WHS - Warehouse Group

[winner (n)]

Noel Leeming sales growth over the years quite interesting

Lockdowns good for them --- maybe when all the computer gear and TVs bought during lockdown will need to be replaced soon to give sales another boost. That be good for them

On the other hand might just revert to lowish growth as seen pre-covid.

But it seems JB HiFi doing better at the moment

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[Basil]

I have a Samsung 55-inch T.V.  Had it for ~ 10 years and still going strong with a very clear picture.  I doubt much of the stuff bought during lockdown recently will need replacing for a while but maybe stuff isn;t built as well these days ?  Time will tell.

Groceries sales up a lot. I knew all my cheap milk purchases at WHS would show up somewhere...wonder what their margin is on $3 for 2 liters of milk ?

[lorraina]

Very little.,.

[winner (n)]

Big day on NZX but WHS hardly moved after a sales update

Suppose one could assume market not that impressed with update.

[winner (n)]

For a laugh joined WHS ASM

Jeez Nick is so boring .... doesn't want to be there methinks

Taking ages to get to question time.

[Basil]

Can't help notice it closed very close to a new low for the year at $2.90
My morbid fascination with no growth cyclical companies sees me wondering if this goes back to test its support level of $2 a few years ago ?
Might be worth a punt if it does.

[Left Field]

Crikey! A sneaky downgrade released late afternoon 29/12/22

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

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.

And what's this about "down 300 basis points....etc" ?? Give me the % for xxx sake. Anyways, glad I don't hold.

[winner (n)]

Profit for H1 to be down about 40% ....ouch

Hard to imagine H2 being any better

Bit of a disaster this update

And our man Nick just got zillions to say on for another few years ...I'd say he lucky to keep his job.

[winner (n)]

WHS could be back on Basil's watch list pretty soon

[Hectorplains]

Aituā! So "purposeful investment in the Group's MarketClub membership programme" is highlighted as a key expense.  They reckon they have 900,000 "active members" (whatever 'active' might actually mean?)  Yet it's hard to see where they will gain profitability from this particular venture?  How many sales are they getting out of each of these members?  I guess it's all commercially sensitive information but at some point they need to produce numbers that prove this is not just an expensive folly (which is what my bet is on it being.)

[Basil]

Profit for H1 to be down about 40% ....ouch

Hard to imagine H2 being any better

Bit of a disaster this update

And our man Nick just got zillions to say on for another few years ...I'd say he lucky to keep his job.

Looks like a bit of a disaster to me.  Noel Leeming sales tanking, sales down in the last 2 months but not down so much because they are held up a bit by low margin grocery but it's all okay because we now have 900,000 active users on our market platform.
It's long overdue for Nick to give up on his fantasy for creating a mini N.Z. version of Amazon that's costing shareholders ~ $25m per annum.
I think this deserves to go back to $2 where it came from. 

[Perky]

Yes well I think the Whs should be doing super well every year...

I think they could be ordinary this year..weighed down by noels coming off Covid tailwinds, torpedo 7 will be so so and red sheds will have sold a lot of milk, flour and butter which kept customers happy but shareholders poor as the selling price of these items is unsustainable. The grocery experiment will end in a whimper and they will go in search of the next category nirvana after they already exited finance,jewelry, Whs xtra, alcohol, Australia...silly solly etc. The market will still be selling heaps but costing heaps to run selling other businesses products.
By jiggery pokery of group numbers the dividend will still be paid

Maybe when the economy slows a bit more the red shed will go better. Not enough pain yet

I could be also be horribly wrong so GLH

Even though I'm not a holder it's an interesting company to follow with its diversity of product mix and sales channels that aren't always closely related in performance ie when Noel's goes well whs probably not and vice versa..when they get all bits going north ...that's the year

I'm not totally surprised as per my post above in September. I think the Whs has a real conundrum on what they are going to be in grocery. At the moment they only offer a very tight range of goods so people can't do a full grocery shop at Whs ie no fresh , frozen, meat etc. In my real world I go past a Whs to go to supermarket. I'm spending some money with the Whs on groceries which I previously wasn't...but I only buy the items that are cheaper than supermarket ie milk, butter, flour and I take advantage of their special offers. I don't know what their buy prices are but some of their bundled offers are ridiculously good value for customers and probably contribute no profit to shareholders...here's a few example from my Whs app on purchases made with a guesstimate on ave supermarket price.
40 Starbucks capsules Whs $16.78 supermarket $28
4 twin packs griffins gingernuts Whs $7.90. Supermarket $18
Honey Whs $3. Supermarket $5
Milk Whs $3. Supermarket $4
Flour Whs $1. Supermarket $2.40

On top of this I regularly get $5 or $10 off on spend levels with Whs app or market place

No wonder theres margin pressure on grocery.
Every week the supermarkets have loss leaders as they know once you get there you grab a big trolley and fill it with other items and spend a high weekly ave amount. I've never used a trolley or even a basket for my shopping at Whs grocery. I wonder if lots of other people shop similar. Sales revenue is one thing but margin and profit are more important imho.

So the Whs is getting me in store which is good. I'm spending some money there but average purchase would be around $10/week...that is bad. I haven't bought any other category outside of grocery...that is very bad. I still do 95% go grocery shopping at other stores...this is bad.

There giving a lot of pricing margin away to me and getting diddly squat back from me in revenue

If you were poor ole Nick head of Whs...what would you do to get this place humming?

[winner (n)]

So H123 sales going to be about $110m than H122

But after all that effort they make $20m less after tax ...$26m before tax.

Increased sales impact $38m additional margin all gone from reduced margin %. That much improved margin they gloated about over last couple of years all gone.

And then costs up say $25m

Npat will be about $30m ...not much eh

Reduced margins and increasing costs not a good combo

[winner (n)]

Profit margin below 2% of sales

Back to the good old days of being a low margin retailer .....hardly a surprise

Reducing margins and increasing costs not a good combination

[Perky]

Mr Winner, you told me once you used to work on Whs business in your professional capacity. You know this business very very well...probably better than some of management

Today you are Nick.

The board has called you urgently back to Birkenhead from nicks holiday Bach in Omaha

In 25 words or less...what's going wrong and how you going to fix it?

Discl. Not a holder but might buy some one day.