WES - Wesfarmers Limited

[divs4ever]

Wesfarmers wary of mounting lockdown toll

Wesfarmers wary of mounting lockdown toll

Wesfarmers leaders say lockdown impacts are mounting on staff and the company will pay a "material" cost to compensate thousands unable to work due to COVID-19.The Bunnings and Officeworks operator vowed to keep paying wages to workers sidelined by COVID measures until at least December 31, and...

au.finance.yahoo.com

DYOR

i hold WES

so Ita Buttrose MIGHT be the single source of credible information on Covid in Australia

well , WES has already signed up Alison Watkins to the board , not a huge chance Ita will get an invite as well ... is there

 

[Sean K]

WES smashed since late Aug guidance. Must have been a downgrade on future growth in there that spooked the market.

Returning $2 later in the year with the sp currently $56. hmmm.

Good support across $56 too.

 

[peter2]

I've also been considering a purchase of WES in a large cap portfolio. The recent dip in price back to support does provide a good risk:reward opportunity. Bunnings stores in Syd were closed for two weeks. A good move politically but I'm thinking it had more to do with staff management. They must have had many Covid positives and many more close contacts that had to isolate. The two week closure should have helped manage this inconvenience with minimal loss of sales.

I'm unsure whether to buy this now or wait for the start of the next rally. I'm expecting a bit more weakness in the market late Sept as it's a seasonal tendency. If we see it then it'll provide many good RR opportunities. WES will be only one of them to buy.

 

[divs4ever]

i still DRP WES , but i stopped buying on-market back in December 2018 @ $31.17 ( AFTER the COL spin-off )

good luck

DYOR

 

[Garpal Gumnut]

I've also been considering a purchase of WES in a large cap portfolio. The recent dip in price back to support does provide a good risk:reward opportunity. Bunnings stores in Syd were closed for two weeks. A good move politically but I'm thinking it had more to do with staff management. They must have had many Covid positives and many more close contacts that had to isolate. The two week closure should have helped manage this inconvenience with minimal loss of sales.

I'm unsure whether to buy this now or wait for the start of the next rally. I'm expecting a bit more weakness in the market late Sept as it's a seasonal tendency. If we see it then it'll provide many good RR opportunities. WES will be only one of them to buy.

API is in the bag now for WES.

I expect pharmacies in Kmart or Bunnings before too long.

Come on late Sept.

gg

 

[mullokintyre]

API is in the bag now for WES.

I expect pharmacies in Kmart or Bunnings before too long.

Come on late Sept.

gg

Ownership rules for pharmacies vary from state to state, but thanks to the Pharmacy Guild, in general, only a pharmacist or group of pharmacists can own a pharmacy. That has not stopped the terry White group or Chemist warehouse from pretending its otherwise, but they still have artifical structures in place.
For Bunnings or Kmart to operate a pharmacy, they would have to somehow sublet an area to the pharmacist to run the dispensary, and maybe keep the retail side separate.
And they would struggle to staff them.
My wife is fielding multiple calls per week to do locums , mostly in remotely managed pharmacies where the owners(s) cannot get managers at any price, especially outside the metropolitan area.
Mick

 

[Dona Ferentes]

Wesfarmers supports the community pharmacy model, including the pharmacy ownership and location rules. If the proposal is successful, we see opportunities to invest to strengthen the competitive position of API and its community pharmacy partners by expanding ranges, improving supply chain capabilities and enhancing the online experience for customers......

API would also provide the basis of a new Healthcare division of Wesfarmers and a platform from which to invest and develop capabilities in the growing health, wellbeing and beauty sector.

.... The words of Rob Scott...

AFR has a bit of goss that this is just the start; watch for more takeovers . Rounding up the usual anonymous suspects

Industry sources believe that if ... successful, Wesfarmers is likely to follow up with other acquisitions, to create a $10 billion health, beauty and wellness business.

It's a fast-growing health and beauty market. Eventually, there will be deregulation and they will be well positioned to capitalise on that .

 

[peter2]

Was disappointed that I couldn't buy some cheaper WES today. (ASX -2%). Tomorrow?
Minimal sellers today indicates that WES is in demand at this support level.

 

[Sean K]

Was disappointed that I couldn't buy some cheaper WES today. (ASX -2%). Tomorrow?
Minimal sellers today indicates that WES is in demand at this support level.

Unless there's a general market crash it looks like $56 was a nice time to dip in.

It's going to be interesting to see what people are going to do with all the money they've saved over the past 2 years once lock downs are over. Do you go on holidays, buy a new car, renovate the house, buy a second house, book into Attica, or go to Bunnings, Kmart and Officeworks and fill up the trolley with whatever.... A lot of money burning in pockets I reckon. I know there's click and collect, but still...

 

[divs4ever]

API is in the bag now for WES.

I expect pharmacies in Kmart or Bunnings before too long.

Come on late Sept.

gg

probably attached to Bunnings , it the same building complex booting on of the other smaller tenants

i think they should have moved earlier and parceled in the COL demerger ( i would still rather have kept the API but an earlier takeover would have had me with only half the API shares i have now

but remember API is not just a couple of pharmacy chains it is a whole distribution network ( and i suggest MTS would have been a better fit with API )

if a co-tenant with Bunnings play expect the transition to be fairly slow , say limited to new Bunnings complexes and already empty retail spaces in existing Bunnings complexes

good luck with the K-Mart/Target play unless they do synergies with the cosmetics and such , that might prove counter-productive ( more attractive to shop-lifting/employee theft )

i also hold BWP and SCP ( which own a few Bunnings complexes as well )

 

[Sean K]

probably attached to Bunnings , it the same building complex booting on of the other smaller tenants

And @Garpal Gumnut I think pharmacies in supermarkets would be the most logical place. So, they should buy out Coles and then create some more space within the shop, or tack a pharmacy onto the bottle shop - a one stop shop for your medication.

 

[divs4ever]

And @Garpal Gumnut I think pharmacies in supermarkets would be the most logical place. So, they should buy out Coles and then create some more space within the shop, or tack a pharmacy onto the bottle shop - a one stop shop for your medication.

that would only make sense if you put the 'health-foods ' aisle inside the 'pharmacy section' despite the contradiction , and would probably reduce the impulse buying

but let's see if WES can make the acquisition work , i would be much more pessimistic if WOW was the predator

 

[ProfitEqualsYummy]

Hi all! My first post here. I was looking to buy WES a few weeks back when they were $54, but (regretably) didn't pull the plug. Still haven't pulled it either

Back in August they were at $65 but have since dropped, anyone have some insight into why that happened?

Thanks all! Love the discussions on this place

 

[peter2]

Hard to say for certain. As traders and investors we have to accept that the prices of our shares will go up and down at various times.

There was an annual report presented, a $2 return of capital, WES made a takeover offer for API which looks like it's been accepted. Eastern states were in Covid lockdowns. These circumstances create some uncertainty about the immediate outlook for WES. Uncertainty creates price volatility.

It's these situations that traders and investors wait for as they create a good opportunity to buy at lower prices. A trader must have a plan. The investor must have a conviction that WES remains fundamentally sound.

 

[divs4ever]

welcome to posting

coming events for WES

is the $2 a share capital return
3.1 +Record date 19/11/2021
3.1a Effective date of the cash return of capital 16/11/2021 ( next Tuesday )

also there is the progression of the API take-over ( more likely since SIG has walked away )

now i am AGAINST both these moves

the SIG offer suited me much better ( although i would rather have API as a stand-alone holding as a first choice )

and the $2 capital return is better ( imo ) than a share buy-back , but i see it as an admission that management could not find a good place to invest the cash ( a sad statement for a company that is essentially an investment shell )

now to my mind $65 for WES AFTER they had unloaded COL is crazy money maybe some thought the capital return would be more like $10 a share

i last added extra WES in December 2018 ( AFTER they divested COL ) @ $31.25 , so you can see why i think WES is over valued currently

since i couldn't understand why WES hit $65 i am probably not a good judge on why you should buy them now at anything over $45 ( with or without the capital return )

maybe WES has some clever moves left in the trick-bag ( and they are as sure as heck better than WOW )

now one card WES has yet to play is the fate of Office-Works and that could be a biggie ( depending on what is decided )

i am hoping for a REIT spin-off ( of Office-Works properties ) something similar to BWP

DYOR

now remember WES is an investment vehicle ( one might even say a corporate raider , although less aggressive than some )

 

[Dona Ferentes]

Hi all! My first post here. I was looking to buy WES a few weeks back when they were $54, but (regrettably) didn't pull the plug. Still haven't pulled it either

Back in August they were at $65 but have since dropped, anyone have some insight into why that happened?

First up, welcome.

I had a chuckle to myself, as I was thinking of topping up WES, probably around the same time. The chuckle then was probably relating to some rather self-serving comment from a fund manager in an Opinion Piece. Dated 17 Oct, it contained the usual "I know better than you" hubris

"These are just some examples of companies that have been mispriced when investors succumb to their behavioural biases. Be contrarian and don’t let another salesperson tell you that buying Wesfarmers is a reopening trade.

"There are plenty of investment opportunities, investors just need to be discerning.

Now that date was when WES was just above $54, it had bounced along that level for about a week. Our Very Important Columnist , operating in the stratified world of spending other peoples' money ( and taking a clip) , had either
a) the desire to buy some for self/ portfolio
b) seen some other fund manager espousing said BUY and wanted to score a point

and so came out with this backhander (the tips, by the way, were BHP, Star SGR and A2M <and WES doing better, 1 month on!>.)

WES, in my opinion, isn't a reopening play; FLT may be!

To answer your question, nothing has happened. Essentially WES is the same company/ corporation/ conglomerate. Inside WES, the company leaders; Bunnings, Officeworks, KMart, have done well through Covid but maybe that momentum is fading, the Lithium play is too early to tell and funds haven't been committed, and now the API takeover has happened and may introduce a level of concern.

I can't help you to decide when to buy. Long term it has been a great story, and probably will be for quite a while. (I hold)

One factor possibly at work is that GE, the archetype conglomerate but a mere shadow of former self, has announced it is breaking into 3 entities. Big money may look at this and wonder/ worry. WES and Seven West Group SVW are the only Aussie echoes, and of course there is Berkshire Hathaway. Recent comment has revisited these themes:

Talk of a Wesfarmers break-up has surfaced from time to time, but the doubling of the group’s share price in the past five years – the stock sits just below the record high it hit in August – has naturally silenced any critics. The chief benefit of a conglomerate is that its different divisions perform in different ways, delivering investors steady returns throughout an economic cycle.

This, of course, is also the big weakness in the model, as exposed by GE’s travails – when a conglomerate gets too unwieldy, underperforming businesses start to detract from the star divisions, which must then prop up the broader group.

Both [WES and Seven Group] have been unemotional about selling, demerging or reducing their exposure to certain business units when it has made sense to do so. Wesfarmers’ willingness to do these types of deals – contemplating the spin-off of Officeworks in 2017, for example, and then demerging Coles in 2018 when it can create shareholder value rather than when it needs to dig itself out of a hole, as in the case of GE – has reassured investors that the group is vigilant about portfolio management.

Further, the repeated insistence by Wesfarmers boss Rob Scott that he will not be pressured into big-bang acquisitions for the sake of it, instead making smaller bets in areas adjacent to the group’s existing units, speaks to strong discipline and a refusal to get sucked in by the empire building that ultimately engulfed GE.

 

[sptrawler]

And @Garpal Gumnut I think pharmacies in supermarkets would be the most logical place. So, they should buy out Coles and then create some more space within the shop, or tack a pharmacy onto the bottle shop - a one stop shop for your medication.

I would think that the logical space for the pharmacy, health and beauty stuff to be sold, would be to rebrand the non performing Target stores that still have leases, as they are in major shopping centres and have been under performing for years.
I do hold.

 

[Sean K]

Hi all! My first post here. I was looking to buy WES a few weeks back when they were $54, but (regretably) didn't pull the plug. Still haven't pulled it either

Back in August they were at $65 but have since dropped, anyone have some insight into why that happened?

Thanks all! Love the discussions on this place

The reason for WES dropping at that time could have been for a number of reasons: The sectors it's invested in, the overall market sentiment, technical traders, bad news, making bad decisions, good decisions, takeovers, decisions on payouts, etc. A stock like WES in the long term might also follow general market trajectory with some ups and downs and sideways moves. Not sure if WES or the XAO has done better over 10 years.

 

[divs4ever]

I would think that the logical space for the pharmacy, health and beauty stuff to be sold, would be to rebrand the non performing Target stores that still have leases, as they are in major shopping centres and have been under performing for years.
I do hold.

wouldn't that be a scary thought if you are a Myer shareholder ( i have held and been burnt with MYR in the past )

( say pharmacy , beauty and discontinued lines from K-Mart )

 

[sptrawler]

The reason for WES dropping at that time could have been for a number of reasons: The sectors it's invested in, the overall market sentiment, technical traders, bad news, making bad decisions, good decisions, takeovers, decisions on payouts, etc. A stock like WES in the long term might also follow general market trajectory with some ups and downs and sideways moves. Not sure if WES or the XAO has done better over 10 years.

View attachment 132798

10 years ago when the GFC happened WES were $12, even if you bought them 5 years ago and included the 1 for 1 Coles shares, then add that onto the current WES price it wasn't a bad buy.
Check out WBC over the same period.