When it’s ouch you resort to the ol’ ‘corresponding quarter last year was a boomer’ trick
Nonetheless WHS sales down 6.7% on pcp ….Briscoes Group sales up 2.4% in same quarter
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Torpedo 7 getting uglier and uglier …sales down 25%
Nick says - “Torpedo7 has not made the progress we’d hoped to see. We have a critical quarter ahead as we focus on driving its business performance recovery.”
Category strength in grocery sales continued, increasing 8.2% in FY24 Q1 compared to FY23 Q1, and making up 22.8% of The Warehouse sales in FY24 Q1
I looked at three Warehouse stores on Sunday looking for "Kiwiland Orchard Fruits",Eastgate,Barrington and Hornby.
I think their grocery section is very poor quality,Displays are poor,empty shelves, and prices generally more expensive than New World where I usually shop.
Giving more space to low margin products where their logistics are not coping,[ie out of stocks],looks as though it is a high risk.
WHS are not the only store saying they have an item "in stock",but when you visit the store they are "out of stock".
I notice at WHS checkouts grocery customers only have a few items in their trolley,compared with full trolleys at New World.
Down 7c or 3.9% on opening to $1.75.
Not quite the lowest price price they've traded at this century.....have been low $1.60's this year.
But don't worry, there is a divvy feed coming up soon.....;)
You've always had a good eye for the WHS and retail Jimbo.
The problem with TP7 is that it barely eeked out a profit when it was experiencing bubble-like retail conditions (driven by the surge in people buying bikes and outdoor gear when the country was in and out of lockdowns). And what did WHS do - it went on a store opening spree with the assumptions in the business case for those new stores likely based on some faulty/naïve per store revenue inputs.
Attachment 14842
I find it instructive in retail to look at the sales per the number of average stores during a quarter (or whatever timeseries is available) and how it compares to trend. An issue where there is a severe correction in retail sales is that they don't simply revert to trend, they can fall below it as the segment works through its issues (a glut of bikes the issue here). Sales per ave store in Q1 FY24 now below where they were in the last Q1 before covid hit, despite inflation. Lots of people bought bikes during covid and they are long lasting durable discretionary items that don't need replacing often, especially when households are squeezed. That together with the glut of available stock creates a lot of short term challenges for TP7. No idea when it will be worked through but one would hope for TP7's sake it'll revert back up to trend at some point.
The problem with TP7 is that its stores are large with attendantly large leases and CODBs, its stock slow to turnover, and given the increased footprint in recent years the brand probably carries a higher WALT than other WHS brands, making rationalising the network slower and more difficult. It certainly needs some rationalisation and either through early lease exit penalties or just taking it on the chin until the lease is up, it will be an expensive exercise for the business.
terrible numbers. need to merge torpedo7 in with warehouse stationary and the warehouse all under one roof. ditch the marketplace esp now as they will never compete against temu
How about the one after and next after that ? .. that could be a bit of a worryhouse as all the boys and girls out there suddenly find their buckeroos not stretching anywhere near before ;)
When will pre Christmas sales start to try reign in the RedShed fiscal woes ? ;)
No sense in getting to own all the excess clutter for another year through to Christmas 2024 and then get to land a large shower of Red for the privilege of the exercise..
They need to do something with TP7 but they have leases. A real obligation and always been viewed in retail as quasi debt (more so now under archaic IFRS16 rules). Difficult and expensive to exit. TP7 sells more expensive, high touch products - not like redsheds where people are content to wonder aimlessly without assistance from staff. People want to know about the bike, kayak, snowboard, hiking shoe, sleeping bag, etc.
Temu thrashing themarket. I assume the WHS has pulled back on the heavy adword spend they were doing to bring in customers. But I think the systems that underpin themarket are quite important and central to the other brands and to some extent could be a IT cost centre so not clear to what extent losses can be paired back
WHS already trying to bring bluesheds under the redsheds banner with their store within a store strategy. Only so much you can do to offset an industry in terminal decline.
Important to focus on gross profit and gross margin - not necessarily changes in revenue. Margin did improve although gross profit fell 2%. Gross profit really needs to be growing at ~4-5% or whatever the rate of CODB inflation is just for EBIT to run steady.
Kmart is thriving, Costco looking to expand. JB Hi Fi doing (relatively) well and expanding. Bring up a 20 year chart and clear the business has been in structural decline for the last 2 decades. Hard to see that changing. Business has been in a downgrade cycle the last 18 months and even before todays update is trading on 14x 2024 consensus earnings (which I'd imagine they'll miss). Nothing counter cyclical about this business. My opinion only and GLTAHs. Disc: no position.
Hardly surprising with all the retrenchment & restructuring going on in the group.
Staff morale at all time low in WHS group - that’s one feedback you will get back very quickly if you talk to any contact there who is a non-executive staff.
I went to the local WHS’s gardening section last weekend and it is damning to see so many of the plants half dead (obviously no care or attention) and I wonder why WHS bother! Compare and contrast with the premium presentation at Mitre 10 for eg and one gets the impression of a dying group.
WHS’s glory days are gone and the concept of a lifelong career advancing ever higher within the group is a distant dream.
Consistent with my T7 experiences. Probably 30% of the time you strike someone good.
I'm into that sort of stuff, and have a gift voucher still to use up with T7 - but will avoid if at all possible.
Last major item I bought there was my then 10 year-old daughters bike. Pedal fell off on the first ride - like WTAF???
yep the lease costs become like a noose when a business in struggling. themarket costing them over 20m yr and declining sales to go with it. temu/shein/amazon probably making the sales decline even more now soon to nothing is my pick. they are not big enough to compete with these giants
Lots of nice words and pictures.
https://www.nzx.com/announcements/422346
When t7 was online initially it provided value but I was quite surprised visiting a physical store. It was all high end prices and nothing else. Not much to differentiate from anywhere else. I have been in a lot of mitre ten, bunnings and warehouse lately. Warehouse can difffer store to store. Staff at the base cant find their arse. Staff at bunnings know where everything is and have time to help. One lady at mitre ten spent ages helping my friend choose two tomato plants. The warehouse feels like a govt department under labour.
Ordered some things online on the 22nd. Apparently a “glitch” in the system only discovered yesterday, cancelled a whole lot of orders. Delivery now ‘sometime’ early December.
No comms on this at all until I phoned.
Appalling. Can’t believe I’m a shareholder.
trading update will sneak out this fri at 4pm.
im picking its going to be an absolute howler.
if only there was a way to short this on the nzx!
ill leave this here
https://nz.trustpilot.com/review/torpedo7.co.nz
I agree, went into a two different Warehouse stores, one pre Christmas and one yesterday on Boxing day, pretty empty - hardly anyone in them, lots of empty shelves and damaged stock and general untidiness - but what was most striking was how few people were in there buying anything. Didnt get a good feeling - especially the lack of stock and lack of any good deals. Torpedo7 was much the same, except seem to have a massive overstock of bikes and not a lot else, stores a mess and again a lot of opened and damaged stock, was looking at wetsuits no "normal sizes" only giant sizes or midgets, that seemed to be common, cant even give them money so left and bought one at Rebel.
Then I made a silly mistake of going to Kmart - queue for the checkouts must have been the length of the store, people with jammed trolleys, store also a mess - but a different sort, because people had just been going wild. I know who I would be investing with.
If the numbers are just average, it will definitely be a surprise.
Warehouse had a fair number of shoppers this afternoon, more customers than at bunnings. Kiwis need shopping therapy more than splurging on renos
must be next friday now
Queues in kmart are insane, they lose so much custom from people putting down their clothes and walking out rather than endure the queue. But at least they have queues, the cashiers at the warehouse twiddling their thumbs.
As for torpedo 7 they do have some decent gear, lots of it is probably bought online, but they are a shambles like you say.
A mate of mine wanted to buy one of their kayaks for 499 in the sale, only one they had to show him was broken, (tower junction store) said they could order him one, but the fact they only had one broken one in stock was enough to put him right off, so he went elsewhere.
Div yield of just over 5 percent 5.06% is poor, my intuition says the share price needs to drop to reflect this. I even picked whs in the share challenge as a retail story for 2024 but having second thoughts. Term deposit interest rates coming down may help
Haven't had to queue at the WHS in both Auckland and Tauranga for months now.
I do enjoy buying from Torpedo on the Farmlands card. Excellent discounts.
Wasn't aware on the Farmlands discount.....thanks!!
Although generally it is a painful shopping experience, especially online......currently saying order delays, maybe 10 days for small items and 26 days (!!) for large items, including with click & collect. :confused:
It’s outrageous - almost a case study in how to stop customers in giving you their money.
Not that I am a frequent reddit user but there is a very recent thread on the warehouse in personal finance nz on the severe operational challenges besetting TP7 and other TWG subsidiaries. Some significant strife occurring .
No update on Christmas sales yet
Maybe a case of no news is good news
Nick will be still at his Bach at Omaha. Joan be out shopping choosing the lip stick colour to put on the pig.
T7 will still be having a shocker..too many stores (25) costing a lot to run..Too much stock not moving lots of discounting. They can’t even get it to customers when they do buy it. They have the quinella…software and hardware issues ..lol
The Market gone very quiet…no promotional activity…pretty sure they put it to sleep this year. Amazon. Au be killing it
Noels seem to be discounting a lot.
No idea how red sheds going..the one I visit seems quiet.
Agile management my arse.
The share price tells you what the market expecting..nearly 52 wk low I think.
Might be time for Nick and Joan to find a new home. Nicks Expensive to run and been there a while now.
Nick was spotted doing some shopping at a warehouse store yesterday - good to know he shops there!
Do you know if he was buying the lipstick…might have my wires crossed. Joan could be at Omaha.
On 14/11 WHS stated in NZX announcement:
"Torpedo7 sales were further impacted in the quarter due to ERP system replacement issues disrupting online and instore sales."
and
“Torpedo7 has not made the progress we’d hoped to see. We have a critical quarter ahead as we focus on driving its business performance recovery.”
As at today 9/1 ~7 weeks later: on the Torpedo 7 website there is a bright banner stating
"Order delays (includes Click & Collect) - Large items may take up to 26 days, small items can take up to 10 days. Can't wait? Shop in store"
What on earth is going on? Who is running this ship?
Disc: Not a holder!
Captain Nick the Agile is in charge. Joan of Arc is the fleet commander.
This is what Nick said in December…the problems are mostly resolved…but that not what your seeing
However, Torpedo7 sales declined a further 25.4% in the first quarter of the 2024 financial year, covering the 13 weeks to October 29.
As well as a decline in bike sales, Torpedo7 was impacted by the move to a new enterprise resource planning software system in the quarter, with some customers unable to have transactions fulfilled, both instore and online.
Most of those teething problems were now resolved, Grayston said.
Pretty big drop in share price today …close at $1.50
Seems to be the lowest it’s been this century
Probably bad news coming out tomorrow
Market cap $545m
Buy it and use the red shed footprint as a supermarket chain......
It's PE is 17. That seems high to me for a retail stock. Does it have particularly bright prospects?
I note BGR has a PE of 12.
One of these companies has a very large turnover and the other generates significant profits.
Why is WHS so highly regarded by the market?
Having done a bit of shopping recently with time to spend comparing pricing and offering across different stores, T7 and Noels left me completely underwhelmed with what was on offer, store condition/organisation and tidiness. Gave up on trying to find any staff available or with sufficient knowledge to assist as well.
Pricing of consumer level products is also pretty much the same as anywhere else for equivalent quality, with T7 a surprising amount higher. Simply reinforced in my mind why I avoid the group 99% of the time and take my money elsewhere.
Long gone are the days when a bargain could actually be found.
These days are long gone
https://www.youtube.com/watch?app=desktop&v=DbVNrfCHNOo
I prefer this version for a Friday arvo.......:laugh:
https://www.tiktok.com/@jammylammyof...17311289199874
No market update since November, we are now in mid Feb, T7 continues to have their banner on website saying massive delays on delivery. WHS continues with their half-hearted grocery strategy, stores remain shabby. SP continues to plumb new lows.
Disc - no holding
JB HiFi half year December report NZ sales up 5% but boosted by 3 new outlets …comparable sales down 1.2%
Sales $169m …resulting in small LOSS
Jan month saw comparable sales down 4% (with new stores +8%)
Can’t imagine Noel Leemings having a good half year based on this
About 40 Tauranga Warehouse staff to find new roles as Cameron Rd site closes
https://www.nzherald.co.nz/bay-of-pl...P2DYOR56TO56U/
A middle manager seems to have more clues than Nick -
The Warehouse regional manager Daniel Prew said closing the doors on the Cameron Road store was not an easy decision “but after looking at things like how the store’s been doing and how our customers shop, we had to make the tough call”.
This should "brighten' shareholders day.....!! :t_up:
https://www.scoop.co.nz/stories/BU24...+February+2024
Greenwashing given the amount of short lived junk they import and sell to the masses every Easter, Halloween and Xmas on top of the generally short lifespan of cheap low quality products.
Was inevitable.It was the first Warehouse in Tauranga I believe before Fashion Island ,The Lakes and other shopping centres built outside Tauranga,in what used to be Turner's and Growers fruit and veg auction building.Its been ghostly in there for years.At least two other warehouse stores here.
.Lease liabilities 2023 re $100 mill,prop plant and equipment re $223 mill .How many buildings they own ,don't know.Tga City Council has bought it for indoor sports
Apologies if already mentioned but Temu.com seems to be gaining rapidly in popularity and has many similar product categories to WHS.
What about linking up with a bit of royal patronage, to give their whole stock range a lift: The new branding being:
'Dealer of Everything King's Approved'
Yes its a mouthful, but you could promote the company via its new acronym: 'DEKA'. A name with a nice (yet strangely familiar?) ring to it?
SNOOPY
A bargain would be good quality, brought cheaply relative to normal prices.
WHS shareprice down 7% to 129 today
About the lowest it’s been this century
Bit suspicious if they do a KMD tomorrow and have a bad update
Chart first gave ominous signals back in Jan 2022, and has looked hideous (at least for the Bulls) ever since. Showing oversold signals on the monthly charts, but FIB pointing to sub $1 being quite possible by EOCY24. Just a feeling, but next update may see a further, and significant, SP capitulation?
IMV things have clearly been amiss at WHS for quite a while. Financial metrics, operational metrics (poor execution) and MV (SP) all singing (moaning) the same tune. Sad to see the degradation of what used to be an iconic Co. Can imagine PE & Trade picking off pieces in the not too distant future. :(
GLTAH
Time to pull the Knight saviour & extraordinaire out of the retirement cupboard to throw around some magic dust ? ;)
T7 sold for $1
https://www.nzx.com/announcements/426627
Surprised, not surprised.
Expect they will be better operators than WHS.....
pretty good evisceration of shareholder funds.
but a good outcome to be able to walk away from it.
Nick should resign
WHS apparently paid $79.3m for T7 and another $50m on additional companies to bolster the business.
Already written of the $40m goodwill involved
Be interesting what makes up the additional $55m/$65m write off ….probably big stock adjustments along with employee leave etc provisions ….and maybe even some rent subsidies
What a disaster. …but never mind Nick says the net cash impact (post tax) of the sale will be close to zero….so no worries
Should frame the $1 coin and frame it and hang in Board Room as a reminder of past follies
Will be interesting to see if Tahua "got a bargain.....".
Surprisingly trading down only 3c/2.4% so far today.
Although trading at the lowest level this century already.....:sleep:
WHS down about 25% in past 2 weeks or so despite no news/updates......Obviously this deal didn't happen overnight. Likely plenty of insider trading from WHS senior management and their friends & family.
But this is the NZX so don't expect anything from the regulators.
Gross mismanagement of T7 by the Warehouse and shows that the directors & management have no transferable skills in running businesses outside of the declining fortunes of WHS ‘classic’.
Deleted deleted
I worked for Torpedo 7 (well part of the business that had actually been acquired by T7 before itself being acquired by The Warehouse Group) about a decade ago. I technically had a 'management' position - at least based on my job title - working in a back office and met all the group managers, used to be privy to the sales reports that would be distributed each morning, sat in on management meetings and all that jazz.
Honestly back then it felt like quite a fun, dynamic place to work (particularly with the more "swashbuckling" sub-brands e.g. 1 Day and Shotgun Supplements) and I'm proud of the work my little team did, but some internal changes among more senior management made it clear the writing was on the wall and I looked for new pastures. I
I got out just before there was a big restructure, around the time that Grayston came on board. I recall being in a whole bunch of trouble with my manager for telling him that I thought Grayston looked like an incompetent - I wonder if my then-boss would be willing to eat his words all these years later?
I occasionally shop at T7 but am always disappointed with the service, the selection and the seeming incapability of their systems to actually determine what stock is where.
Sad story in a lot of ways there samjay
One hopes that being operated by guys who have some customer empathy T7 might be great again
I was in a meeting with Nick shortly after he turned up at WHS and had same thoughts as you …..think I said to myself heck what was the Board thinking taking him on.
That is completely my experience too. Hit & miss for service instore, but online & call centre is rubbish. Buy things and then out of stock - latest one was using a voucher to buy and refunded but now can only spend online.
Thanks for sharing Samjay - very interesting and no doubt you've moved on to greener pastures....:)
I think one of the problems WHS and Kmart is they are fighting for lowest common denominator status when it comes to physical presence. The offerings are little different, pricing is similar and store tidiness/customer service of both treads a fine line between the below par and shambolic. At least here across Auckland.
Can't speak to the online experience though.
Unfortunately it may end up like Deka.
I'm kind of surprised at how bad Torpedo7 has tracked... I know it's underperforming, but I'm not sure it's a $1 firesale sort of deal. I think they were leaders in quite an overpriced outdoor segment. Their closest competitors were Kathmandu, Macpac etc, and they don't have the gear or equipment (e.g. cycles) that T7 has. If anything I think they didn't do a good enough job of positioning themselves as the one stop shop if you're leaving Auckland for the weekend.
I think the quick sale in itself demonstrates the incompetence of Grayson and the team. I see huge potential that Tahua will realise and laugh to the bank with.
With regards to NL, they're really just another player in a very competitive electronics landscape... Competing against PB Tech, JB HI FI and HN but doing it poorly - the service and price points are lacking, and you often get sales hungry vulchers instead of techies wanting to help. I think their real risk is here being lost in a crowded race.
Lastly we come to the Warehouse - what a absolute clown show. 2024 and we still have the $2 goods at $10 prices. The concrete floors and open racks are a far cry from the aesthetic and bright Kmart experience. Across my millennial group, Kmart is seen as passable (and a right of passage for a first flat), whereas the Warehouse is just disdain. On top of this the smart shoppers but from AliExpress and Temu who can drop ship within the week now.
I won't touch on The Market... I don't even know what that frankenstein of a site is...
In conclusion, I think they've shot the wrong horse, and now they're really screwed for the race ahead.
Kmart seem miles ahead, always huge queues while the warehouse near empty. Only places warehouse does well is in places without much competition. Good thing with the warehouse was it it was an easy stock to escape from as the writing had been on the wall for some time.
I sense Nick’s next big disaster will be ‘focusing’ on selling heaps more food …heaps more in most stores that is …not just a fit of butter and a few carton of eggs but heaps of everything
I don’t think Nick quire grasps that you need more than ‘foot print’ to make money selling heaps of food
Kmart are miles ahead. We got a TON of kids stuff from them, from toys to necessities. So do all our friends.
We would never even think to go the Warehouse.
WHS Red Shed stores are just depressing......
Dunedin KMart closed due to semismic risk a few years ago. About to reopen in South D. But an indication of the pull of KMart (and how bad the WHS is) is that companies have been organizing shopping trips to KMart Invercargill.
https://thespinoff.co.nz/business/30...rcargill-kmart
Old news, but a sad inditement on a few levels, but pretty sad for the Warehouse.
Not KMart and only a WHS where I live - been in the Red Shed once and actively avoid the place.
Went into KMart once. Total rubbish. Never been back.