In theory it's very hard to get 20 bets in a row wrong with 50/50 odds, but I guess it's possible. Personally the strategy has never really worked for me, but I don't have big enough pockets to last more than 7 losses on the trot :)
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Starting at $1 the 20th bet is $524288 after having lost $524287 on the 19th bet.
Sorry but I am having trouble with the subject under discussion here.
Does the Warehouse have Roulette Wheels and the like on special?
Best Wishes
Paper Tiger
Yes ; could rename this thread for newbies "HOW NOT TO INVEST"
If anyone is actually interested in optimal bet sizeing google the Kelly criterion.
A thought - where would be the Warehouse sp be but for the Normans buying?
Based on last SSH, they have only 1.39% to go and they reach 20% - either corporate activity happens (merger with farmers?) or sp is going to be without support, especially now that WHS is getting kicked out of NZX50 this Friday.
This is what WHS announced when it raised $115m of new equity in March 2014 as part of its strategic move into financial services:
1. Ambition to be a 'Leading NZ Retail financial services company'.
2. Financial Services will lose up to $3M after tax in FY14 and FY15 as the business base is developed.
3. But the growth of product range and receivables portfolio should result in a positive contribution from Financial Services by FY16.
As it turned out, the Financial Services business showed a loss of $2.7m in FY16 and we now read that FY17 showed an increased loss of $5.2m! Basically means that this business is running behind schedule by 2 years! Hence, the 'pre-launch' excuse?
As for the $22.5m goodwill impairment write-off being 'non-cash', history tells us that simply means that the cash was spent in previous years and was capitalized (hence, making previous years' profits look better). It is a very real adverse cash and profit impact indeed!
No wonder the institutions who supported the equity raising are selling out? Hard to see any positives coming out of WHS from this results.
warehouse should ditch have of the s.it they sell and close all noel leaming and warehouse stationary stores and fold them all under one roof- save heaps on lease costs, staff costs, head office costs etc etc and then rebrand get rid of the warehouse brand its had its day. but i guess the new guy supported by the board will continue to waste millions on a no hope situation in its current state.
gee when the warehouse closes one day there be lots of mall spaces around.
http://www.nzherald.co.nz/business/n...ectid=11818080
Some insightful comments from Rod Duke - Briscoe's profit and market cap now both bigger than WHS!
2 notable points :
1. Kiwis are over cheap rubbish. Perception of the WHS after years of restructuring is that it still sells cheap rubbish.
2. The likes of Amazon, Ebay & Alibaba will impact the most on certain categories like books, clothings, toys etc. WHS is still busy selling these items!
Long road ahead for WHS - it has got plenty of retail space (used to be its claim to fame) but a lot of that space is now used for stocking and selling sunset goods. Meanwhile, lease payments are ballooning higher and higher, one side effect to the sale and leaseback strategy.
PS. Reminder to oneself - NEVER buy into a sustained downtrend!
Always bought my Cadbury marshmallow centered easter eggs there. Seemed to be alright.
....mmmmmmm
I agree that there will always be a segment of the market and a pretty sizeable one at that where people must buy the cheapest product out there that does the job but quite aside from the old cliché which is one of my favorites that "the bitter taste of poor quality lingers long after the thrill of a bargain" the thing is when you go into a Briscoes store the perception is, (well mine is for what that's worth), that you're buying product someone around the middle of the market as opposed to cheap rubbish.
For example we updated our cutlery before Christmas, (the stuff my wife and I were given at our wedding 25 years ago was very tired) with some very nice Simon Gault cutlery at Briscoes and have found it to be very good quality and it was at quite a reasonable price when acquired when on sale at 50% off.
I think this explains why Rod Duke is doing so well. He creates the perception of pretty good quality at a fairly reasonable price and I think that's what most people want, well most people I know.
Also, Briscoe stock the full range of products - from cheap to very expensive. The very expensive (eg. Scanpan, Tefal and Wustof) tends to uplift the whole store's image.
WHS does not stock the full range and when it has upmarket brands like Apple or Sony, it sells but a few items of that brand. Heck, most brands would not want to be associated with the Warehouse!
Think how often you go into Briscoe intending to buy something on special and walk out with something more upmarket for 20% or 30% more, and thinking you made the right decision.
That's spot on Balance. Fact is there was a whole range of cutlery in there, from stuff that would most likely bend or break pretty quickly to the stuff we bought that will probably last us another 25 years.
On the other hand I wouldn't even contemplate going to the Warehouse for cutlery, what's the point of buying utensils that you know on the balance of probabilities won't last a reasonable period of time ?
As you suggest, there's probably many brands that don't want to be associated with the Warehouse so WHS can probably never achieve a decent spectrum of product quality in any particular range of merchandise even if they wanted too. I think its this key fact that compromises the WHS's business model going forward, (along with their other challenges), and no amount of restructuring can change that.
The exception in my view is the Noel Leeming stores that I continue to expect to do well given Dick Smith's demise.
OK - so the Warehouse obviously made a lot of mistakes and forgot to change with the times. Still - it must be worth something.
Their average EPS (over the last 10 years or so) are 25 cents, future average EPS estimated around 20 cents. Analyst consensus is $2.65, though coupled with an "underperform" recommendation.
A good board and management team would have plenty of opportunities to build on the strengths (and there still are some - the red sheds normally have plenty of customers (other than the blue ones) and Noel Leemings and torpedo 7 don't do too bad either) and lose all the redundant and inefficient ballast ...
So - how much would it be worth for somebody to pick it up (assuming Steven Tindall is prepared to sell) and turn it back into a better business?
What do people think is the underlying value? If I take the 20 cents future earning and a PE of 10 - This would make it $2 per share. If we accept a PE of 12.5 we are already at $2.50.
Add the 10 cents dividend (until end of the month) and some value for gaining synergies if somebody does tidy it up ... maybe the current share price does not look that bad?
Try your workings with a PE of 7.5.
Forest would be very disappointed in the hound if he didn't weigh in with an opinion on this so here goes, all data based off average forecast analyst earnings off 4 traders website and focus is on next year's earnings which exclude any current year restructuring charges.
Market always looking ahead so I focus on FY 18 data.
WHS forecast PE 13.1
HLG forecast PE 12.3.
I would argue HLG is an extremely well run company with excellent well refined business practices and has no systemic issues that require dramatic restructuring of any kind and note top line sales growth is very comfortably outstripping the extremely modest rate WHS is "growing" their sales at.
As noted in previous posts and as noted by the CEO of WHS himself WHS faces ongoing significant potential restructuring issues and I would argue extremely serious challenges turning their finance operations around.
Given the known headwinds and slower growth rate and the fact that HLG is known to be a far more efficient retailer with best of breed stock turn I would argue the WHS should trade at a PE discount of at least 1, more fairly 2 to HLG.
If we said a fair FY18 PE for WHS was a 2 discount to HLG a PE of 10.3 there is potential for the current SP to fall from a PE of 13.1 to 10.3 = 21%.
If we said a PE discount of 1 is warranted there is potential for the current SP to fall from a PE of 13.1 to 11.3 = 14%.
In my opinion an ex dividend price of about $2.00 might be fair / good value going forward IF you believe, (I don't), in the current directors and management's business model and believe they can turn around the finance arm so its doesn't act like a sea anchor on future earnings.
Last time when things got bad Stephen offered $5.75 to buy the company back ....with the help of PEP I think it was
Would he offer to privatise it again .......or just call it quits and find somebody to take his shares off his hands - getting cheaper by he day eh
Over the years the cheap rubbish has got dearer and WHS profit has not improved, so there lies the problem..Many years ago the Warehouse was a price disruptor with their smaller shops full of all sorts of bargains. Now its just a giant barn full of all sorts...gardening supplies and home hardware cheaper at Bunnings, Auto supplies cheaper at Repco or Supercheap Autos, Food and soft drinks cheaper at the Supermarkets etc etc...A retail scattergun strategy's weakness is it's lack of individual expertise/product/supply chain focus to compete effectively...They went some way to fix this problem in the Electronic/Whiteware area with Noel Leeming takeover...Years ago they had individualised speciality stores under the Warehouse roof...but for some reason they moved away from that..
Retail is as always a very difficult sector to be in.
Even more so today with Amazon and other strong online retailers growing very quickly.
Bricks and mortar retailers such as The Farmers, Briscoes and Hallenstein Glassons are well focussed in their target markets.Even K-mart have moved ahead.
So WHS is lost in this tough market.They had to buy Leemings to source quality products,as rubbish was no longer acceptable,or profitable,ie you make no money on products that are returned.
They have kept adding to their cost structure with staff,and lease commitments.
I think the Normans would be able to reposition WHS.It would mean reducing the product range considerably,and making the store flow better.Cut out non performing departments and strengthen departments where they are strong.
In retail you either go forward or you end up going backwards very quickly.At the present time WHS has to find a strategy that will work.Whether they can or can not means it is a very poor,or dangerous punt.
Therefore one must be very careful on valuing WHS on dividend yield,PE or whether the Normans will make a takeover bid.
Yeah. You might not make the grade if you gave your girlfriend a diamond ring purchased from The Warehouse.
I think there cheap apparel has a place in the market esp cheap kids clothing as for the rest agree they are trying to be jack of all but expert in none.
As for technical I believe all time low is happening so very bearish my long term channel down is currently under 2 dollars at this time.
WHS slowly slip sliding away $2.42 now !
What's the all time low?
bounced of it in mid 2015 too just too confirm the level = agree looks bad on the chart - I think in mid 2015 I was saying it was stuffed too and the normans buying was the only thing holding it up .
Strategy? WHS has been re-positioning since 2006 when Ian Maurice was CEO. Remember Warehouse Extra? Warehouse Cellars? Warehouse Pharmacy?
He and subsequent CEOs had the luxury of a very strong balance sheet (with company owned freehold stores and land as backup assets) and still high levels of cash flow to pursue all those 'failed' re-positioning and restructuring.
Nick Grayston does not now have the benefit of a very strong balance sheet or very strong cash flow to have the same flexibility - the need to raise equity in 2014 is testimony to the lack of balance sheet strength.
The recent announcement of a change in operating model is really only about staff cuts imo. When a company embarks upon staff cuts to effect cost savings, usually means it is bloated in the first place or it is running out of ideas. As Roger has pointed out, Warehouse stores have hardly enough staff as it is! Contrast with K-mart where there are staff everywhere to tidy up, re stack shelves and to answer customers' queries.
PS. reminder to not to invest into a downtrend.
Best comparison may be Briscoe?
Take out the $60m cash and BGR is trading on a historical PER of 15.7 times.
WHS compared to BGR should be trading on a discount of at least 25% to reflect i) earnings downtrend vs BGR's uptrend & ii) weak balance sheet vs BGR's cashed up overcapitalized financial position.
So WHS should trade on a PER of 11.8 times on EPS of say, 15.5c = sp of $1.83.
Your $2.00 is in the same ball park direction of what WHS is now worth! Scary!
I thinking this maybe the last 10c div unless they can grow profit and margins or it could be 10c for the yr guess the well cemented trend is falling profits and falling dividends.
Im sure some people will try and catch falling knife for the div - not a sure fire way to wealth unless you get the shares real cheap today but what is real cheap? or a bargain
Hey Balance, you mentioned Warehouse Pharmacy of days gone by
Whether Nick actually said this or not I can't tell but they seem to be back on the agenda -
Chief executive Nick Grayston said e-commerce only makes up about 10 percent of the New Zealand market, much lower than in other developed countries. But Warehouse has to prepare for increased disruption and part of the response is to move away from a "transactional relationship" with customers where price is the only determinant, to "an engagement model" which could include walk-in health clinics, a return to pharmacies, financial advice and mobile services.
http://www.sharechat.co.nz/article/5...-services.html
as I said the other lowest since last century
Yes a very valid company for comparative PE analysis, probably the best in terms of product offer and distribution methodology but obviously they are chalk and cheese in terms of their track record but nonetheless makes for a very interesting point of comparison.
I think all on here would agree that with a huge vested interest because of the size of his shareholding Rod Duke has carved out for himself a very well defined position in the market with excellent execution of his business model.
I checked on 4 traders and yes 2018 forward average analyst PE, you are quite right is late 15's.
Over the last six years profit has increased by 27%, 11%, 10%, 17%, 20% and most recently as just announced 26% and they are cautiously optimistic about the year ahead.
In my book there should be a very large amount of daylight between a company like BGR and WHS in terms of PE. Really if BGR is 15.7 then maybe Percy is right and a PE of only 7.5 is warranted considering all the challenges WHS faces ?
Certainly no more than 10. Really BGR looks pretty good value to me considering their long term stellar track record.
Conclusion: WHS is still heavily overvalued on a comparative basis with what are vastly better business models with other retailers.
I think Balance picked it correctly.
WHS have still not got a "workable" strategy after two or three different CEOs.
Like any turn around,they always take longer,and cost more than expected.
AND often they don't work.Think Postie Plus,Pumpkin Patch etc.
Is WHS latest stategy going to work,or be another failure.?
All the time other retailers are moving further ahead of WHS.
and still the drop continues
According to 4traders the average analyst EPS for FY18 is 19 cps. Personally I think there is an AWFUL LOT of risk to that earnings estimate.
Choose whatever PE you think is appropriate. Percy's 7.5 for example gives $1.43. On the other hand BP might think a PE of 12 is appropriate giving fair value of $2.28 so trading at $2.36 cum a 10 cent dividend is "an opportunity".
Me - I will not buy stocks in a downtrend no exceptions ! This becomes a theoretical exercise of academic interest only but if someone put a gun to my head and forced me to pick what I think is a fair PE in the circumstances I would probably have to go with only 8.5-9 after seeing such a stellar performer as BGR trading on 15 point something.
Upon reflection I think 8.5 -9 x 19 = $1.61 -$1.71 is a fairer price range than the $2.00 I suggested the other day but the caveat to that is I would only invest at that price if I believed management had a viable plan to turn the company around and stem the losses in the finance unit.
Disc: I am currently considering investing in Briscoes. I think its an under appreciated stock considering its truly stellar growth record.
Much was been made in recent reports what a 'success' Noel Leeming has been
However with a razor thin EBIT margin of ~2% it doesn't contributes very much to the groups bottom line (after interest and tax is taken off) - but at least its positive
Wouldn't be counting on NL being the saviour for WHS
The "success" Leemings has been for WHS, is access to "quality" products, which suppliers would not supply to WHS previously.
I dont think the company make enough of being one of the best payers of staff in retail sector it may appeal to customers sense of fair play it does to me anyway
Apologies if this has been posted before - if so, I missed it. Article from last Saturday's NZ Herald about WHS putting its Newmarket premises up for sale and redevelopment. The implication is that WHS is prepared to leave Newmarket, relying on its neighbouring outlets to service local customers. A bold move?
http://truecommercial.nzherald.co.nz...ref=NZHNetwork
FWIW my broker has a hold rating and"Unable to recover from slow peak season""Disappointing""Doing it tough" etc .
Into the 220's she goes ......and ominously closes on the low of the day / week .....and a huge sell off at the close.
Spose somebody thinks its a bargain buying at these prices.
$2.29 and falling !
Wonder what Foodstuffs are thinking -- must be hurting seeing their 'investment' going down the gurgler
Wow, that's a sizeable off market trade. I reckon it's foodstuffs selling out to James Pascoe. That would be my guess.
My plan is falling into place. Hopefully this goes into the "teens" or lower. Tempted to go all in, lol.
http://www.stuff.co.nz/business/90456569/.html
Interesting article today.
Interesting indeed when a real estate consultant comments on the fortunes of a retailer! Not something they would do in a big hurry as WHS is a very big player on the property scene so Mr Keane needs to be careful what he says.
He makes a good point though and the answer could be that WHS is running into financial stress to continue to pay such 'high' dividends. Have to sell whatever remains of company owned assets to keep going.
Re the off market trade 6m shares, according to the last top 20 SH F/Stuffs 30m shares(10%), Citibank Nominees 5.67m(1.63%) and no other entity close to the 6m off market trade Friday(about 2.2%). So based on those facts F/Stuffs would appear to be the seller unless something else has occurred not yet disclosed. How could JP not be the buyer? All will be revealed next week.
Do you all think a takeover is in the cards?
If so is it Tindall privatising the dog ....or do the Normans have a greater motive than just having 20% as an 'investment'
Or is WHS ripe for private equity to sort it out and do some asset stripping along the way ......(and then another IPO)
Enterprise Value current $1.1 billion so $1.3/$1.4 billion get it over the line
Cheap as
I better take a punt .....and hope Stephen is cooperative one way of the other. It all depends on him eh
haha gamblers lining up for the hoped for bounce a , i would think the only people interested in a takeover would be the pascoes at a much lower price, time moved on most people know big box retail has had its day all you need now is a specialty store or a warehouse to service online.
Im picking under 2 dollars in the not to distant future.
It's not gonna go under $2, that's just too cheap. Things aren't that bad. It's already been sold off heavily over the last few weeks. The big buyers are in now, it's gonna bounce for sure on Monday. I'll have a look after it goes ex div. There could be huge upside for long term holders.
https://www.facebook.com/TheWarehous...5055057866474/
Check out this video.
What does everyone think of this new advertising theme? It's using a dark blue theme instead of the normal red. Looks alot more premium.
I think this is the "new warehouse".
Didn't I read somewhere that the Norman family-- Pascoes/Farmers/Stevens /plus other retail brands some in Aust/NZ own a decent % of WHS, approaching 19.5% now I think.
The problem I have with the warehouse is where is growth going to come from in the next five years? Yes fair value for this might be a little higher if they can keep sales and profits flat (I think $2.50), but why place a risk on a company that's going to make you 10% to 20% at most given the potential downsides? They have so many headwinds and the SP performance over the last 10 years is woeful. Why will this be any different?
EDIT: This is in response to Ogg posts btw, sorry Roger I agree with you!
Their revenue and gross profit is good. They just have to find a way to cut costs in their business.
They need to close or sell alot of their stores, like the one in New Market. Then invest in large online distribution centers in the major cities. The focus should be growing online sales.
Spending $700m on leases is a joke, they should move further out of town and buy the land outright and build more super stores. People will drive 30mins to get a bargain, like a large fridge from Noel Leeming, then when they are in the store you sell them smaller but higher margin products. But again, the focus should be online, and the fridge should get delivered "for free", and customers will be happy to add extra items to their shopping cart.
They need to get rid of more people in their head office and streamline more. Invest in technology that drives efficiency, just like what all the big banks are doing.
Then their needs to be a branding change. Something major, like getting rid of the "red theme", changing the buy line "everyone gets a bargain", or just make up an entire new one. It can be done, for example when Telecom changed to Spark.
The finance business needs to go. As well as the smaller businesses like Torpedo7, Shotgun Supplement, etc. Even warehouse stationary could go as it's just a hassle to run and they aren't going to be very profitable online. Just sell them all off and pay down debt before interest rates go up. Noel Leeming and the Red sheds should merge, after a major brand change.
At the end of the day, this is the go to place for the average kiwi. It is a well known and trusted company. There just need to be a bit of house cleaning and a huge make over.
I would go as far as saying they should stop dividends next year and do all of the above. The share price has already been hammered. There's going to be alot more volatility anyway. It's basically not A grade investment anymore.
Anyway, I see potential here if they can execute well and position themselves for the future.
I too see huge potential of an unrivaled magnitude - would be a great company but for the product range, cheap rubbish image, unimaginative and outdated management etc etc.
There will always be a market for cheap rubbish - unfortunately, more and more of the cheap rubbish can be obtained via the internet, and more often, at cheaper prices than the WHS!
interesting report put out by Credit Suisse about amazons arrival in Australia. Interesting kathmandu is seen as ripe for a pummelling even jb hifi seen losing 33% of sales wow myer possibly the biggest loser. poor old warehouse cant see how they going to survive in current form.
https://www.businessinsider.com.au/h...ll-hurt-2017-3
Has it bottomed?
I've worked with TWL (as a supplier) for a decade, and personally my thoughts are:
- Things picked up a couple years ago when the quality of their product range improved a lot (this is my opinion, I see some people here think differently)
- Red is a stable business but it does not grow, and its very hard to grow
- Financial services has been a massive fail
- Their marketing in the last year (particularly 6 months) has been terrible
- A lot of their acquisitions have performed ok, but they have realised zero efficiencies through the integration of even long term holds like warehouse stationary, which is part of the reason for the current head office cull
- Their last cull was only a couple years ago. Unfortunately they do not value staff or are able to retain key talent
- Kmart has been going well. As has Briscoes. Amazon is a big, big risk, although it will be a few years before they really start to takeover NZ I would suspect
I think if they can fix/sell/ditch financial services, improve their marketing, and realise some efficiencies in the logistics chain (and back office functions), they are a good bet from here.
They seem hell bent on keeping finance arm - they seem to think key to their future long term successQuote:
trackers
I think if they can fix/sell/ditch financial services, improve their marketing, and realise some efficiencies in the logistics chain (and back office functions), they are a good bet from here.
Improve their marketing - long shot that is
Efficiencies should be made but as you sort of suggest it never seems to work out that well. I can imagine the guy who bought paper for Warehouse Stationery now also buying the candles for the Red Sheds
End result - continuing disappointment
They simply lack any plausible cohesive plan to reinvigorate what is a very tired old brand. Believing they can turnaround the finance division against a wide plethora of other financial service providers seems a fanciful idea at best and far more likely to see an ongoing destruction of shareholder value. Far better to admit its a mistake and write the thing off but of course that requires fresh clean sheet thinking and I think that's beyond them...
Harvey Norman directors offloading shares. Is this the end for large retail?
http://www.nzherald.co.nz/business/n...ectid=11822326