WHS - Warehouse Group

[Fortunecookie]

The market is an interesting concept. They are trying to direct traffic to the site. But there is this thing called the internet, or more specifically Google. You can type in a search for what you want, so why be bound to just one site. From I can gather there is no real price differential from buying from their site to another other.

I think it was setup at a time when building ecosystems was popular to replicate the success of likes of Alibaba and Amazon. They are now trialing the sales of perishable goods (I'm thinking there is alot of wastage). Personally I think they need to look at the average shoppers shopping list, focus on the non perishable items and decide whether pricing and the number of items warrant a shoppers second trip to them(perhaps they are already doing this). I do think they have abit of an identity crisis at the moment. It doesn't help economic factors are putting pressure on margins.

Not trying to be negative. Just an observation.

[Toddy]

My family buys alot of stuff from NL and T7.

Service is usually pretty good and prices competitive.

Only ever pop into the WH if the kids are grabbing a sports drink or the likes.

Good Company. But like every business out there. It's tough with inflationary pressures everywhere.

[nztx]

Seems to be the Warehouse everyone gets a bargain except the shareholders.
Management seems asleep at the wheel.
The company isn't making money and going backwards by the looks.

their monthly management accounts should have shown this unfolding too ..

that would have been starting months ago

Was there any market update eluding to stiff headwinds in interim ?

[jimdog31]

The market is an interesting concept. They are trying to direct traffic to the site. But there is this thing called the internet, or more specifically Google. You can type in a search for what you want, so why be bound to just one site. From I can gather there is no real price differential from buying from their site to another other.

I think it was setup at a time when building ecosystems was popular to replicate the success of likes of Alibaba and Amazon. They are now trialing the sales of perishable goods (I'm thinking there is alot of wastage). Personally I think they need to look at the average shoppers shopping list, focus on the non perishable items and decide whether pricing and the number of items warrant a shoppers second trip to them(perhaps they are already doing this). I do think they have abit of an identity crisis at the moment. It doesn't help economic factors are putting pressure on margins.

Not trying to be negative. Just an observation.

It was at a time where amazon/alibaba were seemingly unstoppable and it was only a matter of time before they (amazon) were setting up here etc etc.

But instead of getting better at what they do to protect market share, theyve shot themselves in the foot trying to be a mini amazon, to the tune lf $30-40 million bucks a year.

Biggest own goal IMO

[nztx]

Update 29 Dec 2022:

https://www.nzx.com/announcements/404808

29/12/2022, 5:08 pm MKTUPDTE

The Warehouse Group – FY23 Q2 year to date trading update

The Warehouse Group (“the Group”) has today provided a trading update for the FY23 second quarter period to date from 31 October to 26 December 2022.

On 11 November the Group announced FY23 Q1 sales up 21.2% compared to FY22 Q1. For the FY23 Q2 period to date from 31 October to 26 December 2022 total Group sales have decreased 5.5% compared to the same period in FY22. (The comparable period was an unusual trading period in FY22, as Q1 and Q2 sales were impacted by COVID-19 lockdown levels which were in place from 18 August 2021, with Auckland the last region to re-open stores from 10 November 2021).

FY23 sales for the Q2 period to 26 December 2022 by brand:
• The Warehouse sales were down 1.3% compared to the same period last year
• Warehouse Stationery sales were down 9.2% compared to the same period last year
• Noel Leeming sales were down 11.8% compared to the same period last year
• Torpedo7 sales were down 8.5% compared to the same period last year

Year to date Group sales in FY23 were $1,506m compared to $1,414m in the same period in FY22, an increase of 6.4%.

Group gross profit margin for the FY23 Q2 period to date was down approximately 300 basis points compared to the same period in FY22. Year to date Group gross profit margin in FY23 is down approximately 200 basis points on the same period in FY22.

The Warehouse brand continues to bear most of this decrease due to the continued strength of lower margin grocery and the current mix of seasonal sell through. Increased promotional activity has also impacted margin, in particular due to purposeful investment in the Group’s MarketClub membership programme, which has now generated more than 900,000 active members.

“With cost of living pressures impacting discretionary spend, we are focused on providing the best value essentials for Kiwi families at the lowest prices,” said Group CEO Nick Grayston.

“We’ve continued to see the relative strength in The Warehouse as customers seek out value, however we haven’t had sales momentum across our other brands. We’ve seen softer trading at Noel Leeming after a strong couple of years and some categories like bike and water at Torpedo 7 have not performed at the level we would expect at this time of year.”

“For FY23 H1 we expect gross profit dollars to be broadly in line with FY22 H1, however cost of doing business (“CODB”) including depreciation, to be $20m - $27m higher than FY22 H1. The higher CODB and depreciation largely reflects the investment in core systems and digital platforms the Group is currently undertaking and will continue to be monitored relative to trading conditions.”

The Group’s FY23 half year result will be released on Tuesday 21 March 2023.

[winner69]

Nztx .. you’d have to say the half year result is actually worse than what they alluded to in that Dec update

[winner69]

In analysts call Chair Joan said final dividend being considered …but reading between lines one not be forthcoming.

[Fortunecookie]

It was at a time where amazon/alibaba were seemingly unstoppable and it was only a matter of time before they (amazon) were setting up here etc etc.

But instead of getting better at what they do to protect market share, theyve shot themselves in the foot trying to be a mini amazon, to the tune lf $30-40 million bucks a year.

Biggest own goal IMO

Exactly. It's a huge investment and unfortunately can't see any payoff.

To be fair other outfits have been trying to apply this approach. I think Woolworths and CBA in Oz were trying and I think still are. Perhaps the difference I'm guessing is the strength of balance sheet.

[nztx]

Nztx .. you’d have to say the half year result is actually worse than what they alluded to in that Dec update

And another two months trading now past the the period end reported today - wonder if that is any worse ?

Inflationary & other market pressures may likely have not improved

[Muse]

is it the economy or is it Kmart, Farmers and co just killing WHS..?

It's not the Warehouse banner (Redsheds) that is impacting the group results - it's just all the other 4 divisions lol (stationary, NL, TP7, the markets). First half group sales growth of 4.8% doesn't sound too bad at the headline level, but given 1Q FY22 was lockdown impacted (and naturally 1Q FY23 was up significantly in year on year % terms) it's not a flash result, and in my view Q2 this yr vs last yr much more indicative of underlying trends as both clean results.

Red continues to travel okay but momentum really slowed in the 2nd quarter (sales per ave. store up only 2.6%, negative real growth). Blue down 5.6%, NL down 5.9%, and TP7 down a whopping 18.2% (remember when it was argued these were consumer staples lol)

Predictably enough tp7 has reverted back into loss making mode. Was surprised they continue to grow the store count, even adding 1 during the quarter. The worry with these expensive store roll outs is when they struggle to make coin when things are booming, and then revenue starts falling, is you are left with a large and sticky overhead base....rents and wages continue to rise from inflationary pressure, but your volumes are down which in turn reduces the rebates you get (driving cogs up), increases promotion costs and inventory obsolesce costs. Following the traditional retail cycle stores then need to get closed and expensive to exit leases. All these things compound each other at the bottom line.

Personally think it's madness to persist with the whole markets venture. Even from just a human perspective, those losses could underwrite people's jobs if they didn't persist with it, let alone the shareholder perspective.

Big change in net debt, woeful cashflow.

The ugly results that I had anticipated are arriving in earnest, which I take no satisfaction in for shareholders or effected staff.