WHS - Warehouse Group

[winner (n)]

Basil - always pays to keep track of the cash - here's WHS Free Cash Flow over the years

Coming big spenders .... lot of it on IT related stuff

And an analyst queried why they paid a dividend

You cannot view this attachment.

[lorraina]

Big IT spend to sell cheap baked beans at a low margin.?..Yeah right..lol.

[BlackPeter]

Big IT spend to sell cheap baked beans at a low margin.?..Yeah right..lol.

Have a look at The Market.

Yes, they might sell as well cheap baked beans (https://themarket.com/nz/p/oak-baked-beans-420g/2-R857055?siq=2532c273-1033-4d93-90f2-ac31d14fe142&sii=2R857055&mode=io&s=baked%20beans),

but there is as well plenty of stuff to indulge:

like top end home electronics?

https://themarket.com/nz/p/samsung-galaxy-s22-ultra-5g-512gb-white/4-210609

a great e bike?

https://themarket.com/nz/p/the-new-v4-cruzer-power-dual-battery/5875-SQ4768586?siq=d91d926a-a1cb-43a0-93e6-f8584e0c59fa&sii=5875SQ4768586&mode=io&s=e%20bike


fashion?

https://themarket.com/nz/p/dolce-gabbana-bordeaux-crystal-ball-gown-full-dress/4782-NOC10134?siq=64e39f1f-c239-4381-8819-2588ead37538&sii=4782NOC10134&mode=io&s=ball

or something for the senses?

https://themarket.com/nz/p/boss-bottled-infinite-eau-de-parfum-spray-by-hugo-boss-200-ml-men/4782-FX548708?siq=e29e951e-7f1e-494c-b844-dabdbe940deb&sii=4782FX548708&mode=io&s=boss

while they get for some of this stuff only a 15% commission ... I suppose the margins overall might be quite satisfactory.

[Basil]

The much touted cash mountain of $160m has turned into a pile of debt of $41m Winner

To me that was a run for the hills moment.  Seeing their cash drained like that is pretty spectacular for all the wrong reasons and that's before they pay the dividend which is another $34.7m which probably gets added to the existing debt.

I think there's a very real risk Nick's obsession with 'the market" which is consistently burning ~ 20% of annual profit turns into a white elephant.  Plenty of other online platforms and not many retailers want to pay the market 15% of their gross sales just for being on the platform when they can have their own digital sales channel.  I suspect "the market" is conceptually flawed in a very small country like N.Z..

Like a lot of CEO's, if this huge gamble doesn't pay off, I doubt he will stick around to face the music.

[winner (n)]

So 1.6 million shares as a retention 'incentive' if you hang around for another 4 years and don't stuff things up too much in the process .... well done Nick

Suppose Joan thinks a good deal .. many wouldn't

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/WHS/401168/381916.pdf

[winner (n)]

Allow Nick a year to settle in when he started in 2016 - since then he has seen Group sales grow from $2.9 billion to $3.3 billion - about 3% pa ..... and profits (normalised) have gone from about $70m to just over $80m

Best achievement has been $80m is restructuring / consultants costs

Hope next 4 years is better - but Joan they must keep him on as they want to ensure his leadership through the next 4 years so the strategy that seems to have taken eons to develop can be implemented (successfully)

Maybe I'm just jealous

[Waltzing]

Test out T7 delivery for some gear in the lastest round of sales to ditch last years tech and delivery was next business day.

[Basil]

Allow Nick a year to settle in when he started in 2016 - since then he has seen Group sales grow from $2.9 billion to $3.3 billion - about 3% pa ..... and profits (normalised) have gone from about $70m to just over $80m

Best achievement has been $80m is restructuring / consultants costs

Hope next 4 years is better - but Joan they must keep him on as they want to ensure his leadership through the next 4 years so the strategy that seems to have taken eons to develop can be implemented (successfully)

Maybe I'm just jealous

Just keep throwing $25m a year at themarket.com, (gamble more than a quarter of the company's profit), what could possibly go wrong 

[winner (n)]

When our Nick started as CEO (nearly 7 years ag0) the WHS share price was $2.90 - now $3.09

Maybe a better performance over the next few years so he can cash in his 1.6 million shares at a great price

Must think so because he bought some off a poster on this site for $4.11 not that long ago

[Left Field]

Good update.... holders should be happy

https://www.nzx.com/announcements/402187

• Group sales for the 13 weeks to 30 October 2022 ("FY23 Q1") were $764.7 million, up 21.2% compared to FY22 Q1 and up 12.3% compared to FY20 Q1 (being the last pre-COVID comparative period).
• Record first quarter sales at The Warehouse of $414.6 million, up 39.0% on FY22 Q1, as customers shopped for value with grocery sales up 76.2% and homeware sales up 32.2%.

[winner (n)]

Good update.... holders should be happy

https://www.nzx.com/announcements/402187

• Group sales for the 13 weeks to 30 October 2022 ("FY23 Q1") were $764.7 million, up 21.2% compared to FY22 Q1 and up 12.3% compared to FY20 Q1 (being the last pre-COVID comparative period).
• Record first quarter sales at The Warehouse of $414.6 million, up 39.0% on FY22 Q1, as customers shopped for value with grocery sales up 76.2% and homeware sales up 32.2%.

Only up 21% on pcp

Just as well for the Red Sheds and to a certain extent Warehouse Stationary - Noel Leeming and Torpedo7 must be a bit of a worry.

On their own measures they have lost market share .... overall retail sales in NZ did better than this

And Gross Margin % down -- if that continues for the full year hurts bottom line by $20m v F22

[Basil]

Savvy investors will recall that all of the wider Auckland region was in lockdown for the vast majority of Q1 FY22.  1.7 million people locked up for 107 days.
To really get a clean comparison one needs to go back to the last Q1 result that was undisturbed by Covid, Q1 FY19 in which group sales were $694.8M.  Sales are up 10.06% in the last 3 years in nominal terms or approximately unchanged in inflation adjusted terms.

"Satisfactory" is how I would describe today's announcement.  Good progress on store within a store in the last year.  Dividend hounds should be satisfied that the likelihood of 20 cps fully imputed being maintained going forward just got a little bit better.

Disc: No holding.

[winner (n)]

Taking one quarter a few years ago and doing quarterly comparisons as the base isn't particularly good practice.

Looking at segment growth since October 2019 (pre Covid) - 3 year annual growth has been

Red Sheds 2.4% pa
Stationery -1.4% pa
Noel Leemings 5.5% pa
Torpedo7 5.8% pa

I wouldn't call that good - esp when other NZ retailers have done better than this on same measure (Michael Hill and Kathmandu excluded)

[winner (n)]

But the market thinks the sales were great and share price up 5%

Must have overlooked the margin decline bit

[Basil]

Taking one quarter a few years ago and doing quarterly comparisons as the base isn't particularly good practice.

Looking at segment growth since October 2019 (pre Covid) - 3 year annual growth has been

Red Sheds 2.4% pa
Stationery -1.4% pa
Noel Leemings 5.5% pa
Torpedo7 5.8% pa

I wouldn't call that good - esp when other NZ retailers have done better than this on same measure (Michael Hill and Kathmandu excluded)

Fair enough mate I only did a real quick comparison on gross sales.  As usual you're on the ball very quickly whereas fat Beagle still needs his second coffee 
Current gross yield (if its sustainable), is just on 9% based on them paying 20 cps fully imputed = 27.78 cps gross. On the face of its that's acceptable for dividend hounds but the question in my mind with inflation where it is revolves around whether they can maintain the dividend going forward in inflation adjusted terms ?