WOW - Woolworths Group

[finicky]

Further to Market Matters afternoon report:

Woolworths (WOW) $30.81​

WOW -6.1%: A win for consumers but not for shareholders today, with Woolies stepping up discounting which has forced them to downgrade earnings, WOW now guiding to Australian Food EBIT of $1.48-1.53bn, a ~7% miss to consensus at the mid-point. A rise in online sales has also had an impact on margins, a trend that Goldmans to their credit had highlighted in their recent note on Metcash when they deviated from consensus, the sort of independent thinking that we applaud, even though we were on the wrong side of it. As a good colleague who has been in the markets for 40+ years often says, analysts make sheep look like independent thinkers!

• A soft update and the shares rightly fell.

MM remains neutral WOW ~$31

 

[divs4ever]

Back to screwing suppliers again then.

YEP ! a handy thing to remember when buying small cap. stocks that may sell to WOW

 

[divs4ever]

well they reduced human interaction at check-outs

so some customers helped themselves to 'five-finger discounts ' more often , i could see that trend the last time i visited a store in December 2023

the result costs down ( maybe ) and 'shrinkage' UP
interesting to see Brad the Wonder-boy was replaced

a bit of a feature at WOW

 

[TimeISmoney]

well they reduced human interaction at check-outs

so some customers helped themselves to 'five-finger discounts ' more often , i could see that trend the last time i visited a store in December 2023

the result costs down ( maybe ) and 'shrinkage' UP
interesting to see Brad the Wonder-boy was replaced

a bit of a feature at WOW

You have one person watching on average 10 self serve counters, it's a no brainer that some will take things without paying. The self serve counters here actually have a camera on them but even then the amount of times that machines have trouble and you need assistance, nobody is around to help you because they're attending to someone else.

 

[Value Hunter]

You have one person watching on average 10 self serve counters, it's a no brainer that some will take things without paying. The self serve counters here actually have a camera on them but even then the amount of times that machines have trouble and you need assistance, nobody is around to help you because they're attending to someone else.

Indeed the false economies of cost cutting. If you want to cut costs get rid of head office staff and management employees don't cut down on front line staff who do the critical work.

 

[Timestar]

Can someone pls verify the debt for Woolworths Ltd ($16.7 bn) is corrrect. A colleague mentioned it this week and I thought he ws joking but it appears to be somewhat true. The interest omn the will hit their bottom line big time and the new CEO had better come up with a plan to tackle this asap.

Also The NDIS is projected to cost the taxpayer $46bn in 2025-26, again these numbers are insanely unacceptable and in desperate need of review.

 

[Sean K]

Can someone pls verify the debt for Woolworths Ltd ($16.7 bn) is corrrect. A colleague mentioned it this week and I thought he ws joking but it appears to be somewhat true. The interest omn the will hit their bottom line big time and the new CEO had better come up with a plan to tackle this asap.

Also The NDIS is projected to cost the taxpayer $46bn in 2025-26, again these numbers are insanely unacceptable and in desperate need of review.

About $15b.

 

[Timestar]

Thanks Sean, I think I double counted something. That said, it's still very high with short-term debt of ~$3.6bn, would love to know the new CEO's plan to deal with that consider $13bn is due in total and only ~$2bn cash on hand.

Cheers, T.

 

[Sean K]

Thanks Sean, I think I double counted something. That said, it's still very high with short-term debt of ~$3.6bn, would love to know the new CEO's plan to deal with that consider $13bn is due in total and only ~$2bn cash on hand.

Cheers, T.

I suppose debt and profits are all relative to the overall size of the company and its EV, assets, cashflow, business type, etc. Having $15b in debt for a $35b company does looks pretty steep on the surface of it. Maybe high debt is OK because people need to eat and aren't going to stop going to shop there. Coles is worth $23b and has $10b debt. So, not too different. Maybe that's how grocery companies operate?

 

[Garpal Gumnut]

I suppose debt and profits are all relative to the overall size of the company and its EV, assets, cashflow, business type, etc. Having $15b in debt for a $35b company does looks pretty steep on the surface of it. Maybe high debt is OK because people need to eat and aren't going to stop going to shop there. Coles is worth $23b and has $10b debt. So, not too different. Maybe that's how grocery companies operate?

Cashflow would be so large, as well as the debt, having a good CFO would be essential.

gg

 

[Garpal Gumnut]

There have only been four monthly falls of a similar magnitude in the last three years on such high volume ( over 20m shares traded ). On three out of four occasions the price kept on falling. It may be a buy closer to $26-$27. We are only 1 trading day in to this month.

gg

 

[Value Hunter]

Can someone pls verify the debt for Woolworths Ltd ($16.7 bn) is corrrect. A colleague mentioned it this week and I thought he ws joking but it appears to be somewhat true. The interest omn the will hit their bottom line big time and the new CEO had better come up with a plan to tackle this asap.

Also The NDIS is projected to cost the taxpayer $46bn in 2025-26, again these numbers are insanely unacceptable and in desperate need of review.

It is very normal for large supermarkets Coles, Woolworths, Costco, Aldi, Tesco, etc to have a lot of debt. This is because supermarkets earn a high return on equity and have very stable revenues and cash flows and hence they can should a high debt load.