WHS - Warehouse Group

[Left Field]

The Warehouse - What an absolute shit show. The only thing this stock has consistently delivered on is trading at life lows.

WHS is a bit like OCA and the Warriors..... heaps of holders/posters/fans hoping that one day they will rise from the ashes.

All have been uninvestable for ages IMO.

[Basil]

It's about 27% of our business at the moment, so it is an important category....come on in Aldi or Lidl - the water is fine - competitors either have no clue or or milking it or both

The Norman family with their 19% stake scuttled that proposed deal thirteen months ago which would have seen Tindall take over the company at $1.50 - $1.70 and repurpose it.  With Tindall's son stepping down from the board at the annual meeting, that's a pretty ominous sign that ship has sailed and the Norman's delusional belief that the company was worth $2+ has scuttled any remaining prospect of minority shareholders salvaging any value from this aging dinosaur.

I almost feel sorry for shareholders.  Might go down today and get a few summer T Shirts at $7 each...that'll help them out a bit but at that price you'd be forgiven for wondering if Tindall wants to run the company as a not for profit charity for the benefit of ordinary Kiwi's.  Maybe that is his real agenda ?

[Otago K]

For me I don't hold any great hopes for the WHS, but it may yet come to pass that some improvement would see it looking likely to regain a (NZX50 ?) ranking in 2026 that might help offer a SP lift. Don't see more than a 1 to 2% portfolio allocation at the most for me.
Anyways my little bit of interest in WHS had me visiting the Business Desk website, and then took on an annual subscription at the Black Friday $99 rate.

dscl: hold a few 100 WHS to keep a compass (an eye) on what comes next for the company, and the annual shareholder discount day might see me visiting the local red Shed in December for what I see as value buys on the day.

Anecdotally I think the Dunedin store might be well up on trade to where it was 12 months ago.

[LaserEyeKiwi]

Cool piece in BusinessDesk today.

Suppose some would say Simon is clueless when it comes to WHS

Never mind

Anyway, piece starts -

"This is the end ... " was the opening line to track 11 (the last song – side B) of The Doors' first album, The Doors, released Jan 4, 1967.

"This is the end, beautiful friend. This is the end, my only friend, the end".

The song is 11 minutes 41s of depression. Not wanting to set your Saturday morning off on the wrong foot, but it's good prep work and background music for the story below.

I read the lyrics and they are wild – the stuff about the mother and the father won't get past Victoria (my editor), so I will leave that for you and your choice of large language models to inquire.

The Warehouse - What an absolute shit show. The only thing this stock has consistently delivered on is trading at life lows.

https://businessdesk.co.nz/article/markets/the-warehouse-is-cooked-everyone-knows-it

This is a terribly misinformed article. Pure trash.

I debunked it on the other site, but one only needs to look at this single line to realize the author is a complete total moron:

"Spoiler alert: if they cut the dividend today, the stock would more than halve, again"

Ummmmm....hows this for spoiler alert: the company currently has a no dividend policy already, and hasn't paid one in 20 months.

The putz of an author doesn't know the most basic fundamentals about the company. 

[winner (n)]

Jeez LEK that article really pissed you off eh.

One section that is a worry is this bit " Don't get me started on the four chief financial officers (and an interim) they have had in the last seven years. Torpedo Zero and Warehouse Stationery were signs – leadership and culture are everything."

Isn't the new CEO one of those CFO's? And he's been around for nearly 2 years and apparently was heavily engaged in addressing the problems with JJ.

But nothing has really changed has it. Even at the ASM through addresses and Q&A it seemed he /they were still just looking / analysing things and hoping they find the magic answers.

It always concerns me when a finance person is made a CEO of a retail outfit. Retailing is an art if if retailing isn't in your DNA you won't succeed and I think that Finance don't have that DNA.

Further more the CEO isn't even a Kiwi so will struggle to understand what makes retailing work in NZ.

I get the impression that all this analysis blah blah they are doing misses the vital point and doesn't really address the key challenge of 'how do we succeed in the current retail environment in NZ'

Good luck to them.

[winner (n)]

Apparently a few market observers are concerned about what wasn't mentioned at the ASM after Mark had hinted prior to meeting he would talk more about the big things he was doing to right the ship.


Seems the works ...all talk and no real action

[LaserEyeKiwi]

Apparently a few market observers are concerned about what wasn't mentioned at the ASM after Mark had hinted prior to meeting he would talk more about the big things he was doing to right the ship.


Seems the works ...all talk and no real action

Since full year results were announced back in early October - he has said more of the long term strategy will be revealed later in FY26 (which ends in August 2026).

Since then we had announcement of the "cost reset program" (layoffs) in the Q1 trading update, and at the AGM he specified: " We will share further details of our refresh strategy later in FY '26. I know the words are not what our shareholders, our customers and our team members want right now. You want action, execution and improved performance and that is exactly what we as a team are committed to delivering. The team and I are working tirelessly to improve performance, and we look forward to reporting on our progress in the coming months."

I'm not carrying water for the guy, but he's already doing layoffs just a couple of months after coming on as CEO - so I would consider that concrete steps and not just talk.

[Buzz]

But will they ever be great again, dominating large box retail? So long they've been an also ran, even before the truely great internationals came to NZ and are smashing it. I can't see an investable case in WHS. Convince me otherwise.

[LaserEyeKiwi]

But will they ever be great again, dominating large box retail? So long they've been an also ran, even before the truely great internationals came to NZ and are smashing it. I can't see an investable case in WHS. Convince me otherwise.

It's pretty simple really: don't need them at all to be anything fantastic, just improving gross margin by 1-2% and reducing CODB by 1-2% gets them back to being a ~$100m profit company.

Potential to get back to that $100m profit figure is fairly low hanging fruit. Now consider current market cap is only $270m.

Nothing is a lock, and I still haven't invested much in WHS, but the risk reward looks pretty juicy, and the market is currently already pricing the company like it's going to fail.

[winner (n)]

This touted $100m profit seems so easy to obtain

Last 11 years they've made $672m profit )$175m of that came in 2021 when no retailer could do wrong)

That's what they call ADJUSTED NPAT. Take of $209m of ADJUSTMENTS and real NPAT has been $463m in 11 years ... yes 11 years so average is $42m and ADJUSTED basis $61m

Only once have they achieved more than $100m

But wonder boy Mark is on the case so $100m coming up soon it seems ...good luck to him I reckon.

PS - no doubt a bucket load of ADJUSTING coming up ... just as well ADJUTMENTS don't count

[Basil]

I'm with Winner,  If it was so easy it would have happened multiple times already not just a one-off post Covid freakish year.    $42 million average over 11 years with turnover of more than $3 billion is less than a 1.5% margin and a disgraceful outcome for shareholders. 

[winner (n)]

Funny Kmart NZ June year results went up today

Sales $1,017m (up 2% on pcp)
Gross Margin of 43% (down from 44% pcp)
NPAT $102m v $106m pcp

Jeez $100m profit easy peasy by looks of it and Kmart only have to sell a third of what WHS does

[winner (n)]

Mark mentioned Walmart profit margin of 3% as a'respectable' target

Probably didn't want to acknowledge his biggest competitor does 10% ... would ride expectations eh

[LaserEyeKiwi]

Probably didn't want to acknowledge his biggest competitor does 10% ... would ride expectations eh

Good for them!

To me this shows discount retailing can easily achieve 3% profit margins, and obviously much higher when done well!  Very encouraging.

[Otago K]

Digressing from the thread topic sorry but trying to send an online enquiry form from the investor centre doesn't work because it expects you to confirm as human, just doesn't give you a means to. Symptom of investor relations being low priority??

edit : post 676, took WHS under 30 minutes from sending them a generic online query to resolve some issue they had.