COL - Coles Group

[sptrawler]

As can be seen below announcement out this morning and SP dipped accordingly. I expect it to bounce back but timing of sale is not the best for COL

WES is getting one hell of a war chest Trav, I wonder who they are circling?

 

[fiftyeight]

When COL pops up out of the Keltner Channel it is getting sold straight back down in to it. When it pops out to the down side it is more rounded.

 

[fiftyeight]

After being a d!ck for a tick on Friday and missing getting short $17.50, I scaled right back and just placed a small token trade yesterday, more to keep my opinions honest tbh. Sold 100 at $15.76, grrrrr should be short $17.50+

Immediately have trade regret, why short the only company that will stay open during a lock down

My 'how NOT learn options' is also going well. With no bids or offers, my orders not hitting the market who knows what is going on, I guess someone does but it is not me. I learn best by making mistakes unfortunately so, my fist lil options trade is underway.

I have been mostly reading up on selling puts to accumulate long term holdings or buying long dated calls deep out of the money. First trade executed, buys puts 2 months from expiry......plan is going well so far.

Closed this out yesterday for a tiny tiny profit on the CFD and will let put expire worthless.

Not ideal but not my mostly costly mistake.

On a positive, I did enjoy having to get my ideas (even if they were wrong) down in to words and is something I will do more of

 

[Dona Ferentes]

The whole idea of The Last Mile for deliveries is interesting, with multiple factors such as technology, Covid, gig economy in play, as well as overseas players trying to push into the local scene.

The Last Mile can, of course, be from a factory anywhere in the world, with specifically sourced product (think a car with unique features, or built to specs windows) or food meal delivery from a restaurant via an app, or in the supermarkets' case, it can be collecting the weekly shopping that has flowed from producer to supplier to distribution centre to local shop.

Coles, and Woolies are going in big with convenience, looking to build up home delivery as part of their offerings. How they are going about this is interesting as the approaches and business models are different. Metcash isn't able to compete and the IGA set-up is, as the name implies, Independent, which introduces a raft of challenges. Aldi doesn't seem to be pursuing it either.

In essence, Coles is going for big automated distribution centres that dispatch groceries around the country. Coles is getting its technology from the fast-growing UK online retailer, Ocado, which is also in the business of supplying robots to other retailers. Ocado will own and operate Coles’ distribution centres – one in Sydney and one in Melbourne – and Coles will pay it a fee to pack the groceries and load the bags on Coles’ trucks.

Woolworths will have hundreds of “micro-fulfilment centres” (MFCs) attached to its existing stores.Woolworths is testing the gear of Takeoff Technology, a US start-up that is specialising in building robotic MFCs for supermarket chains. Woolworths is buying the equipment from Takeoff and will do the fit-out and own the space, so it will capture all the margin, with the US firm paid only to do maintenance and software updates in the robots.

- implications? Many. Trucks on the road, growth of big warehouse centres on outskirts. Job losses. Lots more cardboard boxes in rubbish bins.

 

[greggles]

- implications? Many. Trucks on the road, growth of big warehouse centres on outskirts. Job losses. Lots more cardboard boxes in rubbish bins.

Robots, job losses, more cost cutting. Rinse and repeat. Labour continues to be the highest cost for companies like Coles and Woolworths. Automatic checkouts were just the beginning. The move to home deliveries will be largely automated to make the whole service economically viable.

How much are people prepared to pay to have their groceries home delivered?

Cardboard boxes will be imported from Asia and disposed of here. More rubbish, fewer jobs. There might be more jobs in the rubbish disposal and transport sectors but overall I think jobs will be cut where possible. Full time positions will be replaced by casual and part time positions.

 

[finicky]

It's occurred to me that Brickworks (BKW) might be a good 'play' on this one day, at an even lower price. Maybe Goodman (GMG) too?

BKW:

After they've used their fringe urban land or when it otherwise becomes surplus they sometimes hive it off into residential blocks but otherwise the land is rezoned industrial and developed through a joint venture Industrial Property Trust that is a 50/50% partnership between Brickworks and Goodman Industrial Trust. After including debt, Brickworks 50% share of the Property Trust has an equity value of $633 million.

In addition to the Property Trust, the Company holds around 3,750 hectares of operational land and 370 hectares of development land. The company also holds 2,400 hectares of land in the U.S.

In this AFR article from Mar 2019, Brickworks CEO, Lindsay Partridge was interviewed:

" ... Partridge has been able to tap into an industrial property shift from manufacturing to distribution, where factories are out and warehouses are in. As the internet changes commerce, demand for warehouses is soaring and changing.

An example of these changes is provided by Coles’ new state-of-the-art automated warehouses, one of which will be housed within the 89-hectare Oakdale Industrial Estate in Horsley Park, which was sold into the Brickworks Goodman Joint Venture Industrial Trust in 2016.

Notably, the facility is 10 storeys high, which Partridge says neatly illustrates how the requirements of warehouse owners are changing. This trend should be very good for Brickworks.

“We are going to get a lot more distribution capacity per square metre of land,” he says, adding the company’s existing warehouse holdings may well end up being redeveloped over time.

Could Partridge ever imagine shuttering the group’s remaining Australian brick-making plans and telling his board he can make more money in property development?
Partridge says he occasionally makes this joke to his factory managers, but he hopes the day never comes.
“That’s a horrifying thought. I’ve been making bricks all my life.”"

 

[Dona Ferentes]

COL back at new highs; one of the 'beneficiaries' of the pandemic More than likely it won't disappoint in August, as long as costs are seen to be kept under control; dividend could have a little bit extra?

Earnings per Share​

 

[Dona Ferentes]

An example of these changes is provided by Coles’ new state-of-the-art automated warehouses, one of which will be housed within the 89-hectare Oakdale Industrial Estate in Horsley Park, which was sold into the Brickworks Goodman Joint Venture Industrial Trust in 2016.

Notably, the facility is 10 storeys high, which Partridge says neatly illustrates how the requirements of warehouse owners are changing.

Ah, the quest for efficiency may have unforeseen consequences. (In other words, it is frightening not to have redundancy built in). Apart from its dependency of the software and hardware, all that machinery, funneling everything through on location leaves a vulnerability (in this case, Covid).

Two weeks ago the Coles chilled distribution centre in the outer Melbourne suburb of Laverton was hit with a potential crisis when one of its 600 staff tested positive for COVID-19. The centre, which distributes chilled and fresh food through Victoria and as far north as Deniliquin in NSW, was hit with massive staff shortfalls as staff called in sick and the normal workforce of 600 fell down to around 50.

The centre is now back to normal and on Monday night Coles was able to end all restrictions on product sales .... At its worst the centre was five days behind and its stores faced massive shortages, with fears supplies would be as low as 10 per cent on the shelves by last Friday.

But the recovery effort highlights how business and government worked together to keep operations moving. In this case, daily meetings including National COVID Coordination Commission (NCCC) member Paul Little, the head of Victoria's Jobs Department Simon Phemister and Coles supply chain operations boss Tony O'Toole were held to ensure supplies kept up.

One of Little's tasks was to talk with the folk at Linfox and Toll, who are existing logistics suppliers, to ensure staff could be diverted to Laverton to help the process. Unions and health officials were on the job, and the process was a team effort which included where possible bypassing the distribution centre altogether, with suppliers like Lion and milk processor Saputo supplying the stores directly.
The DCs are lot more complicated than the old days, with sophisticated bar code readers and high lift reach trucks (three-storey forklifts) needed to work their way around.

 

[sptrawler]

I was talking to one of the isle pickers this morning and asked if she has seen a huge increase in online orders.
The lady said there was a massive spike at the beginning of the virus, then a leveling at a higher number during the lockdown, now she said it is back to similar numbers as pre virus.
So maybe the general trend hasn't held up and people still prefer to actually shop. By the way that is Perth W.A.

 

[Dona Ferentes]

Robots, job losses, more cost cutting. Rinse and repeat. Labour continues to be the highest cost for companies like Coles and Woolworths. Full time positions will be replaced by casual and part time positions.

Just check out a Canadian company Workjam. https://www.workjam.com/
Take Control of your Frontline Employees’ Digital Experience Through a Single Platform
"Workjam's Digital Workplace technology is designed to bring your non-desk workforce together through agile scheduling, transformative communication, experiential learning, and tailored recognition seamlessly through a single user experience."

Agile scheduling can mean a lot of things. Employee Self-Service
"Optimize labor and employee engagement by reducing manager workloads and giving employees the tools to easily manage availability, time off, schedule changes, swaps, filling open shifts and more."

No middle managers, no time sheets, digitally enabled employees can bid for shifts in multiple locations; when Balmain Woolies recently had all 50 staff put into 14 day self-isolation, replacement staff was found quickly.

 

[Dona Ferentes]

Coles and Woolies are having a good pandemic

Coles' same-store supermarket sales rose 9.7 per cent in the September quarter, boosted by a popular Little House collectibles promotion and strong demand for food and groceries both online and in-store by locked-down Victorian shoppers. This compared with 7.1 per cent growth in the June quarter and beat most analysts' forecasts. However, sales growth slowed slightly in October, with same-store food sales up 6.4 per cent. ( highest was 13.1 per cent in the March quarter 2020, during the first wave of panic buying. )

The September quarter sales were buoyed by stronger than expected e-commerce growth and heightened demand in Melbourne, where cafes, restaurants and food courts were closed and supermarket shopping was one of only a handful of permitted activities. Excluding Victoria, same-store food sales rose 7.7 per cent.

Weekly, since COL listed (Light blue; WOW dark blue)

 

[Dona Ferentes]

and still neck and neck, heading into reporting season

Since COL (dark blue) refloat, ....a bit of settling in, then off to races:

 

[Trav.]

Can anyone explain to me why COL is down ~5% after releasing their HY results.

I am not up to speed on the FA but the below extract looks good to me, what am I missing ?

 

[MovingAverage]

Can anyone explain to me why COL is down ~5% after releasing their HY results.

I am not up to speed on the FA but the below extract looks good to me, what am I missing ?

View attachment 120203

Most things down today...only things that seem up are banks

 

[MovingAverage]

Consumer staples looks to be getting sold off today, which I think COL is a constituent.

 

[Trav.]

Maybe you are right and COL is getting caught up in the overall market sentiment. I thought that I had missed something in the numbers.

 

[Dona Ferentes]

the institutional element always thinks it is forward looking, and various fund managers are probably selling as projections entered into their spread sheets are less rosy than before.

Coles has become the first retailer to explicitly warn that sales could decline over the remainder of the year as the COVID-19 sugar hit to the sector in the June half of 2020 wears off thanks to the vaccine rollout and a reduction in stimulus payments.

The retailer warned investors on Wednesday its sales surge, brought on by pandemic panic buying through the last 9 months of 2020, could be coming to an end, with sales for the first six weeks of the new year growing just 3.3%, well below the 20%-30% monthly growth rates Coles was reporting at times in the June quarter of 2020.

And there looks like being an impact on earnings in the current half and the first half of 2021-22 as well, as Coles explained. It said growth in its online sales “has moderated to 37%. As the business begins to cycle the COVID-19 impacts in the second half of FY21, Supermarkets sales and EBIT growth are expected to face challenges relative to the prior corresponding period.”

“Depending on COVID-19, vaccine roll out and efficacy, and other factors, sales in the supermarket sector may moderate significantly or even decline in the second half of FY21 and into FY22,” Coles warned on Wednesday in its interim results commentary.

While the outlook remains uncertain, Coles said the following trends are likely:

• Some reversal of the local shopping trend as customers become more confident in shopping in larger centres resulting in stronger performance of shopping centre stores;
• Increased movement as COVID-19 restrictions ease which will assist in the restoration of fuel volumes relative to pre-COVID-19 levels and
• reduced immigration which has underpinned population growth, an important sales growth driver, in prior years.

Coles also pointed out that “the benefits of recent improvements in both employment numbers and consumer confidence may be partly offset by a reduction in fiscal stimulus measures introduced during the height of the pandemic.”

 

[barney]

Maybe you are right and COL is getting caught up in the overall market sentiment. I thought that I had missed something in the numbers.

Out of my league Trav, but I always look for subterfuge in any price action? (Specs make you be like that, lol

Coles upcoming Dividend record date is 1st March i believe?

Large funds (insert big players) are the only ones who can orchestrate large price moves in these big Stocks (my assumption)

Pushing it down will release the fringe holders, meanwhile they mop up the slack?

Maybe they are holding Put Options and can clean up with the price dropping?

They collect on the Puts, the loose shares and the upcoming divvies??

I'm just babbling on/guessing of course. Hopefully the Support level just above $17 holds firm for you guys holding.

ps DF (@Dona Ferentes ) above suggestion looks a bit more regular than mine, lol. Divvy time does seem to bring on some odd price action at times though

 

[Trav.]

Thanks guys, forward looking or manipulation is always hard to pick understand

I have bought in today on the dip just for a quick trade so we will see if I can make enough for beer or two.

 

[PZ99]

Like for like selling growth is down from the previous year... but that's the deal with retail.

EPS above DPS + franking credits were enough for me to load the truck to the lid on this one