WHS - Warehouse Group

[Left Field]

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

But Winner, WHS say Gross Profit margin only "down approximately 200 - 300 Basis Points"....... so all is well.

Who are they trying to fool?

[winner (n)]

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.

Nick just sent text to Joan

Hi Joan, the ebike I got from T7 has just stopped working so can't make it today and my mobile isn't working that well. Talk in New Year sometime.

[Hectorplains]

It may not require rocket science...they could just look down the road to K-mart for inspiration.

The rise of Kmart

Kmart's success story started when it attempted to differentiate itself from other mid-market businesses (e.g. Big W and Target) by price through its quarterly sales. Although this promotion encouraged greater spending from customers, it conditioned consumers to delay large purchases until sales occurred. As a result, Kmart switched to the "everyday low prices" (EDLP) model we see today, selling a small range of products at cheap prices, appealing to price conscious customers who desire value for products.


Furthermore, continual market research conducted by Kmart, taking inspiration from international designers and feedback from fans and influencers, allows it to stay on top of consumer trends, putting it ahead of slower competitors.

Another factor contributing to Kmart's success is its comfortable in-store experience; its cleaner and wider aisles and absence of bargain bins contrasts that of Target, which places low-cost items next to higher-priced celebrity and designer collaboration products with bins of miscellaneous products scattered around the store, making it less appealing and attractive for customers. https://www.smsusyd.com/post/a-tale-of-two-retail-chains-marketing-under-the-microscope-5


https://www.smh.com.au/business/companies/how-kmart-became-the-cool-mum-of-australia-s-discount-retailers-20200207-p53yn1.html

[Perky]

Nick just sent text to Joan

Hi Joan, the ebike I got from T7 has just stopped working so can't make it today and my mobile isn't working that well. Talk in New Year sometime.

Joan to Nick,
This is the last time I fly back from Pauanui to market disclose our poor performance. Shut the market, stop discounting and giving margin away..or Nick..you'll be on your bike alright son...
Love Joan of Ark

[winner (n)]

Nick sent another text to Joan 'Record first half sales Joan. what's the problem'

[BlackPeter]

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

Is this a good thing or a bad thing?

[winner (n)]

Basil sold his shares to Nick not that long ago - Nick paid $4.11 for them

They say insider buying is a good sign. Even the CFO was buying about the same time

Suppose Nick not worried that those shares are now $2.60 - used to saying everybody gets a bargain

[Crackity]

NZX site says at the $2.59 current price the

Gross Div Yield      9.921%

Must be on every dividend hounds watchlist as it is well over 8% gross?

[Perky]

Nick sent another text to Joan 'Record first half sales Joan. what's the problem'

Well Nick, the problem is where selling lots more and making much less.
phyla sophicallee we should be trying to sell less and make more or sell more and make more.
That's why we employ you Nick
Joan

ps are your sure you can't come to the office for a spanking...your phone seems to be working now. Maybe you can paddle board from Omaha to takapuna and we will get your pa to pick you up

[Basil]

NZX site says at the $2.59 current price the

Gross Div Yield      9.921%

Must be on every dividend hounds watchlist as it is well over 8% gross?

Is the current annual 20 cps dividend sustainable?  That's the $64,000 question.

[Hectorplains]

NZX site says at the $2.59 current price the

Gross Div Yield      9.921%

Must be on every dividend hounds watchlist as it is well over 8% gross?

Yup...galloping to catch up with My Food Bag's 17.50%.  Surely both are divy hunters dreams, eh. 

[Perky]

Apparently Nick has authorised these billboards as he departs for his annual beach holiday.

He was not prepared to take any calls from share analysts or angry stocktalk members on their latest company performance and would prefer Joan to just own it!!


Happy New year all...especially like to thank Mr Winner for sharing his knowledge and experience and his wealth of posts this year.

[Popeye]

In some ways a puzzling announcement.  A $20-27m increase in COBD (and depreciation) which "largely reflects the investment in core systems and digital platforms the Group is currently undertaking".  So a massive blowout in costs for stuff they knew about and are controlling themselves.  You cannot predict wild NZD swings, global supply chain crises etc. but investment in your IT platforms should not come as a surprise... Also no commentary on the payback of this investment, and timeframe for completion of the programme, so who knows what is coming down the line with all of the other known challenges (fx, inventory, channel mix etc.)

Maintaining a 20c dividend would seem to be a forlorn hope, it would require NPAT of circa $100m based on 70% of NPAT.  Which they have only achieved once the last 6 years, a period over which they have averaged $67m.  Assuming a reversion to the mean return of 2% on sales would produce profit of $65-70m (and dividends of 13-14cps), but they have to weather the current storm first. 

Time to jettison ballast like The Market perhaps?  Grocery still has potential, they just need to go about it intelligently and in controlled stages.

[winner (n)]

1st quarter sales up 21.2% on pcp

YTD sales to December up 6.4% on pcp

If momentum continues through January wonder what 1st half sales growth will look like

They obviously think it's going to be a +ve number because gross profit $s going to be about the same when gp% downbeat couple of % points

[winner (n)]

I reckon FY NPAT will be about $65m ...about 18 cents / share

So share price $2.60 looks expensive

Of course could be wrong as they could 'adjust' numbers by quite a lot ...could even count the increased cost of all this IT stuff as abnormal and 'adjust' accordingly.