WHS - Warehouse Group

[marinesalvor]

oh well - maybe they can get King Win L to make a takeover - takeover rumours are really the only thing that impacts WHS SP

[Snow Leopard]

WHS has sold out of Oz.

[Snow Leopard]

Good to see that they apply their mantra
"Where everyone gets a bargin"
even when selling part of the business.

[winner69]

Early response seems to be the market does not like .... a bit of selling

Even though well signalled and most knew this would happen and they would have to writeoff $100M odd some would say all built into the price .... but there were many (some on sharetrader) once the announcement was actually made would be the time to get back in

However Snoopys earlier analysis a while ago sort of suggested (I recall) that 400 odd was a pretty good price for WHS ... ecen without Aust strangling it to death

Maybe the market is efficient (more so than we give it credit for) but the next few days could be interesting ... wonder what the price will be next week

[craic]

Bought a few a while back for 399 cps. Just put in for a further 1000 at todays price. I fail to see why the price is not going up on the announcement. I suppose the majority of small shareholders ahve to read the newspapers, think about it - and then ring a broker. I like the moves they are making in NZ. Sell booze - sell ride-on mowers, maybe sell Chinese cars soon?

[CJ]

Good they are out of Australia.

However, I personally dont think food and alcohol is a good option.

You cant beat supermarkets. They work on higher turnover/lower margins and have better buying power by selling greater volume of product. Also until WHS becomes a full product supplier, people cant do all there shopping there which is the way supermarkets are going.

[Placebo]

If anything it's a positive as it removes an uncertainty.

Then again, it also removes a potential growth avenue.

So what now? Big fish in a small pond? Fiji? [?]

I disagree re the supemarkets. They are already converging -- you can buy TVs at Foodtown, toilet paper and shampoo at the Warehouse. No doubt this trend will continue.

[rmbbrave]

Aussies may get a bargain from sale of Warehouse

24.11.05 10.00am


Discount retailer The Warehouse has signed a conditional deal to offload its troubled Australian business.

A joint venture between Catalyst Investment Managers, its parent PPM Capital, and Castle Harlan Australian Mezzanine Partners -- acting on behalf of the Champ funds -- has agreed to buy the business for A$92 million ($99 million).

In 2000 The Warehouse paid A$105 million for the chain which consisted of 105 Clints Crazy Bargain and Crazy Sollys stores.

The sale will result in a pre-tax earnings expense of between $80-$90 million for The Warehouse.

The sale is expected to be completed in early 2006, subject to regulatory approval and other commercial conditions, including an agreement with Australian discount retailer Millers, which the joint venture is also buying.

The head of The Warehouse Australia, Ian Tsicalas, will stay at the helm of the new combined business, and as a result has today resigned as a director of The Warehouse.

The Warehouse was advised by Auckland-based First NZ Capital and Sydney-based firms CSFB and Allens Arthur Robinson.

The Warehouse chairman Keith Smith said while The Warehouse Australia has made improvements in the past year, a review indicated that substantial further investment was needed to achieve operating scale and future growth.

"The board considered that at this time, focusing the company's resources on developing its New Zealand businesses would generate a better outcome for shareholders," he said.

The Warehouse revealed in June it was looking to merge its troublesome Australian "Yellow Sheds" chain with rival Millers and then sell off the joint operations.

The enlarged discount variety business would generate sales of about A$1.3 billion and have a market share of 14 per cent, making it more competitive against the dominant Australian players, Coles and Woolworths.

Australia has long been a drag on The Warehouse's profits. For the first quarter of this year, The Warehouse Australia reported an 8.7 per cent drop in sales during the quarter, to A$105 million, while same store sales fell 8.7 per cent.

Sales in New Zealand for the period were up 3.2 per cent to $326 million, with same store sales up 0.2 per cent.

The Warehouse in New Zealand has been undergoing a revamp under new chief executive Ian Morrice, who took on the role in August last year.

Mr Morrice has worked at cutting clutter in the group's stores and improving the product line. A new logo was unveiled during the October quarter and a replacement store opened in Palmerston North based on layout and fixture innovations trialled at the group's laboratory store in Te Rapa.

The group has also announced plans to open an alcohol shop within its store in Fraser Cove, Tauranga.

The trial shop will be owned and run by The Warehouse Cellars, a joint venture between the group and Reliance Wines.

Shares in The Warehouse last traded yesterday at $4.09, having ranged between $3.04 and $4.39 over the past year.

- NZPA

[CJ]

quote:Originally posted by PlaceboI disagree re the supemarkets. They are already converging -- you can buy TVs at Foodtown, toilet paper and shampoo at the Warehouse. No doubt this trend will continue.

Yes they are moving into Warehouses area based on there high volume/low profit margin. Warehouse cant compete and I think they will suffer. Warehouse is the David vs the supermarket Golith and in this case I dont think the small will survive.

Time will tell but I think they should have looked for another warehouse stationary (untapped market) rather than supermarkets which is a mature market.

[Halebop]

quote:Originally posted by CJ

Yes they are moving into Warehouses area based on there high volume/low profit margin. Warehouse cant compete and I think they will suffer. Warehouse is the David vs the supermarket Golith and in this case I dont think the small will survive.

Warehouse was a minnow compared to Farmers when they started out but they prospered by delivering a better offer. As always the better offer will prevail. Nobody in New Zealand has yet demonstrated an ability to package a catch-all grocey+general merchandise offer.

Most supermarkets I go to are attempting to stock limited lines of general merchandise. They are typically hamstrung by lack of space and so will not present a serious one stop shop competitor without some equally serious investment.

Warehouse is already gearing to compete on this level by sourcing oversized sites for the "hypermarket" concept. Personally I think their historical deficiency has been detail. "Retail is detail" and I still remain unimpressed by their merchandising skills although I have not seen their concept store in Hamilton. The key to them succeeding with a full grocery offer is how it will be packaged. I suspect a model similar to Aldi is the way to go because it offers higher gross margins - an important condsideration while they lack scale. This might not fit comfortably with their attempts to upscale the discount stores so I'll await outcomes with interest. A successful strategy could provide years of future growth. A poor implementation will probably see them either splutter along as they have for several years or be swallowed by Woolworths.