WOW - Woolworths Group

[sptrawler]

Re: WOW Shares Theory!

Surprising that their Masters didn't do well given the recent [still going?] property boom. Maybe not so surprising given the deal they made with Anchorage for Dick Smith.

But true, there's a lot of value in WOW's assets... businesses are supposed to screwed up now and then... Their screw ups haven't kill them, only made them more likely to be Wal-Mart's new beachhead into Australia.

Jeez were we brothers in another life.lol Funny how the Masters death is so slooooow and orchestrated.

 

[sptrawler]

WOW's latest TV ad attempts to promote company based on the spurious claim that, once you reach the checkout, your bags will be "packed with pride".

When that's your claimed point of difference, you're better off not advertising. Who on earth wrote that rubbish?!

Q: "Why do you shop at Woolies ma'am?"

A: "Well Aldi have much better prices, their fresh produce is just as fresh as Wollies, but you know I can't help but marvel at how the Woolies checkout chicks shove the stuff in the bags with such pride. Packing pride is very important to me".

I'm in W.A, and Aldi have just opened, but on first observation it is cheap.
But I don't see a full weeks shop in trolleys.
It seems a bit like the low cost reject shop format. I'm not sure they are going to steal a lot of market share, if the majors get serious.

 

[notting]

I'm in W.A, and Aldi have just opened, but on first observation it is cheap.
But I don't see a full weeks shop in trolleys.
It seems a bit like the low cost reject shop format. I'm not sure they are going to steal a lot of market share, if the majors get serious.

They have already made the biggest dent in the duopoly since conception of the duopoly.
The trick is not just the cheaper prices it is also the colorful flyer they offer you which has weekly bargains and causes heaps of people who otherwise would not even go to the supermarket on a particular day to go there. Then the people buy other stuff and get used to the Aldi set up and getting pretty much all they want.
If WOW were smart they would setup a similar thing offering bargain stuff to get people enthusuasticly going there. Go on a Saturday morning it can be a frenzy as many bargains don't even last till lunch time.
Very clever!! (I shorted a bit of WOW today)

 

[Calvin27]

The trick is not just the cheaper prices it is also the colorful flyer they offer you which has weekly bargains and causes heaps of people who otherwise would not even go to the supermarket on a particular day to go there. Then the people buy other stuff and get used to the Aldi set up and getting pretty much all they want.
If WOW were smart they would setup a similar thing offering bargain stuff to get people enthusuasticly going there. Go on a Saturday morning it can be a frenzy as many bargains don't even last till lunch time.
Very clever!! (I shorted a bit of WOW today)

Except they should have done that for masters. Nothing wrong with it (masters) imo, just they tried to do to much too soon without a customer base. Now that they are doing the side bargain bin stuff, I've noticed a lot more traffic. Too late now though.

 

[Craton]

Did WOW have Home Hardware before or after Masters?

Either way, they should have concentrated on one and one only. Now their flogging both off, prft...
FWIW: the name Masters (in this context) grates me the wrong way, dunno why, just does...

 

[tinhat]

They have already made the biggest dent in the duopoly since conception of the duopoly.
The trick is not just the cheaper prices it is also the colorful flyer they offer you which has weekly bargains and causes heaps of people who otherwise would not even go to the supermarket on a particular day to go there. Then the people buy other stuff and get used to the Aldi set up and getting pretty much all they want.
If WOW were smart they would setup a similar thing offering bargain stuff to get people enthusuasticly going there. Go on a Saturday morning it can be a frenzy as many bargains don't even last till lunch time.
Very clever!! (I shorted a bit of WOW today)

The way it used to work in the supermarket trade twenty years ago was that fresh fruit was the loss leader that got people through the door. This was about the time that affordable colour printing technology came to newspapers and mass junk mail. The supermarkets and green grocers started taking out full page ads for loss leading specials (often grapes and bananas) in local papers and started distributing full colour mini-catalogues of current specials.

The supermarkets rearranged their format so that the fresh produce could be seen from the entrance and was the first aisle shoppers went down after grabbing a trolly. Fresh produce in supermarkets only took off in the late 80s. Before then the supermarkets didn't have the distribution, storage, handling and display capacity for it.

 

[Ann]

Looking at the weekly chart for WOW may suggest it is time for consideration. After two years of the EMA falling it is now showing an upward EMA cross over and may see some upside finally. It also offers a DRP for those looking to add to their holding brokerage free!

 

[mcgrath111]

I would think WOW atm is still quite over priced, given the competition it faces in both Coles & Aldi; As I'm sure other users have previously noted.

Supermarkets business:
Struggling heavily and has struggled for the last couple of years due to not providing customers the perception of 'value'. Have countered Coles considerably in this space, however Aldi has now open in SA and WA.
While I believe the turn around in the supermarket business is well and truly under way, it is likely the rewards won't be recognised straight away.

Endeavour Drinks Group is performing quite well and is the shining light for WOW, likely to continually report strong growth going forward.

Big W is currently under transformation however competing with the likes of Target and Kmart will be extremely hard; and seems to fail to identify where it fits in the midst.

Overall WOW's business core business is supermarkets, which is yet to deliver the results of the 'Glory day's' - and while the CEO who (IMO never wanted the job) believes that green shoots are appearing, I don't think they will be enough to stop another substantial fall in the short term.

A fall to 18.5 would not surprise me.

 

[mcgrath111]

Did WOW have Home Hardware before or after Masters?

Either way, they should have concentrated on one and one only. Now their flogging both off, prft...
FWIW: the name Masters (in this context) grates me the wrong way, dunno why, just does...

WOW owned Home hardward before Masters, however largely separated from the broader business. I believe WOW would still be in the hardware business if Lowe's hadn't exercised the put option.

 

[Value Collector]

I would think WOW atm is still quite over priced, given the competition it faces in both Coles & Aldi; As I'm sure other users have previously noted.

Supermarkets business:
Struggling heavily and has struggled for the last couple of years due to not providing customers the perception of 'value'. Have countered Coles considerably in this space, however Aldi has now open in SA and WA.
While I believe the turn around in the supermarket business is well and truly under way, it is likely the rewards won't be recognised straight away.

Endeavour Drinks Group is performing quite well and is the shining light for WOW, likely to continually report strong growth going forward.

Big W is currently under transformation however competing with the likes of Target and Kmart will be extremely hard; and seems to fail to identify where it fits in the midst.

Overall WOW's business core business is supermarkets, which is yet to deliver the results of the 'Glory day's' - and while the CEO who (IMO never wanted the job) believes that green shoots are appearing, I don't think they will be enough to stop another substantial fall in the short term.

A fall to 18.5 would not surprise me.

Aldi's sales growth stagnated despite them opening more stores, I think they are starting to struggle now Coles and woollies have decided to push back.

 

[notting]

Aldi's sales growth stagnated despite them opening more stores, I think they are starting to struggle now Coles and woollies have decided to push back.

How many of those stores are in new states (where they have almost no saturation yet)? If not many % wise then the damage ain't over yet.
Yet you'd have to think Woolies is looking like it might be turning a corner here.

 

[ReXXar]

It seems a lot of people trying to pick a turn here, in my opinion, WOW is an incredibly bad choice. If anyone bothered to dig through the last annual report, by my calculation there's about $25 BILLION off balance sheet liabilities, on top of the $4.4 billion in debt, gives an Enterprise Value circa $57 billion, which is 200% of the Market Cap. I've always been wary of WOW management, especially when they lobbied the government not to amend the accounting rules for operating lease to be included in the balance sheet. Judging by the sale of Dick Smith far less than book value was when I first noticed their incompetence. Looking at the new CEO, he has yet to prove himself, however the first thing he did was took the typical big bath method, by lumping everything into one bad year, typical popularist CEO. I'm never been a favour of such CEOs who play around with earning reports this way. If you think about it logically, the impairment alone wiped out last few year's entire profits. Looking ahead, they're still being squeezed in a corner without any concrete strategy promising outstanding growth. Even if they magically wiped off all their debt and off-balance sheet liabilities overnight I'm still staying away.

 

[dpgrubesic]

Maybe time to buy WOW but with increasing competition from Aldi, IGA and possible Lidi does anyone rate this as a buy I'd say it's at least a hold?

They are going to sell there petrol division for a solid sum (most likely). Anyone feel this is a short term opportunity?

 

[tech/a]

Sorry about the delay been pretty busy.

Click to Expand

This is a WEEKLY CHART

View attachment 60582

Not a bottom but target
Between $23-$24

You know after Rimatis got a belting I haven't seen him around.

Its a pity as you Fundies miss out on some pretty good stuff from us crazy Techies.

Personally I lost track of this thread when I went O/S for 2 mths
but all 'Extreme" and totally ridiculous targets reached--and surpassed by a fair margin.

 

[Gringotts Bank]

SPC news not good. If WOW start importing canned fruit from overseas I'm hopeful customers will make the choice to shop elsewhere. Who could forget the hep-A infected fruit that Creative Gourmet imported from China? This is the sort of crap that protectionist policy can prevent.

What will SPC do now? Probably what many premium quality producers are forced to do in Australia - jack up prices and sell to the Chinese.

 

[sptrawler]

SPC news not good. If WOW start importing canned fruit from overseas I'm hopeful customers will make the choice to shop elsewhere. Who could forget the hep-A infected fruit that Creative Gourmet imported from China? This is the sort of crap that protectionist policy can prevent.

What will SPC do now? Probably what many premium quality producers are forced to do in Australia - jack up prices and sell to the Chinese.

From this ABC report, it sounds as though there is two sides to the story.

http://www.abc.net.au/news/2016-11-...-agreement-with-spc-ardmona-victorian/8004304

Particularly this comment by Woolies CEO.

Woolworths chief executive Brad Banducci said the company was committed to an ongoing relationship with SPC Ardmona.

"We're talking about the volumes that can be supplied and the consistency," he said.

Maybe the quality being supplied is dropping, while the top shelf product is being exported?

I know that happens here in W.A a friend of mine's uncle, had orchards, all the top quality fruit was exported. seconds were sold locally.

I don't think a protectionist policy helps the situation, it just supports companies bad behaviour.

 

[sptrawler]

The other thing on further reading, they are still sourcing the product (tomatoes) from Australia.

http://www.smh.com.au/business/retail/woolworths-dumps-spc-ardmona-tomatoes-20161108-gskmbd.html

Relevant quote:

Woolworths head of buying Stephen Donohue said the chain had struck a deal to buy tomatoes from a local provider, who sourced fruit from the Murray Valley region in Victoria.

Sounds to me like CocaCola spc, may have shot themselves in the foot, another example of a level playing field not being that level.

It seems to me, that the U.S loves globalisation, as long as it all goes their way.

 

[McLovin]

What will SPC do now? Probably what many premium quality producers are forced to do in Australia - jack up prices and sell to the Chinese.

And that's a problem?

Is SPC really considered a premium quality producer? I always thought they were at the cheap and nasty end. Isn't all canned fruit?

 

[Gringotts Bank]

And that's a problem?

Is SPC really considered a premium quality producer? I always thought they were at the cheap and nasty end. Isn't all canned fruit?

I thought they supplied fresh produce as well. I'm back in the 1920's. Good, ship it all to the highest overseas bidder.

 

[McLovin]

I thought they supplied fresh produce as well. I'm back in the 1920's. Good, ship it all to the highest overseas bidder.

Nup, it's all packaged stuff. I've tried their tinned tomatoes, they're pretty cr@p. San Marzano all the way. Even the regular Italian tinned ones are usually cheaper than Ardmona anyway and about 1000x better.