Forum Archive Index - August 2001

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

This weeks announcement from The Warehouse certainly showed that 
their sales are far from slowing down

A staggering 27% increase (compared to the same months last year) in 
sales for The Warehouse and Warehouse Stationery sales in the July 
quarter in New Zealand is not something to dismiss lightly.

>From the Stats NZ retail sales figures (May and June actuals and my 
assessment for July as official data not out yet) the broader retail 
market that WHS competes in grew by 6.5% in the same period. That 
broader market covers all footwear, clothing, appliance, hardware, 
recreational goods and department stores.

Looking at it another way while WHS sales increased by 27% all its 
competitor's (in this broader market) sales only increased by 4%.

This equates to a huge market share gain in the markets that WHS is 
competing in (in NZ) - from 10.7% in the same three months last year 
to 12.7% this year.

The Warehouse and Warehouse Stationary stores continue to have a 
large impact on the overall New Zealand retail scene.

A lot of the quarters increase has come from promotional activity to 
clear excess stocks etc. This activity obviously has been successful 
insofar as that exercise was concerned. Margins will be down but 
exposure to stock write-downs in the future have be lessened - and of 
course it has helped cash flows.

Even in a full year basis a 15% increase in WHS sales is pretty 
impressive in a market that has only grown by 6-7%. The others in the 
market have only grown their sales by 2%.

Australian sales do not seem to be doing too badly. They were down 
this quarter but this is comparing them to the quarter last year that 
was a boomer with pre-GST sales. A better indication is that sales 
were nearly 9% up over the last 12 months - and that would suggest 
market share gains.

So WHS sales growth and market share gains are still happening. This 
years earnings are forecasted to be pretty flat (compared to last 
year) and that has been reflected in the WHS shareprice over the last 
12 months - it is still at the same level it was a year ago.

The future, insofar as earnings are concerned, looks a lot more 
positive. 

The market conditions over the next 12 months should be a lot more 
positive for the likes of WHS in both NZ and Australia. There doesn't 
seem to be any reason why they should not continue to make more 
impressive market share gains.

The WHS business model should ensure that margins improve back to 
levels more like they have experienced in the past.

If that is the case it all looks pretty positive for the WHS 
shareprice over the next 12 months. It looked fully priced at 560 for 
NZ activities this time last year. With it not improving since 
reflects what has been a pretty tough tear for them.

The last quarters sales does suggest that they have not lost any of 
their magic. To me a reason to view this stock in a pretty positive 
light again

Cheers

Peter


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