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COL - Coles Group

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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.


 

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
 
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.
 
Dona Ferentes said:
- implications? Many. Trucks on the road, growth of big warehouse centres on outskirts. Job losses. Lots more cardboard boxes in rubbish bins.
Click to expand...

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.
 
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.”"
 
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​


 
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).

 
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.
 
greggles said:
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.
Click to expand...
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.
 
Coles and Woolies are having a good pandemic


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

 
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.”

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.”
 
Trav. said:
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.
Click to expand...
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
 
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
 
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