WHS - Warehouse Group

[Fiordland Moose]

This is all true.  It was only a decade ago that Kmart was deeply in the poop.  It was turned around relatively quickly. In two years Kmart had a major structural overhaul that yielded a 100% increased profits. The key was strong management and meeting customer wants.   The simple things, done well.  There's nothing stopping WHS from becoming relevant again. It'll all depend with who they appoint at the top. The initial noise is positive but I don't see them as investable...yet.

It's true Kmart have executed on a very good turnaround of the presentation of their stores and customer service, but the core of why they have been able to increase marketshare and profits so much is that they transformed from a retailer to a disruptive product maker.

Kmart Australia/NZ is owned by ASX listed Westfarmers and not owned by Kmart International.

Kmart AU owns the hugely successful Anko brand. Whilst you could call it a house brand, it's been a smashing success and you could put it up there with Zuru in terms of disruption. Over 85% of everything sold in Australasia is Anko. It only launched in 2019 and is now sold globally at Target, launched a partnership with Mattel for toys to sell across Walmart Stores in North America, Zellers in Canada, via Amazon in some jurisdictions, etc. Being vertically integrated Kmart is close to buying trends, has no margin sucking middlemen, and has a hyper efficient product design, development and manufacturing capability.

WHS could get back to basics - maybe, if they aren't in too much a downward spiral where they don't have the capital to reinvest back into the business - but its hard to fathom how they could remotely compete with Kmart's ANKO brand. I reckon Kmart will continue to rollout stores, or even pickoff abandoned warehouse sites overtime, and slowly but surely, continue to pulverise the WHS into oblivion (sort of like what the WHS did to mum and pop retailers 25 years ago)

[Basil]

Nick and the board wrecked this company.  ~$60m donated back to the Govt from Covid support because Cindy frowned on them and they are so focused on ESG they have forgotten about their obligations to shareholders.  By some accounts a total of well over $100m wasted on Nick's fantasy of creating a mini N.Z. Amazon with the market and there have been so many fiascos I forget how much got torpedoed on Torpedo7 ~ $60m?.

Tindall, opps sorry Sir Stephen Tindall, must be proud though with all the good he is doing, essentially running WHS stores with such skinny margins they operate as quasi not for profit Salvation Army stores.  There's still a place for this charity in N.Z. for quite a while longer, serving provincial towns where K Mart doesn't exist yet.    Their Te Kuiti store a classic example.  Its the only big box retailer in town and their store completely dominates the main retail shopping strip.

Balance has hit the nail directly on the head, the major focus of the largest shareholders is incongruent with the standard principles of maximizing shareholder returns.  It's all about leaving a legacy.  Sir Stephen must be proud conferring employment opportunities on more than 11,000 staff and supplying the basics of life to low-income families at basically, cost price + 2%    It's all about other stakeholders now...for as long as its lasts.

There's probably still quite some value in Noel Leeming and probably best to sell it and return the capital to shareholders before they waste it on more philanthropic endeavors.   I think all brands go through a life cycle and WHS is slowly dying.

[Raven]

It seems to me a lot of people here draw a strong link between ESG and company performance, that they are inversely related, that lots of ESG causes poor performance. As a Wesfarmers employee (not Kmart but another division) I can assure you that Wesfarmers is awash with ESG, particularly the E part - modern-day slavery, anti-bullying, pay parity, employee diversity, etc etc. I think you might be astonished at just how much there is, and yet I think Wesfarmers is generally regarded as a successful company.

[BlackPeter]

It seems to me a lot of people here draw a strong link between ESG and company performance, that they are inversely related, that lots of ESG causes poor performance. As a Wesfarmers employee (not Kmart but another division) I can assure you that Wesfarmers is awash with ESG, particularly the E part - modern-day slavery, anti-bullying, pay parity, employee diversity, etc etc. I think you might be astonished at just how much there is, and yet I think Wesfarmers is generally regarded as a successful company.

Its not a lot of people. Its just a small group of noisy people influenced by alt right and populist ideologies, who tend to repeat their gospel constantly like a broken record.

ESG does not kill business, but of course - any business forgetting over ESG its main purpose of being is doomed.

ESG for a business is similar like hygiene for a restaurant or a surgery.

If you are a customer you clearly want both of them to adhere to the appropriate hygienic standards, but you also want them to focus on their main job (like preparing good meals in the restaurant, or performing beneficial health procedures in the surgery).

The examples this group of anti-wokes brings are just companies who forgot their main purpose of being
and focussing on ESG instead. Obviously - this works as well as a restaurant which only focusses on disinfecting its venues and forgetting about cooking tasty meals. How many of their clients will they keep? But on the other hand - I can tell you as well how many customers they will keep if they give each of them a Bali belly for ignoring hygiene.

The trick is balancing both, but this is hard to understand for populists.

[Basil]

It seems to me a lot of people here draw a strong link between ESG and company performance, that they are inversely related, that lots of ESG causes poor performance. As a Wesfarmers employee (not Kmart but another division) I can assure you that Wesfarmers is awash with ESG, particularly the E part - modern-day slavery, anti-bullying, pay parity, employee diversity, etc etc. I think you might be astonished at just how much there is, and yet I think Wesfarmers is generally regarded as a successful company.

It's all about getting the balance right and there are plenty that do that. When ESG becomes the main focus point you know that the company has lost the plot. Synlait, a great example and WHS running a close second.  Recently, the CFO of one of the listed retirement village companies started the end of year financial result presentation by detailing all their ESG achievements before even mentioning the financial performance.  Shouldn't ESG stuff be somewhere in the main body of the presentation not right at the front end?  That to me is a really big clue their focus is unbalanced.    More than a few companies on the NZX try and disguise their woeful financial performance with liberal amounts of greenwashing.

[SemiStrongForm]

It's all about getting the balance right

Can I suggest to you, that on balance, you overweight the destruction of shareholder value associated with 'ESG' (ie, living wage, diversity) and underweight the destruction of value caused by (1) complete lack of successful innovation in store offerings, products and brand over a period of 25 years; (2) the effect of increased competition from kmart, temu and other retailers that are innovating ; (3) $100 million dollar value destruction from the online market place and other failed initiatives (Torpedo 7).

In 2021, Kmart was paying the living wage (I assume they do now as well). I don't think ESG has been the downfall of that business, to the contrary it is successful.

ESG is a strawman on this forum, and I'd like to do my part to bring in the actual value-relevant considerations that are more likely to be driving financial performance.

[Basil]

No doubt about it, apart from an excessive focus on all things ESG, the board allowed Nick to shoot WHS in the foot in quite a number of different ways before eventually summoning up the gonads to get rid of him.  In addition, as you mention, while all this was happening over many years the competition has been executing well.

[moose]

Its not a lot of people. Its just a small group of noisy people influenced by alt right and populist ideologies, who tend to repeat their gospel constantly like a broken record.

ESG does not kill business, but of course - any business forgetting over ESG its main purpose of being is doomed.

ESG for a business is similar like hygiene for a restaurant or a surgery.

If you are a customer you clearly want both of them to adhere to the appropriate hygienic standards, but you also want them to focus on their main job (like preparing good meals in the restaurant, or performing beneficial health procedures in the surgery).

The examples this group of anti-wokes brings are just companies who forgot their main purpose of being
and focussing on ESG instead. Obviously - this works as well as a restaurant which only focusses on disinfecting its venues and forgetting about cooking tasty meals. How many of their clients will they keep? But on the other hand - I can tell you as well how many customers they will keep if they give each of them a Bali belly for ignoring hygiene.

The trick is balancing both, but this is hard to understand for populists.

Not quite on a thread but this is exactly why we have had such poor performance from the public services (especially Health) - put bluntly the Managers/"Decision Makers" simply do not have the intellectual bandwidth to be able to concentrate on ESG (which the prior government stressed was its priority) and "doing the basics right" - the result is that we spent billions more on health but got worse outcomes because they removed all KPIs related to outcomes and the managers just concentrated on the topical ESG gift-wrapping - the result we are all receiving a worse service with worse outcomes.

The same applies to many NZ companies - we simply do not have enough competent, capable and intelligent senior managers and Directors.

[Teitei]

Can I suggest to you, that on balance, you overweight the destruction of shareholder value associated with 'ESG' (ie, living wage, diversity) and underweight the destruction of value caused by (1) complete lack of successful innovation in store offerings, products and brand over a period of 25 years; (2) the effect of increased competition from kmart, temu and other retailers that are innovating ; (3) $100 million dollar value destruction from the online market place and other failed initiatives (Torpedo 7).

In 2021, Kmart was paying the living wage (I assume they do now as well). I don't think ESG has been the downfall of that business, to the contrary it is successful.

ESG is a strawman on this forum, and I'd like to do my part to bring in the actual value-relevant considerations that are more likely to be driving financial performance.

Go to K-mart and witness how there's no woke or cultural signage in there.

Go to K-mart and witness how motivated staff are - continuously tidying up and sorting out merchandise so that they are in the proper places for customers to see and buy.

The Warehouse is all woke these days with the most pathetic indifferent & disinterested staff you could ever find. The emphasis has been on woke and cultural training rather than on how to take care of customers.

Is it any wonder that the businesses (previously profitable and successful like Torpedo & Noel Leeming) bought or created by Warehouse became such disasters?

Difference between K-Mart & Warehouse comes down to what and how the staff are trained and directed to do - one on customer service, the other on woke and cultural values.

Like I wrote before, the company reflects the desire of the principal shareholder to leave a legacy rather than a business.   

[BlackPeter]

The same applies to many NZ companies - we simply do not have enough competent, capable and intelligent senior managers and Directors.

Fair enough ... and clearly true for all sorts of jobs and activities - including politicians. Just we posters are an exception ;

I suspect however that NZ is not alone in this field. Lets face it - while everybody believes that they are a star, half of all people are below average in what they are doing. Simple maths.

Its just that dropping ESG in business does not improve the situation, same as dropping hygiene in a restaurant or surgery would. Maybe our schools need to refocus on what's useful, and teach next to reading, writing, discipline and respect as well to walk while chewing gum. Give it two generations or so, and it will all be fine ;

[Teitei]

What went wrong for (?) the warehouse? Should be at the warehouse surely!

https://www.rnz.co.nz/news/business/520304/what-went-wrong-for-the-warehouse

[Untamed]

Our local Warehouse lost its way when they closed our standalone Warehouse Stationary store, which was actually an awesome place to shop, and moved it into one end of The Warehouse. Their Warehouse Stationary offering is now pathetic to see the least. A major backward step. At the same time they re-arranged the entire store, creating a layout which now makes zero sense in terms of store navigation. Their groceries are no cheaper than Pak n Save for the most part. In the past it was a place to go "window shopping" for something to do on a rainy day, or my go-to for garden stuff. I now probably go there no more than 4 times a year, if that.

They should have stuck to the original model and resisted the urge to expand into other areas. Once upon a time you could even buy a bottom range laptop there - not something I would have purchased, but for people on a low budget, it served a need.

They could shut up shop tomorrow and I wouldn't even notice. I suspect many locals feel the same.

[Left Field]

Surprise, surprise...... a downgrade.

https://www.nzx.com/announcements/433265

GLH.

[Teitei]

Surprise, surprise...... a downgrade.

https://www.nzx.com/announcements/433265

GLH.

Go woke and go broke.

Bluntly, minorities are dumb to be in the stock given the influence of the principal
Shareholder whose motivation is incongruent to that of a progressive and prospering business (principal shareholder has of course already made his money in the hundreds of millions of dollars).

[winner (n)]

So ~$25m EBIT for full year ....not much NPAT after that no matter what 'adjustments' they come upmwith

Half year EBIT was $44m so second half a LOSS and a pretty big one at that