internet platform costing money - no issue if the rewards (i.e. increased revenue and earnings over time) are larger than the cost for the respective platform.

Maybe we should now propose for Amazon, Kogan and HLG to close down their respective Internet platforms as well (actually both Kogan and HLG show currently as well some weaker numbers - must be the immense cost of their sales platforms ...) - just close your eyes and dream how many dollars they could save that way ;

[Beagle]

https://www.thewarehouse.co.nz/
https://themarket.com/nz/
Looks like two separate websites to me....but who knows maybe they're intergrated in the back office somewhere.
I've already taken note of page 25...and the losses from the market in its second year are well up on its first year as noted therein. Turnover is well down.
Based on WHS own presentation numbers themarket is shinking in size and losses are expanding in the middle of a Covid epidemic when online sales growth is going ballistic...surely that would worry any reasonable investor ?

Meanwhile HLG are growing their online sales and not losing money on their online platform.

No worries mate, I am sure this year will be different and with Nick doubling down on his investment in the market the ~$40m loss will drive huge future profit...what could possibly go wrong and if it does they could always double that spend to $80m the following year, surely that would be a guaranteed success story and on the off chance it isn't why not double it again to $180m capex, surely that must work

What would this grown up bean counter know....gosh, maybe just a little bit after selling Nick my shares at $4.10 lol

[bull....]

sold my at 4.24 as posted

[winner69]

BP - TheMarket is a discrete sales and marketing business ... and like you I assume they share the same IT platform as other TWG businesses ....and it appears those other businesses are allocated some (if not most) of the platform costs

Question then is how does TheMarket lose so much money - if you back out the 1-day sales stuff all revenues and that big loss

And I'd hazard a guess that 1-day is separate to TheMarket .... at least 1-day sales are $50m but it seems rather strange they report a loss of $5m

Another point TWG only own 88% of TheMarket

I still reckon it's all so convoluted that only Nick knows what total sales are actually generated through TheMarket and how much it all costs to run .... but then again maybe even he doesn't know

[BlackPeter]

https://www.thewarehouse.co.nz/
https://themarket.com/nz/
Looks like two separate websites to me....but who knows maybe they're intergrated in the back office somewhere.
I've already taken note of page 25...and the losses from the market in its second year are well up on its first year as noted therein. Turnover is well down.
Based on WHS own presentation numbers themarket is shinking in size and losses are expanding in the middle of a Covid epidemic when online sales growth is going ballistic...surely that would worry any reasonable investor ?

Meanwhile HLG are growing their online sales and not losing money on their online platform.

No worries mate, I am sure this year will be different and with Nick doubling down on his investment in the market the ~$40m loss will drive huge future profit...what could possibly go wrong and if it does they could always double that spend to $80m the following year, surely that would be a guaranteed success story and on the off chance it isn't why not double it again to $180m capex, surely there's no chance you can't lose then

What would this grown up bean counter know....gosh, maybe just a little bit after selling Nick my shares at $4.10

If you look at the growth rates they claim for the market (page 23 of their annual report) and compare that to the meagre revenue they assign to it in their books, than it is probably fair to assume that most of the revenue as well as the earnings they make through purchases facilitated by the market show up allocated to the individual companies.

I don't know how they internally calculate the fees The Market is charging to the other companies in the Warehouse group, but suppose that some cross subsidizing happens.

Do you know? Without this information is it pretty tough to assess whether the market is a sensible investment for the Warehouse group or not, isn't it?

The only thing we know about it are the costs allocated to it and some revenue numbers which clearly don't reflect the total value of the goods going through this platform. But hey, this is still more than we know about the Internet sales and marketing platforms of any of the other Retailers. So, how can we say that the Market is in comparison a bad investment for the Warehouse group if we know only half of the story for the Warehouse group but still less about any comparable platform?