WOW - Woolworths Group

[oldblue]

..right now they are on that way already going into NZ when it's not profitable for them to do so...
QUOTE.

They're certainly profitable in NZ - EBIT of NZD91.9m in the last half - but probably not as profitable as the Aust supermarkets and certainly not growing as fast at present.
The problem is they're not the market leader in NZ. WOW has around 43% share of supermarket revenue versus 50%+ held by the leader, Foodstuffs.
WOW certainly has an active investment programme to displace Foodstuffs as No 1 and I wouldn't bet against them succeeding in that. What they do lack at present is a Big W-type presence. That would be solved if/when they make another play for The Warehouse.

Disc: Not holding but they wouldn't have to get much cheaper to entice me in.

 

[joeyr46]

Julia can you give me an example of how or why you would justify a high PE
18 to 20 PE suggests to me WOW could half in price and if times get tough or more demanding a lot lower

 

[M34N]

WOW has caught my attention lately, seems to have started heading down lately and heading towards its 52-week low of $22.85. Has only gone backwards in the past few days since the markets started to rally and it looks like it has plenty of support at the $23-24 range. Any jump below the $23 level and it looks like it'll be down to the next step of $20, which is again very strong support.

Very tempted to buy here and looks like it's due for a technical bounce very soon. Any buying volume that sees it go higher and I will ride this one up. Keeping a close eye on it here.

 

[matty193]

I hope you're right M34N. I wish I could shed some light on why is had dropped over the past couple of weeks, especially considering the bounce of market over the last few days.

Yesterday's volume was, in fact, about that of the last significant support at around $24 at around 7 million, and quite a bit above the previous week or two.

Will be watching too.

 

[freddy2]

Julia can you give me an example of how or why you would justify a high PE
18 to 20 PE suggests to me WOW could half in price and if times get tough or more demanding a lot lower

This financial year WOW will make a pre-tax profit of around $3 billion (about $2 billion after tax). If the current price cuts in half (to $15B market cap) you are looking at a 20% pre-tax return on one of the best companies in the country. Although I have some shares at the moment one can only hope for such an opportunity to buy more.

 

[moXJO]

I hope you're right M34N. I wish I could shed some light on why is had dropped over the past couple of weeks, especially considering the bounce of market over the last few days.

.

Possibly the impact of Costco or whatever its called opening stores soon. Not to sure how they will go. But considering Woolies seem to rip you off in stores it could be a major dent in their future profits

 

[rustyheela]

i would suggest coz ita a defensive stock and the market has somewhat stabilized a bit punters are selling down to maybe take on a bit more risk looking forward

 

[rustyheela]

maybe downside price pressure of a new kid on the block and a sign of things to come?

US giant Costco takes on Coles, Woolies with first Australian store at Docklands
By Kellee Nolan
AAP
March 13, 2009 01:36pm
Text size
+ - Print Email Share Add to MySpace Add to Digg Add to del.icio.us Add to Fark Post to Facebook Add to Kwoff What are these? Retail giant ... what customers can expect when US supermarket chain Costco opens in Australia / AFP
Costco to opens stores in Australia
Company hopes to draw customers from afar
But they'll have to pay a membership fee
SUPERMARKET giants Coles and Woolworths will have have a new kid on the block to go up against later this year with cut-price international grocery warehouse Costco set to open in Melbourne.

Costco will open its first Australian outlet at Melbourne's central Docklands precinct in July, offering everything from greenhouses to diamond rings and fresh strawberries to toilet paper, at discount prices to both wholesale and retail customers.

The store will create 225 new full-time and part-time jobs which Victorian Industry and Trade Minister Martin Pakula said was a "statement of confidence" in Victoria's economy.

The US-based Costco also planned to open a store in Sydney, and was looking "all over" the city for a suitable site, Costco Australian manager Patrick Noone said today.

The $60 million Melbourne store will be Australia's first, joining a stable of 535 Costco outlets across the US, UK, Canada, Mexico, South Korea, Taiwan and Japan.

Related Coverage
Costco promises shopper savings
The Australian, 14 Mar 2009
Reader's Comments: Costco takes on Coles, Woolies - The Courier-Mail
Courier Mail,
We stop big boys getting too comfy
The Australian, 12 Aug 2008
Price checks flawed: supermarkets
The Australian, 7 Aug 2008
Supermarket price check
Courier Mail, 6 Aug 2008
Following the inroads made by no-frills grocery chain Aldi in Australia, Costco warehouses will offer wholesale prices to small and medium enterprises and also allow retail consumers to buy goods at wholesale prices, for an annual $60 membership fee.

Commenting on the new central Melbourne Costco site, Mr Noone said he hoped people would travel "a long way" to shop there.

"We think they will take to it like ducks to water," he said.

Australian Retailers Association executive director Richard Evans said consumers would take some time to come around to the Costco way of shopping, but the wholesaler was a welcome addition to the retailing mix.

"Australian consumers are very set in the their ways, it's very difficult to get them to change their style of shopping," Mr Evans said.

"Retailing is very competitive but the more competition, the better it is for consumers."

Last year the Australian Competition and Consumer Commission (ACCC) ran an inquiry into the competitiveness of grocery prices in Australia, amid public concern over a perceived stranglehold on the market between Coles and Woolworths.

In its July 2008 report, it found price competition between Coles and Woolworths was limited by high barriers to entry for new competitors combined with limited incentive for Coles and Woolworths to compete aggressively.

But it found Aldi had been a "vigorous price competitor", forcing Coles and Woolworths to lower prices on many products.

Docklands retail and restaurant owners, still reeling from the closure of the heat-buckled Southern Star Observation Wheel, welcomed the

 

[Wysiwyg]

Julia can you give me an example of how or why you would justify a high PE
18 to 20 PE suggests to me WOW could half in price and if times get tough or more demanding a lot lower

This financial year WOW will make a pre-tax profit of around $3 billion (about $2 billion after tax). If the current price cuts in half (to $15B market cap) you are looking at a 20% pre-tax return on one of the best companies in the country. Although I have some shares at the moment one can only hope for such an opportunity to buy more.

And an increasing dividend year after year. That is all I wanted to type because Woolies has been and still is, a great Australian company.

 

[Dangerous]

And an increasing dividend year after year. That is all I wanted to type because Woolies has been and still is, a great Australian company.

i got on at $25 as providing the dividend stays the same i will get 3.9%, which after the last interest rate cut is more than the bank.... Would love another buying opportunity

 

[Hank Moody]

yeah i loaded up at $25 ish, i think this recent run will hopefully continue to around the $28 mark.

Half way there so far

 

[PhoenixXx]

continue to around the $28 mark

No joy...hit $28 and slumped after its (worse? than expected) 7.5% sales increase. I started accumulating since low $25-ish, kept buying and bought some more sub $28

 

[brettc4]

Can someone explain to me the drop over the last 2 days, when the market itself has gone up well??

Brett

 

[airpoe]

market expected higher single digit increase, people are now switching to Wesfarmers.

I saw it drop & got 2.5k but shouldn't, waiting to get out asap

 

[Iggy_Pop]

Can someone explain to me the drop over the last 2 days, when the market itself has gone up well??

Brett

WOW is a defensive stock. Money will move to cyclical stocks when the market booms, also a few share raisings such as NAB will see defensive stocks go down a bit. Still a great company and one for the long term.

 

[3 veiws of a secret]

Don't you just hate it when the stock is going gangbusters like today , and you cannot keep up with the amended sell price. Got caught today finally @ $27 dead, before I could penny pinch some more at $27.15 !!!
AT least sold for a profit !

 

[Sean K]

WTF is WOW doing paying such a premium for Danks? This is crazy stuff.

Danks Holdings Limited (Danks) today announced that it had signed an implementation deed with Woolworths Limited (Woolworths) under which an off-market takeover offer will be made to acquire all of the issued shares in Danks at a price of $13.50 cash per ordinary share.

Significant premium for shareholders

“The offer enables shareholders to realise their investment for cash at a significant premium to the current market price,” he said.

The offer represents a 65% premium to Danks’ closing share price of $8.20 on 24 August 2009, being the last trading day prior to this announcement and an 89% premium to the volume weighted average price of Danks shares for the 6 months to close of trade on 24 August 2009.

 

[gfresh]

er? So the takeover bid is attractive and likely to succeed?

Doesn't seem excessive to me. Danks is profitable, and $87.6M is still small change to a company like Woolworths. NPAT for Danks last year was $7M on revenue of $569.5M. I am sure WOW thinks they can improve on that with some changes. I think it's fair, and again, it's not as if we are talking $100's of M here that would leave Woolworths in excessive debt.

Danks owns Home Timber & Hardware, Thrifty Link, and Plants Plus Garden Centres.. These days, behind Bunnings, there isn't much left and those names are recognisable to most Aussies. Allows Woolies to leverage the existing brand, and expand into new stores.

I am not sure whether everybody is itching for further cheap hardware stores, but I guess it fills out their offering.

 

[swm79]

WTF is WOW doing paying such a premium for Danks? This is crazy stuff.

Danks Holdings Limited (Danks) today announced that it had signed an implementation deed with Woolworths Limited (Woolworths) under which an off-market takeover offer will be made to acquire all of the issued shares in Danks at a price of $13.50 cash per ordinary share.

Significant premium for shareholders

“The offer enables shareholders to realise their investment for cash at a significant premium to the current market price,” he said.

The offer represents a 65% premium to Danks’ closing share price of $8.20 on 24 August 2009, being the last trading day prior to this announcement and an 89% premium to the volume weighted average price of Danks shares for the 6 months to close of trade on 24 August 2009.

sick and tired of waiting to get in i guess... the one third JV with Lowes US wouldnt have hurt the amount of avaiable cap either!

there's a lot of growth opp for Danks though, but yeah obv GREAT price for shareholders

65% is a LOT of premium

 

[Sean K]

90% premium to the last 6 months? Huh?

I suppose we've had that nasty GFC thingy, but this was an opportunity to buy something on the cheap. Real cheap.

But yes, maybe small fry for WOW.