WHS - Warehouse Group

[winner69]

So then W69 you're saying that, unlike many other NZX companies, WHS is fairly valued

Not really -- probably saying that that WHS as on ongoing concern is overvalued and those that think there is a reasonable take over premium currently built into the price are correct ... if that is the reason for the 'overvaluation'

At current price and current company performance returns for anybody taking it over is 8% ..... probably on the low side .... like Snoopy uses Buffet's number of 15% ..... so take it from there and WHS is not worth 385

Never mind all this crap .... the market is always right eh .... so it must be worth 385 .... no argument

[Corporate]

One way of looking at

Currently WHS EBIT about $128M (assuming this year to be about the same as last year) which after tax gives Operating Earnings of about $90M .... driven from shareholder equity of $$320m and debt of $100m .... so a 20% return on capital .... fantastic performance

At current shareprice market cap is $1.1 billion. So if you managed to buy the company it would cost you this $1.1 billion and you pick up the $100m debt so total cost (capital required) is $1.2 billion. All of sudden that $90m operating earnings is not that attractive .... it only gives you a 8% return on the capital invested (6% if you had to pay a 20% premium)

So honestly .... would any of you if you had $1,4 billion buy something for a 6% after tax return .... esp when they have essentially saturated the market and future growth potential is rather limited without further capital.

I doubt it ... therefore isn't WHS overvalued at the moment .... or there is some strategic value of the sites / footprint for a potential buyer included in the price.

Same sort of thinking Buffet applies ... as Snoopy would probably say Warren wouldn't be buying WHS at these prices .... but at what price? .... at least a 12% return i would say to cover cost of capital ... ie about $2.10 a share.

Is that what Warren pay Snoopy ... haven't checked your latest workings on sharechat

Interesting

Good post Winner. I think you hit the nail on the head!

[modandm]

think you guys have it wrong.

You can't think of any investment in the way you have described.

This is how people are thinking:

Solid blue chip co with defensive characteristics

Strong dividend yield with high likelyhood of 30cps special div this year.

Modest return risk characteristics

YES - il have this in my clients retirement portfolio please.

Sure its not going to be a double bagger unless there is a takeover but it is going to be reliable and provide a good income stream

believe it or not thats what most people want from their investments.

Plenty of room for upside as blue sheds get spun off or sold.

Cheers

[POSSUM THE CAT]

modandum Take the blinkers off. With the present hopeless management I do not know if I would buy them at $3.00. Tindall needs to return & manage The Warehouse again to bring back some core business stratedgy. Instead of looking at every passing fad. Bluesheds are suffering because of poor management. With staff that know very little about there product how can they expect to charge the same sort of prices as the likes of Whitcoulls & Office Depot where you get personal service and the staff have lots of product knowledge.

[ratkin]

Sure its not going to be a double bagger unless there is a takeover but it is going to be reliable and provide a good income stream

In these trying times i actually agree with you here , the company has very little debt and isnt quite the basket case it being portrayed as.
Might not be a screaming buy according to Buffett , but then what is?

[Balance]

In these trying times i actually agree with you here , the company has very little debt and isnt quite the basket case it being portrayed as.
Might not be a screaming buy according to Buffett , but then what is?

WHS has strategic value which will be realised soon enough.

Enough said.

[winner69]

modandum Take the blinkers off. With the present hopeless management I do not know if I would buy them at $3.00. Tindall needs to return & manage The Warehouse again to bring back some core business stratedgy. Instead of looking at every passing fad. Bluesheds are suffering because of poor management. With staff that know very little about there product how can they expect to charge the same sort of prices as the likes of Whitcoulls & Office Depot where you get personal service and the staff have lots of product knowledge.

The reported double digit sales increase by BGR doesn't put WHS in very good light

The market was not as stuffed as Ian made out .... some retailers have done very well and The Warehouse wasn't one of them

Prob stock a lot of stuff punters don't want .... Briscoes must stock the stuff punters want and at the price they are willing to pay

Be interesting to see whether WHS expanded margins like BGR say they have managed to do

[emearg]

Rod Duke continues to prove himself to be one of the countries most capable retailers.

In my opinion Stephen Tindall used to be one of the countries most capable retailers.

I'm not sure about the current Warehouse management or strategy. They have gone a little more upmarket in terms of layout, quality and prices and don't have the constant sales that used to appeal to a lot of people (or was it just me?)

I'm not sure any of these things suit the Warehouse brand that was created over a couple of decades? It seems they have tried to become a bit of a 'me too' (like Dick Smiths have just done) shop and have perhaps lost some of their appeal because of that?

Over the past few years I have found myself buying very little from the Warehouse. Briscoes sells better quality gear (in my opinion) for not much more (when it is on sale). If I want CDs and DVDS which I used to buy at the Warehouse I now go to JB HiFi as they have a much better range and are generally cheaper.

[Lizard]

Putting on my "chief household shopper" hat, I find myself shopping less and less at our local Porirua store - even actively avoiding it. When I do go, I tend to leave feeling irritated:

• Never enough checkouts open - usually a queue of at least 3+ people at any checkout.
• Seems like assistant leaves the till for every other customer to check on something.
• Items often not visibly priced or not priced correctly or pricing is confusing (sale items mixed with non-sale)
• Unfriendly and unattractive.
• Pricing policy seems a bit random. No longer assume it will be best price there.
• The annoying "pay for bags" policy - I don't mind being asked if I want one, but the petty charging grates.

Okay, I admit I am probably no longer in WHS target demographic, but I think a little more pride at shop floor and improved focus on customer experience wouldn't go amiss.

[percy]

Putting on my "chief household shopper" hat, I find myself shopping less and less at our local Porirua store - even actively avoiding it. When I do go, I tend to leave feeling irritated:

• Never enough checkouts open - usually a queue of at least 3+ people at any checkout.
• Seems like assistant leaves the till for every other customer to check on something.
• Items often not visibly priced or not priced correctly or pricing is confusing (sale items mixed with non-sale)
• Unfriendly and unattractive.
• Pricing policy seems a bit random. No longer assume it will be best price there.
• The annoying "pay for bags" policy - I don't mind being asked if I want one, but the petty charging grates.

Okay, I admit I am probably no longer in WHS target demographic, but I think a little more pride at shop floor and improved focus on customer experience wouldn't go amiss.

Everytime I go into barrington store I find myself asking what the hell am I doing in here.Cannot find what I am looking for and no staff to ask.