Forum Archive Index - August 2001

["Ben Dutton" <bendutton@sharechat.co.nz>]

Jerrold,

Peter wrote an excellent piece on The Warehouse - check out "WHS sales
announcement" on Sunday.

I've been meaning to comment on the Forbes article which David kindly posted
last week - for the version on the web click here:

http://www.forbes.com/global/2001/0820/028.html

I've been reading Forbes for years and would class it as the world's best
financial magazine.  Forbes have done countless profiles on retail
operations in the past, and for them to say The Warehouse is "one of the
best retail operations in the entire world" is incredible and an impressive
compliment for Tindall and The Warehouse team.

Congratulations Stephen Tindall - investors take note...(and read Peter's
piece on WHS).

Best Regards

Ben Dutton
(Disc. do not hold WHS)

----- Original Message -----
From: "jerrold poh" <pohj@ihug.co.nz>
To: <sharechat@sharechat.co.nz>
Sent: Monday, August 13, 2001 1:53 PM
Subject: Re: [sharechat] Warehouse from Forbes.com (2)


> Thanks for the article DR ...  even though it did feel like the author
> was brown nosing Tindall there abit :).
>
> The side by side comparison was good in the first post and really did
> put some perspective on just how well this little company tucked away in
> New Zealand is doing, which has actually motivated me enough to do some
> research on it :).
>
> It is the opportune time, (well, I reckon anyway), what with the general
> impression that the expansion isn't doing too well in Australia, and
> the current down trend it's in (correct me if I'm wrong Phaedrus?).
>
> Has anyone have any other thoughts on this company (actually quite
> surprised they weren't many replies to this email)?
>
>
> Jerrold.
>
>
>
> On Fri, Aug 10, 2001 at 07:13:44AM +1200, DR wrote:
> > The Warehouse Group was started by Stephen Tindall in 1982 with $30,000
in capital, one small store and three full-time employees. In fewer than 20
years, Tindall has turned the Warehouse Group into the country's largest
retailer, with 40% of the $1.7 billion spent annually in department stores
on nonfood items. "It's an understatement to say that Tindall changed the
face of retailing in the country," says Clyde D'Souza, an analyst with
Salomon Smith Barney in Auckland.
> >
> > Tindall's method was to develop a local version of the low-cost,
category-killing megastores built by Costco, Wal-Mart and Carrefour.
Designed to look like warehouses, the chain's 75 outlets, whose exterior
walls are painted bright red, are typically huge stores in suburban areas.
Inside, one finds aisle after aisle of cheap stuff piled high: tennis shoes
at $6.30 a pair, boxes of lawn fertilizer for a dollar, nail polish at 84
cents a bottle. "If you go into any small town in the country, the biggest
store there is probably us," says Tindall.
> >
> > And he is just warming up. Last year, he invaded Australia, whose
economy is six times the size of New Zealand's. He spent $54 million buying
a smaller competitor there; operated under the Solly's and Clints brand
names, it will be rebranded to become a bridgehead in Australia. To
supplement growth in New Zealand, Tindall is starting to sell telecom and
financial services and may add electricity sales as well. All told, Tindall
expects to increase sales by 2.5 times within five years.
> >
> > Can he pull it off? "It won't be an easy road, but I think Tindall and
his team can do it," says Karen Wilson, an analyst with J.P. Morgan in
Auckland. To bring in fresh blood, Tindall kicked himself upstairs last
year, taking the title of founder and appointing a new CEO, Greg Muir, who
had been with the company since 1999 and had helped run other Australasian
blue chips, such as TNT and Lion Nathan.
> >
> > Tindall's record speaks for itself. If you had been smart enough to buy
a thousand shares of Warehouse Group when it listed on the Auckland exchange
in 1994, your $1,050 investment would have compounded at about 27% a year
and would now be worth $5,670.
> >
> > Tindall, 50, has retailing in his blood. His great-grandfather founded
what used to be the country's largest retailer, George Courts. His father
was also a retailer, importing hand tools and other hardware. After
graduating from high school, Stephen Tindall went onto an executive track at
George Courts, winning the retailer award of the year at the age of 27. All
the signs pointed to his one day taking the reins of the company.
> >
> > But he had other ideas. "I always yearned to do my own thing," says
Tindall, who stays in shape by swimming two and a half kilometers every day.
During a sales visit he made to New York City in the spring of 1982, a
client invited him to see a factory outlet (i.e., discount) store in
suburban New Jersey. Tindall saw his opportunity. In October that year he
quit his job, at age 31, and launched his first Warehouse store a month
later.
> >
> > It was a store unlike any other in the country. The concept of
dirt-cheap goods was revolutionary for New Zealand. Tindall pioneered other
concepts. He was the first to computerize his sales and inventory data,
plowing $20,000 of his $30,000 in startup capital into two NCR cash
registers that recorded sales data on magnetic tape, which he printed out
once a week. At George Courts, inventory was taken only once a year,
manually. "I was suddenly 52 times better in knowing how I was doing," says
Tindall with a chuckle. Today, the Warehouse Group continues to be
technologically advanced: As early as 1998 the company started to build an
intranet/internet system and launched a data warehousing project.
> >
> > Perhaps Tindall's boldest move was to aggressively take advantage of
lower tariffs on imports during the wave of privatization and deregulation
in the 1980s. "I was probably the first to start importing when they lifted
the restrictions," says Tindall. By doing so, he could enjoy fat margins and
still undercut domestically produced goods. He once imported 120,000 coffee
cups from France, pricing them at 71 cents when similar mugs sold for $1.25
elsewhere. The cups sold out in three days. "It was just, whoosh!" Tindall
exclaims. Cutting costs even further, Warehouse buys directly from suppliers
around the world, thus eliminating middlemen.
> >
> > One of the secrets of Warehouse's success has been Tindall himself. "He
has managed to go from being an entrepreneur to running a complex
organization," says D'Souza. "Others couldn't take it to the next level."
Tindall's success attracted about half a dozen imitators, who have all come
and gone. "They weren't reinvesting in the business. They didn't worry about
technology. And they didn't understand what being a shopkeeper is all
about," says Tindall
> > D.
> >
>
>
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