WOW - Woolworths Group

nulla nulla · 26 November 2011

nulla nulla said:
Woolworths broke above the top of the recent downward channel line but stalled arround $24.90 on Wednesday and Friday. It needs to break above $25.00 then move above $25.60 to be convincing.

It wouldn't surprise me if brokers were to re-assess their positions in the near future and decide Woolworths has more upside than the current price (probably on the basis that retail is improving in the lead up to xmas). I can't see them being able to push it down much further (probably have to wait until January 2012 and take the position that xmas sales were lower than expected). As always, ignore my inane ramblings and dyor.

It is a good thing everyone ignores my inane ramblings. The share price got the staggers and fell back into the downward channel. Hard to work out if it fell because O'Brien appeared to put a gloomy forecast on what lies ahead (at the AGM) or if the fall was relative to the rest of the XAO. To some extent it is possible the fall was reduced by share holders switching out of more volitile stocks into wow as a "safer" share for these volitile times.

Personally I think it was O'Brien's comments on what lies ahead combined with Mr Strong trying to imflict a nickname of "Penguin" on O'Brien because he comes from Penguin Tasmania. Bloody pathetic.

Tyler Durden · 26 November 2011

Ves said:
Can someone provide some figures that Coles are actually gaining market share from Woolies? Or is Coles market share gain from other competitors in the same supermarket space? I'm really unsure how to tell at this point...

Perhaps not the most technical way, but go into both Woolies and Coles and see which one you'd rather buy at. I always end up at Coles because the things I need are cheaper, and they have greater specials. I've also noticed more people at Coles than Woolies in the city.

Ves · 26 November 2011

Tyler Durden said:
Perhaps not the most technical way, but go into both Woolies and Coles and see which one you'd rather buy at. I always end up at Coles because the things I need are cheaper, and they have greater specials. I've also noticed more people at Coles than Woolies in the city.

My partner and her mother are long-term Woolies customers; but I've always been a mix of both. Moreso Woolies these days, but I drop into Coles occasionally. I honestly haven't noticed too much difference between the store appearances, perhaps there really isn't much in Brisbane to separate them. I'm not big on stacking up on discretionary items such as chocolate, chips, soft drinks though... perhaps that's where the difference lies.

Still waiting for the Woolies share price to regress furher. Below the GFC lows would be lovely at some time next year.

nulla nulla · 9 December 2011

Against all expectations Woolworths rallied this week closing on $25.61 (after tapping $25.85 interday). Fairly significant when you consider where the rest of the market trended.

Historically, for the last couple of years, woolworths has rallied up in the December / January period. Whether Woolworths is in the middle of this years rally or has done its' dash remains to be seen.

Personally I think there is more to come. Very strong finishes the last three days, I wouldn't be surprised if Woolworths staggers toward $27.00. Then again....dyor

nulla nulla · 16 December 2011

While the rest of the market was tanking and other shares were testing lower channel levels Woolworths has been a stand out this week. Initialy holding firm early in the week arround the $25.68 mark, Woolworths then poked above $26.00 to tap $26.35 arround Wednesday and close on $26.26 today.

That $27.00 level is looking more and more possible in the runup to Christmas/ Early January, but then again Europe could collapse and the down hill slalom could start all over again. DYOR and good luck.

nulla nulla · 21 January 2012

Well Europe didn't quite collapse although there is plenty of talk about GFC2, but it does look like the retail sector has taken a hit on xmas sales being less than hoped for. Combine this with the disappearance of thousands of Australian jobs and the message about the Australian 2 speed economy is well and truly starting to hit home.

WOW broke through the lower channel support line and is now moving sideways and down. The Sales up-date is scheduled for 31 January 2012 and it is unlikely to be good. This will probably spook another sell down between the Sales update and the Annual Report. Watch to see if it can hold above previous support levels.

notting · 21 January 2012

Hopefully it's just being conscientious and filling that little gap which it tried to do before but failed!
Then again the Tool shed thing's a bit scary and the Dick Smith thing was always retarded. The pokies thing is just about finalized. Even online Alcohol deals are causing the old long termer to stagger.
Bit there to be mulled over whilst eating home brand sandwiches.
It's not as clear cut as it used to be.

Tyler Durden · 23 January 2012

Interesting view from a poster at HC:

Peak volume sales of Christmas are over.
189 Dick Smith stores closing; and an attempt to migrate most of that arm to online sales (how many zillions will go on consultancy fees for that little stroke of getting-in-ahead-of-the-pack genius?).
WOW looks like it's heading sub $23 before you can write out a directors $5 million productivity bonus cheque.
WES looks like contiuing to outpoint WOW in the immediate future.
Future looks grim; time to bail.
Good luck to all who stay aboard this billion dollar cruising showpony.

McLovin · 24 January 2012

Something I noticed when I did a bit of research on WOW was the decline in revenue/$ of PP&E.

I guess they're just not getting out of their stores what they used to...

The takeaway being that they will need to make a larger fixed asset investment for each additional $ of spending.

ROE · 24 January 2012

Tyler Durden said:
Interesting view from a poster at HC:

That was an article in AFR regarding WOW review of Dickies and they could get rid of Dickie all together but they cant afford the write down so they caught between a rock and a hard place, so slowly closing down stores over time is probably the only option..

skc · 24 January 2012

McLovin said:
Something I noticed when I did a bit of research on WOW was the decline in revenue/$ of PP&E.

I guess they're just not getting out of their stores what they used to...View attachment 45873

The takeaway being that they will need to make a larger fixed asset investment for each additional $ of spending.

Interesting ratio. I don't know what makes up PP&E but is there property revaluation component that affects that number?

May be something like revenue uplift / annual capex would give a different/better picture?

McLovin · 24 January 2012

skc said:
Interesting ratio. I don't know what makes up PP&E but is there property revaluation component that affects that number?

No, property is held at the lower of cost and recoverable value.

I compared that number to a few other supermarket chains around the world and WOW was, and still is, able to extract more revenue than most of its peers. Walmart, for instance, is down around the $4 mark.

skc said:
May be something like revenue uplift / annual capex would give a different/better picture?

4.27, 2.56, 1.52, 1.20, 1.14

Those are the numbers for the 5 years to 2011. Not much better.

skc · 24 January 2012

McLovin said:
No, property is held at the lower of cost and recoverable value.

I compared that number to a few other supermarket chains around the world and WOW was, and still is, able to extract more revenue than most of its peers. Walmart, for instance, is down around the $4 mark.

4.27, 2.56, 1.52, 1.20, 1.14

Those are the numbers for the 5 years to 2011. Not much better.

Thanks. When I say better picture I meant "more accurate" picture.

I think the numbers you quoted do better reflect the situation... i.e. worse than what rev/PP&E suggests.

McLovin · 24 January 2012

skc said:
Thanks. When I say better picture I meant "more accurate" picture.

I think the numbers you quoted do better reflect the situation... i.e. worse than what rev/PP&E suggests.

At the last FY report they said that they expected declining CAPEX over the next few years. It will be interesting to see how they can meet the markets, albeit diminishing, growth expectations and reduce CAPEX given the above.

Tyler Durden · 29 January 2012

Woolworths has drawn flack for linking drinking and driving by offering deep discount petrol vouchers to people who double their alcohol purchases.

The supermarket chain, which is a major player in both the bottle shop and service station markets, is offering a 30 cents a litre petrol discount coupon to buyers who buy two cases of beer or pre-mix cans of spirits. The discount is being offered on top of the usual 4c a litre discount for grocery purchases.

But the Australian Automobile Association (AAA), usually a champion of a better deal for motorists, has drawn the line at the heavy petrol discounts, labelling it "irresponsible".

http://smh.drive.com.au/motor-news/...-30c-alcoholfuel-discount-20120127-1ql58.html

Responsibility issue aside, I wonder how successful this will be.

nulla nulla · 29 January 2012

Tyler Durden said:
http://smh.drive.com.au/motor-news/...-30c-alcoholfuel-discount-20120127-1ql58.html

Responsibility issue aside, I wonder how successful this will be.

I didn't like their choice of Beers/Mixers (and pricing) so I let it slide.

Tyler Durden · 30 January 2012

Woolworths bolstered its board today with the appointment of three new non-executive directors including David Mackay, the former president and chief executive of US snack food giant Kellogg's.

But He is not the only new director with retail experience. Fellow appointee Christine Cross, retired from British supermarket group Tescos in 2003 and runs her own retail advisory firm.

Michael Ullmer, who retired as deputy group chief executive at NAB last year, is the third appointee. Mr Ullmer has also been a director of NAB, Bank of New Zealand and Chairman of the subsidiaries Great Western Bank (US) and JBWere. He is currently a director of Lend Lease.

"They bring a tremendous array of skills, knowledge and experience to the table and we look forward to their contribution," said Woolworths chairman James Strong.
Woolworths reports its second quarter sales results tomorrow with analysts expecting further headwinds for the discretionary end of its retail business, especially electronics, and slower growth from its grocery business than rival Coles.

http://www.smh.com.au/business/woolies-bolsters-board-with-new-directors-20120130-1qowg.html

Looks like the expected bad news tomorrow outweighed the new hirings, as WOW fell 1.29% today.

snowking · 31 January 2012

the market seems to like the results after they announced half year sales of $29.7 billion or a 5.0% increase on last year, up just over 2% at the moment.

I think the announcement regarding the divestment of the dick smith stores is also a positive. In my opinion so many of the goods found in DSE are readily available online and does one really need to go and look at a lot of the goods before buying? I don't.

Also, the market seems extremely cautious of the move into hardware even though Bunnings holds only 20% market share. Based on many analysts and observers comments you would think bunnings was a monopoly that could not be touched. If Masters can gain market share from the other 80% then there is great potential for growth. I have heard very positive things from people going to the new store in Melbourne, with many commenting prices are lower and there is a greater selection of products.
The partnership with Lowe's is also underestimated, Lowe's know their stuff and have been extremely successful in the US so if they have any input then I am sure Woolworths will pleasantly surprise going forward

Smurf1976 · 31 January 2012

snowking said:
tI think the announcement regarding the divestment of the dick smith stores is also a positive. In my opinion so many of the goods found in DSE are readily available online and does one really need to go and look at a lot of the goods before buying? I don't.

DSE has been doomed ever since it stopped being an electronics store and became simply a retailer of consumer appliances as it is today.

For those not old enough to remember, DSE used to be what Jaycar is today and that's how Dick made his money out of it. I doubt you could even buy a roll of solder there today - it's a shop that sells phones and TV's, not an "electronics" store as such.

qldfrog · 31 January 2012

Smurf1976 said:
DSE has been doomed ever since it stopped being an electronics store and became simply a retailer of consumer appliances as it is today.

For those not old enough to remember, DSE used to be what Jaycar is today and that's how Dick made his money out of it. I doubt you could even buy a roll of solder there today - it's a shop that sells phones and TV's, not an "electronics" store as such.

I have to agree, any battery a bit unusual, no more transistor/resistor/capacitor, they are like a cheap harvey norman or retravision store
Can not for the hell of me understand what the management thought..doomed to failure indeed yet there is a niche market there that jaycar took

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