WHS - Warehouse Group

[Sideshow Bob]

I would have thought bad Winner. R&R has evolved in recent years, but in many places they sponsor and support athletes and community events and trail building - which is really important. Depends whether this sort of thing continues with a more corporate environment.

Owners and staff have been bikers, racers, endurance athletes etc so live and breathe that sort of stuff. Ability to attract and retain that sort of staff may change. But who knows.

Would guess WHS would leave it standalone and try to work some synergies with Torpedo 7. I think a lot of their bike suppliers might be annoyed. Torpedo 7 isn't well liked by local importers/distributors/agents.

[winner69]

I would have thought bad Winner. R&R has evolved in recent years, but in many places they sponsor and support athletes and community events and trail building - which is really important. Depends whether this sort of thing continues with a more corporate environment.

Owners and staff have been bikers, racers, endurance athletes etc so live and breathe that sort of stuff. Ability to attract and retain that sort of staff may change. But who knows.

Would guess WHS would leave it standalone and try to work some synergies with Torpedo 7. I think a lot of their bike suppliers might be annoyed. Torpedo 7 isn't well liked by local importers/distributors/agents.

Good comments Sideshow

Hope they do leave them alone as obviously it is that culture that makes them successful.

A real challenge for corporate / old fashioned retailers as they come to grips with modern retailing, those businesses with high level of engaged staff engaging with the shoppers .... and the online way of doing things

[kiwitrev]

The Warehouse Group





Friday 29th November 2013

Text too small?


The Warehouse Group Limited (WHS) was established in 1982 by Sir Stephen Tindall, initially selling imported and manufactured clearance lines in Takapuna, Auckland. The Warehouse has subsequently grown to become one of New Zealand's largest general merchandise retailers. The group was listed in November 1994 following a public issue of 23.6 million ordinary shares at $2.50. In 2013, The Warehouse group announced the acquisition of all 92 stores of specialist Consumer Electronics and Home Appliance retailer Noel Leeming Group for $65 million NZD. This was followed by the announcement that WHS has signed an agreement to acquire 51% of the shares of Torpedo7 Limited, a leading New Zealand online retailer operating through the Torpedo7, 1-day and Urban Daddy websites in New Zealand and Australia.

The Warehouse Group reported Group sales for the year were $2,239.5 million, up 29.3% and adjusted net profit after tax increased 13.1% to $73.7 million. Reported net profit after tax was $144.7 million, an increase of 61.1% compared to $89.8 million last year, primarily due to gains on the disposal of property. The Directors declared a final dividend of 5.5 cents per share, representing 89.0% of adjusted earnings.

Over the past 12 months, WHS’s quarterly retail sales showed improving positive growth. The Chairman said in a statement “We believe we will see gradual ongoing improvements in consumer confidence and spending further supporting the recent retail sales growth trend. As our earnings are significantly influenced by Christmas trading performance it is too early to provide specific earnings guidance. The key elements of the Group’s strategic plan should ensure adjusted net profit after tax in FY14 is above that recorded in FY13.”

The Warehouse Group reported underlying net profit after tax, or NPAT, of NZD 73.7 million. However the 13.1% growth is due to the gains from its acquisition. The overall group’s operating margin reduced to 5.0% in 2013 from 5.6% in the previous year. The reduction in margin is attributed to the low margin of Noel Leeming Group (2.8%) and Torpedo7 (2.7%). Sales growth in the next five years is likely to grow due to the acquisition of Noel Leeming and The Group should gain increase in revenue from the online sales as the current trend of online shopping is growing and with some strategic acquisition The Warehouse should be able to use that to its advantage. WHS believes that the online sales will grow 3 times its current level in the next 5 years.

The Group’s dividend policy is to pay a dividend equal to 90% of adjusted net profit. The Board declares two dividends annually in respect of the half year (interim dividend) and full year results (final dividend). All dividends paid were fully imputed. Supplementary dividends of $0.595 million (2012: $0.601 million) were paid. Dividends are expected to increase at a steady pace in the future.

The shares have climbed 29 percent this year. The stock is rated an average 'hold' based on seven analyst recommendations compiled by Reuters, with a median target price of $3.75

[kiwitrev]

Endorsement for WHS on-line strategy today on stuff.co.nz. Having problem with cut/paste so go to stuff if interested.

[hilskin]

Thanks kiwitrev, here's the link for anyone interested.

http://www.stuff.co.nz/business/unli...sh-into-online

[percy]

I think WHS are doing all the right things .
The latest acquisition of School Tex brand from PPG will work well for them.
Also impressed with Noel Leeming and Torpedo7 acquisitions.
Pity it does not look too flash on charts,being on 200 day moving average.Will add it to a watch list.

[stoploss]

I think WHS are doing all the right things .
The latest acquisition of School Tex brand from PPG will work well for them.
Also impressed with Noel Leeming and Torpedo7 acquisitions.

I'm with you Percy , personally think this stock should be a lot higher... ( don't currently own ) When the world looks a bad place and I get out of many of my small caps I park it in the WHS..... Even when Aussie was hurting them they still made 50 odd million a year. Don't think you could get resource consent and build their footprint ( I know they have sold and leased back some ) for less than $ 5.00 a share ... Our two friendly supermarket chains are long 10 % each at prices North of 5.00 as well........

[macduffy]

Our two friendly supermarket chains are long 10 % each at prices North of 5.00 as well........

But they're only there to thwart each other's chances of taking the lot! Price meant very little to them when they bought so it's not a good guide to current values.

Nevertheless, I agree that WHS is a good hold at present in a market that to me doesn't offer a lot of better opportunities.

[stoploss]

But they're only there to thwart each other's chances of taking the lot! Price meant very little to them when they bought so it's not a good guide to current values.

Nevertheless, I agree that WHS is a good hold at present in a market that to me doesn't offer a lot of better opportunities.

It irks me somewhat that they were allowed to do this .... surely we want a competitive supermarket structure.... 3 chains would be better Aldi putting pressure on in Aussie... that move struck me as anti competitive.... then from memory the comm comm said that Countdown couldn't buy it anyway ....

[Harvey Specter]

PE ratio should be circa 10-15 and not sub 10!

Net yeild is just under 6% (fully imputed?) where they pay out 90% of profits from memory. Hard to see the share price increase unless they can increase profits.

They are moving in the right direction. The Noel Leeming and Torpedo7 acquisitions should hopefully help their growth. The latest acquisition looks like it wont take effect till after school starts so no big benefit till next year.

As an aside: has anyone seen the Torpedo7 ad on TV. The best ad on TV at the moment in my opinion; it could almost be used as a tourism NZ ad!