Rawz your rubbing it in .:eek2:.. time to move to european retail soon anyway..
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Rawz your rubbing it in .:eek2:.. time to move to european retail soon anyway..
For Bar update.
OUTPERFORM
The Warehouse Group's (WHS) trading update for the five months ended 2 January 2022, highlights positive sales
momentum through the Christmas period but increasing costs of doing business. The company provided Adjusted Net
Profit After Tax (NPAT) guidance for 1H22, which is expected to exceed NZ$40m, hampered by ~NZ$35m of non
COVID-19 cost increases over the prior period. Total group sales for the first five months of trading (NZ$1.47bn) are now
~-6% down on FY21, an improvement on the ~-15% reported after a COVID-19 impacted first quarter. WHS expects
second quarter trading to remain at or above last year's levels and believes it is well positioned for the remainder of the
summer and Back to School period. WHS is scheduled to report its half year results on 22 March 2022. We make material
changes to our earnings estimates to incorporate higher costs and reduce our target price to NZ$3.85 (from NZ$4.35).
Trading at ~12x one-year forward PE we retain an OUTPERFORM rating but recognise near-term risks with inflationary
pressures and the potential impact of the COVID-19 Omicron variant in New Zealand.
What's changed?
Cost of doing business rising
Based on the results from the first five months of 1H22, WHS expects 1H22 Adjusted Net Profit After Tax (NPAT) to exceed NZ$40m,
(compared to 1H21 Adjusted NPAT of NZ$111m and NZ$46m in 1H20). The company highlighted three main contributors to the
decrease in expected 1H22 NPAT compared to the prior period:
1. Sales are expected to be ~-NZ$80m (~-4%) less than 1H21 due to COVID-19 restrictions in 1Q21.
2. Cost of doing business is NZ$35m higher attributed to higher store labour costs, increased investment in TheMarket, higher digital
spend, in addition to an estimated NZ$10m–NZ$12m of COVID-19 related costs.
3. Gross profit margin in 1H21 benefitted from an NZ$10m decrease in inventory provisioning from FY20 and reduced discounting.
Online sales increasing but weighing on gross profit margin
WHS has continued to experience higher online sales levels, growing +105% on FY21 and representing 18% of total sales. The
increase in online purchases contributed to a reduction in gross profit margins (down -55bps on the prior year) with higher costs
associated with freight and online sales lower-margin product mix. That said, gross profit margin was +132bps ahead of the same
period of FY20. Click and collect represented 50% of online sales, an increase of +89% on the prior year.
Can imagine the Retail Investment community after the FOOBAR outperform will have something to say about that... can hear loud barking in yonder hills...:scared:
I'm glad the snow leopard lives in the Himalayan mountains :p
Inflation to 30/9/2021 was 4.9% and some economists forecast it to be running at close to 6% for calendar year 2021 so in real inflation adjusted terms sales year to date are down ~ 12%. Why is it important to adjust sales for inflation ? Clearly the cost of doing business is rising rapidly.Quote:
Total group sales for the first five months of trading (NZ$1.47bn) are now ~-6% down on FY21,
The ~ $90m they might make in FY22 is really only ~ $85m in inflation adjusted terms which will be only half what they made last year.
INFLATION ..... pardon... NOOOoooo cant be right..
the Shaz wont take any notice ... back to 4 dollars.. ...but first can we go to 3.45...
if OMI gets out in a big way the mind set of the country might get a little bit jittery because its not war hardened yet.
3.55 should hold..only professionals will do the numbers the SHAZ wont..
AIR is still above the clouds... numbers dont seem to matter much anymore..
Obviously the $100m odd TWG have spent over the last five years on restructuring, Agile and Rise hasn’t helped them out when they face a few challenges …..not agile / resilient enough and they fall back to the old norm.
Winner you can see the SHAZ buying..
we dont know how far through they are or more likely over budget.
I think you summed it up really well there and with your bar chart. The only value that I can add is that we're in a new inflationary environment and just repeating the same result they did in 2007 of ~ $100m is not going to cut the mustard in 2023 because to even match 2007 numbers in 2022 real inflation adjusted terms means earning ~ $132m. (Source Reserve Bank inflation calculator) - available here https://www.rbnz.govt.nz/monetary-po...on-calculator/
My main point is that if earnings revert back to the "norm" (and I agree with your prognosis and think its highly likely they will), those earnings are really a lot less than they used to be.
I also agree that all the fancy talk and spend on agile this, metaverse that and A.I. the other is nothing but stay in business expenditure and they'd get steamrolled if they didn't try and keep up. (One supposes that you have to give the appearance of being ahead of the curve and intelligent when being paid $2m+)
If I were a shareholder my biggest fear would not be omicron, it would be Nick keeping on doubling down again and again on themarket and burning ever increasing tens of millions per annum and the platform going nowhere.
Given the way profits are likely to be a lot lower in real terms than they used to be the question becomes is there any point being a shareholder again ? Maybe at a no growth PE of 10 = $2.60 as a yield thing ? Other than getting down pretty close to there...I am quite content to sit on my hands...