Good point Balance
Maybe I thought in haste and assumed no debt .... but then all they say is a $65m share acquisition eh
Additional debt would make the sums different
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Good point Balance
Maybe I thought in haste and assumed no debt .... but then all they say is a $65m share acquisition eh
Additional debt would make the sums different
Increasing the exposure to an deflationary environment is bad enough...but...taking on debt with the hope of paying it off from the profits earn't within this deflationary market.....yeah right!!
Just to clarify, the acquisition also includes all Bond and Bond stores.
http://www.nzherald.co.nz/business/n...ectid=10853046
Must say I'm also sceptical about this move on WHS' part which signals an abrupt switch from their traditional discounting model. Let's hope they know what they're taking on.
....fleas!!!
People and businesses are afraid of deflation and so they should be.
Deflation used to be common... In the USA deflation ruled most of the 19th century during its technical revolution...businesses these days have forgotten what deflation is all about and how to survive during an era of deflation which can last for decades. The last generation that experienced it are dead and it seems the successful methods of operating within an deflationary environment have died with them.
Deflation atm is localised mainly within the tech area ....how are the major businesses handling it atm?? Panasonic $9.6 B loss Sony Q2 loss $198M Samsung $17B loss LG q4 $98M loss.. I think its safe to say that the best brains in the market/product department haven't come to grips to how to operate/market their products to be a successful business within a deflationary environment....yet..
They should dust off some old 19th century economic business textbooks..eh?
Now the Warehouse folk .............ah...she'll be right mate.
Makes sense in some ways;
Gives WHS access to better brands.They have had too many problems with poor TVs etc.
Helps both WHS and Leemings/Bond and Bond "bulk up" to buy product at better prices.
Also helps inlogistics/warehousing.
With larger buying group,should be able to compete with NAFTA[spelling may be wrong] which includes JB Hi FI and Smiths City.
Head Office costs/distribution etc at Leemings should be able to be cut.
Makes sense for WHS and stops Leemings going broke.
Margins are very thin and with price deflation/obsolete product it is a very difficult section of retail to be in.
Went for a bit of a look at Warehouse Extra on Blenheim Road last night.Wife looked around while I read a good book on Bruce MacLaren.
Only section that looked busy was the returns department.!!!!!!!!!!!
This announcement makes me happy that I sold my WHS shares years ago and decided that BGR was a better retailer. Stick with what you know Rod Duke and don't go buying into the most incredibly competitive retailing business imaginable!
In my view there are too many electronics retailers. And they have far too many staff. A trip into Noel Lemmings a few weeks ago on a week day resulted in me being pounced on by four staff over the 10 minutes I was in their shop. They were far too aggressive which made me wander down to Harvey Norman and spend my money there. That and the fact they don't sell Bosch which was a pity.
How can they be making a decent margin when they have constant sales, will reduce prices even further when you start playing them off against each other, Cherrytree (I'm not a member) and the internet in general??!
Synergies? Well yes but at what cost and will they be worth it?
Personally if I was a shareholder and I got a vote in this decision I would vote against it.
NoeL Leemings are a nothing store, they sell nothing that makes a person want to go there. They not
cheap and they sell stuff you can buy in any of the other big box retailers.
Our toaster broke down last week , went online to check out prices and range , Noel Leemings stocked
the same as Briscoes , except they were all aroiund thirty dollars more expensive.
If The warehouse want to make a success of it , they will have to make them far more competitive price wise .
they could also lay off half the staff , the ones that follow and pester the customers as soon as they walk in the door
I wonder how well Noel Leemings do being part of FlyBuys, and whether this will change?