Forum Archive Index - September 2000

["Peter Maiden" <pmaiden@today.com.au>]

IMO a tremendous result from the Warehouse.

Besides the large increase in earnings it is the underlying performance in 
operations that gives me comfort in saying that these are sustainable for many 
years.

In particular a sales growth of $143M, increasing operating margin from 9.1% 
last year to over 10% this year and improving stockturns.

By continuing to operate on a business model (my view of the business) that 
mirrors Home Depot in the states I can only only see increasing earnings coming 
through. You may recall I posted what my valuation of the WHS some time ago.

How can you go wrong when

-you relentlessly beat up your suppliers
-use technology to the utmost to drive operating wfficiencies to world class 
levels
-continue to expand your product range
-create more selling space (Rangiora might not be the most glamourous town to 
have a store)
-live by a vision thay includes making more things more affordable fot more 
Kiwis (or something like that)
- are socially responsible (?) - put that in as flavour of the week

However one of the big drivers of future success is government policy. As the 
government closes the gap between rich and poor by making all of us poor the 
Warehouse customer base has to get bigger and bigger. Where else are the poor 
to shop? As stated before Farmers/Deka customers even appear to be trading down 
to the Warehouse - or WEarehouse customers do not appear to be trading up to 
the Warehouse.

Hold WHS and will accumulate as IMHO 600 odd is still cheap.

Peter 
 

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