WOW - Woolworths Group

nulla nulla · 2 September 2011

nulla nulla said:
Sold the $25.25 parcel today at $25.72. Didn't like the re-testing this week of the $25.07 bottom after tapping mid $25.60's and when todays xao started to pull back I figured it was a good idea to take some profit in case we had another sell off. Looks like there are still a lot of investors willing to sell into any sort of bounce.

Also the media and the market may have to allow the Hardware start-up some settling in time. If tonight is a downer internationaly we are likely to have a down day tomorrow. The usual Friday sell off after 2:00pm could provide a re-entry. Will re-enter if there is any sort of decent retrace to $25.30 or lower. (Still hold 2 parcels).

Got sick of waiting and took a parcel at $25.27. Imediately after I bought, the share price broke through the $25.26 support and dropped down to $25.18. Thankfully there was enought support in the auction to lift the closing price to $25.25.

No doubt the u.s.a will be down on their employment figures tonight (the djia futures was down earlier) however I am looking for the weekend papers to be full of articles about the relentless growth of Woolworths and Market dominance, defensive stock in tough times etc etc and fire up the dividend strippers to push the price back up before it goes ex-div. as always do your own research.

Chasero · 3 September 2011

I bought some Wow shares.

I'm expecting it to drift between 24.20 to 25.70 this week before hitting highs of low to mid 26.

Hopefully it'll peak before the ex div date. Then I'll decide whether to hold or sell.

The ~5% dividend is too safe a purchase to pass up for most investors using the dividend capture strategy.

Garpal Gumnut · 9 September 2011

WOW look in a bit of strife fundamentally.

Mrs Gumnut now buys most of our vittals from Coles.

This article suggests that Bunnings will win out in the hardware.

Mr Errington said over the past six years, Woolworths has spent $13 billion on investing activities or $2.17 billion per year. In terms of money spent on investing activities over depreciation, Woolworths has spent on average $1.48 billion per year.
Advertisement: Story continues below
He said this high investment spend came at a time that it was making a risky move into the highly competitive hardware space

Read more: http://www.smh.com.au/business/mast...lyst-20110909-1k0vi.html#ixzz1XQ767CgR/QUOTE]

I'll vote with the missus.

http://www.smh.com.au/business/masters-chain-will-bleed-money-analyst-20110909-1k0vi.html

nulla nulla · 9 September 2011

Aparently the Home Hardware market in Australia is so big and profitable the Woolworths doesnt have to dominate it to make a profit. All it has to do is capture a viable portion of it. Track record suggests it will recoup its investment and turn a profit from this area also.

However the market certainly paid out on Woolworths today with the massive push down before close and in the auction. $25.38 with a fully franked $0.65c dividend included suggests that WOW will get sold down to roughly $24.58 on Monday when it goes exdiv. You would think we were at the bottom of the gfc.

We took the profit on another parcel early this morning at $25.55 but held 3 more parcels for the div and a longer term capital gain. Might be holding for a while. If the share price goes over sold I will look for more trade opportunities. We live in strange times.

RandR · 10 September 2011

Garpal Gumnut said:
WOW look in a bit of strife fundamentally.

Mrs Gumnut now buys most of our vittals from Coles.

This article suggests that Bunnings will win out in the hardware.

Mr Errington said over the past six years, Woolworths has spent $13 billion on investing activities or $2.17 billion per year. In terms of money spent on investing activities over depreciation, Woolworths has spent on average $1.48 billion per year.
Advertisement: Story continues below
He said this high investment spend came at a time that it was making a risky move into the highly competitive hardware space

Read more: http://www.smh.com.au/business/mast...lyst-20110909-1k0vi.html#ixzz1XQ767CgR/QUOTE]

I'll vote with the missus.

http://www.smh.com.au/business/masters-chain-will-bleed-money-analyst-20110909-1k0vi.html

Click to expand...

Im going to respectfully disagree with that assesment, Masters doesnt and wont really be competing with Bunnings for a couple of years yet (at least on a national market level). Locally of course it will be another thing. But as many analysts have pointed out, the hardware/home improvement market is big, and there will be room for both quite comfortably. The ones that will be squeezed are the other participants in the market, over time I can see the likes of Mitre 10 etc easily getting squeezed and losing market share by both Bunnings and Masters.

I have a sneaky suspicion that Masters CODB is going to be higher then bunnings, so if they are going to compete on price it will mean they'll be operating on lower margins.

Despite more then likely having lower margins, I think Masters will most definitly be profitable.

I can guarantee it will be infinitly more profitable then the return Coles is giving to Wesfarmers

Im still building my position in Woolworths, this will be a core holding for me.

nulla nulla · 14 September 2011

When the herd turns against a stock it can get sold off like it has the plague. WOW is testing three to four year lows despite posting increased profits year in year out.

On its recent performance, you have to wonder if it is going to retest the lowest point in 4 years at $22.85. That is only $1.25 from the low point of the last few days.

nulla nulla · 27 September 2011

Opened at $25.00 and for a few seconds it looked like wow was going to rally, then it fell to $24.68 and struggled to recover to anywhere near the opening price.

IMO there were two obstacles: The first was an article in todays papers business section about the $400+ million outlay to set up the hardware stores; and the second was the irrational exuberance of the previous "defensive buyers" selling out thinking it is safe to go back to more speculative shares.

They'll be back.

Chasero · 28 September 2011

nulla nulla said:
Opened at $25.00 and for a few seconds it looked like wow was going to rally, then it fell to $24.68 and struggled to recover to anywhere near the opening price.

IMO there were two obstacles: The first was an article in todays papers business section about the $400+ million outlay to set up the hardware stores; and the second was the irrational exuberance of the previous "defensive buyers" selling out thinking it is safe to go back to more speculative shares.

They'll be back.

A lot of people I know have sold WOW and switched to WES.

Short term everyone's thinking Bunnings and Coles are miles ahead of Masters and wool. I'm still holding on though.

silence · 29 September 2011

In my local coles store I have often heard customers say they hadn't realised how much coles has changed since they had to come there instead of woolworths for a change, and that they had changed to shopping only at coles and hadn't looked back. I think there is a lot of momentum behind coles and it has several years of great growth ahead. And that's pretty much being stolen from woolworths. So one is probably heading up and the other down..

Disclaimer: While I work at coles I have heard these sort of comments in passing, not particularly in connection with my job. Other customers will have also heard the comments so I assume this isn't 'inside information'. I also hold WES shares.

nulla nulla · 29 September 2011

silence said:
In my local coles store I have often heard customers say they hadn't realised how much coles has changed since they had to come there instead of woolworths for a change, and that they had changed to shopping only at coles and hadn't looked back. I think there is a lot of momentum behind coles and it has several years of great growth ahead. And that's pretty much being stolen from woolworths. So one is probably heading up and the other down..

Disclaimer: While I work at coles I have heard these sort of comments in passing, not particularly in connection with my job. Other customers will have also heard the comments so I assume this isn't 'inside information'. I also hold WES shares.

The Annual Reports released by both companies show that both companies are continuing to gain market share, which is apparently at the expense of the likes of Metcash, Aldi, IGA and independants.

matty77 · 18 October 2011

Can someone please explain "Notes II" to be? Is this just a fancy name for another share offer?

Offer Summary

On 18 October 2011, Woolworths Limited (Woolworths) announced an offer (Offer) of dated, unsecured, subordinated, cumulative notes (Woolworths Notes II or Notes). The Offer is made under the Prospectus lodged with ASIC on 18 October 2011 (Prospectus).

Woolworths intends to raise $500 million through the issue of Notes with the ability to raise more or less.

The Offer of Notes forms part of Woolworths’ ongoing capital management strategy, with the proceeds of the Offer to be used for general corporate purposes. Woolworths expects the Notes to lend support to Woolworths’ corporate credit rating from Standard & Poor’s until 24 November 2016. The Notes themselves will not be rated.

The Prospectus contains details of the Offer which you should read carefully and in particular, you should consider the risk factors set out in Section 4 of the Prospectus before deciding whether to apply for Notes.

Capitalised terms used in this website have the meanings found in the Prospectus.

The Offer comprises of an Institutional Offer, a Broker Firm Offer, a Woolworths Shareholder Offer and a General Offer.

Notes will not be and have not been registered under the US Securities Act of 1933, as amended (US Securities Act) or the securities laws of any state or other jurisdiction of the United States, and may not be offered, sold or re-sold in the United States, or to, or for the account or benefit of, US persons except in a transaction exempt from, or not subject to, the registration requirements of the US Securities Act.

ROE · 18 October 2011

matty77 said:
Can someone please explain "Notes II" to be? Is this just a fancy name for another share offer?

Another form of capital raising, WES aggressive push on its food stable is hurting
and fighting the market leaders in Hardware isn't cheap.

ROE · 18 October 2011

silence said:
In my local coles store I have often heard customers say they hadn't realised how much coles has changed since they had to come there instead of woolworths for a change, and that they had changed to shopping only at coles and hadn't looked back. I think there is a lot of momentum behind coles and it has several years of great growth ahead. And that's pretty much being stolen from woolworths. So one is probably heading up and the other down..

Disclaimer: While I work at coles I have heard these sort of comments in passing, not particularly in connection with my job. Other customers will have also heard the comments so I assume this isn't 'inside information'. I also hold WES shares.

I used to hate Coles but that change in the last 15 months, I now mostly shop at Coles, I also like WOW as a business but that also change when I saw what WES is doing to Coles

so I refuse to pay premium for WOW at that time the stock is around 26-28 bucks
two years later $24-$25 buck, another year or two $20-22

below $20 I will seriously look else no go

huachuma · 22 October 2011

I live in Europe (Balkans)and I have wow for more than 10 years. I am only building my holding hopping that it will provide a very good dividend income for my retirement. These days, we are having a good opportunity to buy wow with very high div.yield, but many others shares would provide the same benefits, I guess.

Can someone explain why wow was buying out shares, last year, spending around 700 mil (if i remember) and paying around $27 per share and now they are truing to get cash at very costly price by issuing notes?
Is that just to obtain a better rating from agencies witch are becoming increasingly discredited these days (at least that is how it looks to bi here in Europe).
I can not see the logic.

(Sorry for my English, I am not from English speaking background)

nulla nulla · 24 October 2011

Woolworths is due to report on their sales this week. Coles sales were up 8% on last year and Woolworths is not expected to be up as high due to Woolies have a higher turnover than Coles to begin with. No doubt if it comes in under market expectations, the share price will get slapped down again.

Interesting comment by the boss of Wesfarmers in an article in Fridays paper about the impact the Woolies hardware stores "Masters" are having on the local Bunnings stores when they open in the same area. Bunnings stores are experiencing a drop in sales. Wesfarmers not only has to contend with the competition coming from Woolies but the revitalisation of Mitre 10 hardware stores is making life difficult for Bunnings as well.

Go Woolies. I haven't got the circular in respect of the notes issue yet but will certainly give it a good read when I do get it.

Ves · 27 October 2011

Looks like the result was towards the upper range of what they expected for the 2011-12 year. It's not startling growth by any means, but it's stable.

I am looking at picking up some WOW as way of providing a growing income stream for the future... unsure to wait to see if the price stabilises or retraces even further and offers a better yield on cost. Still kicking myself that I didn't pick up ANZ and WBC any where under $19.50 whilst I had the chance.

Julia · 27 October 2011

Ves said:
Still kicking myself that I didn't pick up ANZ and WBC any where under $19.50 whilst I had the chance.

If you wait a bit, Ves, when the world wakes up to the fact that the European solution isn't in fact a solution, you could well have the chance to pick these up at that price again.

Ves · 28 October 2011

Julia said:
If you wait a bit, Ves, when the world wakes up to the fact that the European solution isn't in fact a solution, you could well have the chance to pick these up at that price again.

Here's hoping. As Buffett said, you don't need to swing until you find the right pitch. If profits increase the current prices may well be attractive too.

ROE · 28 October 2011

$20 here it come you don't have to wait for too long ...

Coles catching up
Heavy Capital expenditure start up masters and the Jury is still out on this one
Borrow more and more each year to keep up the earning....

they are caught between a rock and a hard place ... Borrow more to keep up the earning
or face stagnant growth or going backward but the more you rack up in debt it comes to
a point where increase debt wont increase earning but becomes a burden...

Like all good stories it eventually comes to an end and WOW cant command the premium like it used to in its young day.

Plus WOW earning is also mask by its Pokies earning, if the new Pokie laws come in effect WOW got a perfect storm hit it from all directions....

Still think this stock deserve a premium, not in my book..

nulla nulla · 29 October 2011

Here is a link to an article by Nathan Bell of Inteligent Investor in respect of the pro's and cons of the Woolworths Notes II versus the ANZ Notes recently issued.

http://www.theage.com.au/money/woolies-delivers-a-security-winner-20111028-1mnvr.html

They are expect to be redeemed after 5 years. If not the margin will increase by a further 1% and could run until 2036. I'm sure I read that the notes will trade on the asx but this may need to be checked.

Looks like a good combo interest paid quarterly, for those looking to lock in for longer periods.

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