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#Risks
Added a month ago

ABC Coverage on Woolworths and Coles - it's been great for shareholders, but the cat is now out of the bag.

Woolworths specific tactics:

  • Woolies sought to boost its profit margins by leveraging economy-wide inflation.
  • Woolies requested to share in any price increases granted to its suppliers.
  • Consumers ultimately paid more, suppliers did not receive the full price increase, but Woolworths increased its profit margins.


This negative press can't be good, cue public backlash...

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#ASX Announcements
Added a month ago

WOW....(pardon the pun)...Big news coming from WOW this morning.

  • CEO Brad Banducci to retire in September
  • $0.47 Dividend declared
  • Key earnings metrics from the announcement this morning with marginally increased EBIT and NPAT from H23
  • NZ Food division still struggling
  • Big W minor declines in sales but 60% decline in EBIT


I'm reluctant to buy back in at this stage, just waiting for the Senate inquiry to play out to consider dipping my toes back in again.

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#Results
stale
Added 4 years ago

27-Aug-2020:  Full Year Results Announcement  and  Full Year Results Presentation  plus  Appendix 4E and 2020 Annual Report

Woolies isn't discussed much here on Strawman.com, but it's one to watch.  I'd be interested if they successfully spin out their hotels and liquor assets.  As it is, they're still the largest listed owner of pokie machines in Australia, and that's a turn-off for many investors, including me.  They also don't look particularly cheap, but they've produced another solid result, with online sales increasing by +41.8%, which is no great surprise.  They have been impacted by COVID, with group revenue up but overall earnings down, but that's to be expected also.  Worth looking at if they come back down to around $36, and that's only about 10% below where they are now, so it's entirely possible...  but I won't be buying WOW at any price until they spin out their hotels.  I love alcohol, but I don't like pokies and the harm they cause to the community.  But that's just me, and everyone is different.

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#Bull Case
stale
Last edited 3 years ago

There's no shortage of business for Woolworths during lockdown.  Don't know why the price has fallen.

Opportunity to buy methinks.  

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#Moats
stale
Added 3 years ago

Woolworths Moat is getting wider....

Their Everyday Rewards program is very powerful at customer retention.  Every purchase is tracked, down to the date and qty.  To their absolute credit, they are mining this data to no end on the Woolies side.  Would love to see them take this data to promote the Big W business - granted much harder to get sticky customers.

Like Wesfarmers, WOW is company seeing the opportunity in data.

Company with strong physical presence with even more powerful distribution channels.   During the pandemic they are leaping forward with fine-tuning their delivery channels.  They even opened some "dark stores" during lockdown, simply to pick and pack because they couldn't cope with demand.

They are already entering the fastfood space with their pizza, deli and sushi counters.  I can't see anything stopping them from selling delivered office/childcare catering, wholesale distribution to retail/fast food, even prescription medicines with some tweaks.

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#Business Model/Strategy
stale
Added 3 years ago

Ethnic food retail soaring (eg MiddleEast, Indian subcontinent, Asian anything) - they are currently run off their feet, delivering 10hrs a day, 7 days a week, own staff plus hiring sub contractors, and there is a 1 to 2week lead time?!?!

Large traditional retailers have a lot to gain from entering this space, especially in the more ethnic suburbs and with the use of dark warehouse distribution models (as there are so many product lines).

Who will lead - Woolworths or Coles?

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#Bear Case
stale
Added 3 years ago

Covid-19 lockdowns and dividend expectations the only catalyst driving the share price upwards, now that EDV has been spun off.

Looking to sell over the next few days before WOW reports next week. 

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##Share Buyback $2bn
stale
Added 3 years ago

Announced $2bn off-market buyback (10-14% off market price)

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#Everyday Rewards Scheme Powerf
stale
Added 2 years ago

The opportunity to get cashback on something as mundane as grocery purchases is very conducive to people scanning their loyalty cards/apps.  This in turn gives Woolworths the data they need to upsell.  And they are using it!

Examples:

* They know which items I buy in bulk and market discounts to me accordingly.

* They know who buys petfood and what type of pet they have - possible to sell pet insurance or petfood subscriptions (much like toiletpaper subscriptions).  They already onsell health and car and home insurance.  Simiarly, they know who have kids (all those snack foods and packet drinks) and could potentially upsell an ipad/laptop computer/study guide at the start of each year.

* They know who buys baking tins.  Those are the people most likely buy kitchen gadgets.  At upwards of $400 a food processor, or $300 for a vacuum cleaner, Woolworths have the ability to earn a clip off each appliance sold.  That's A LOT of commission for doing nothing more than opening their platform to list items.

* They are already in the meal prep space , partnering with Dinnerly - with more reach and less premium pricing than Marley Spoon/Hello Fresh etc

* They already sell mobile plans & mobile phones.  Not to mention selling gift cards to JB HIfi, Fashion brands, Restaurants etc.  A small clip off each of these would add up.

I got excited when Wesfarmers opened up their website to third party sellers many months ago.  But I feel Woolworths is in a much much better position than Wesfarmers.  Woolworths has the data to 'know' their customers.  I do not believe Wesfarmers has my profile even though I shop at Bunnings and Officeworks regularly. 

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#Bid for Priceline (API)
stale
Added 2 years ago

Woolworths Group (ASX: WOW) has today thrown its hat in the ring to acquire Australian Pharmaceutical Industries (ASX: API) for $872 million, representing a 13 per cent premium to the offer on the table from retail rival Wesfarmers (ASX: WES).

Perth-based Wesfarmers' proposal already represented a 35.4 per cent premium to API's closing share price before a bidding war began that also included Sigma Healthcare (ASX: SIG).

The API board had previously unanimously recommended shareholders vote in favour of that arrangement in the absence of a superior proposal.

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#Business Model/Strategy
stale
Added 2 years ago

Woolworths has now withdrawn it's bid for API (pharmaceutical businesses including Priceline).

Thank goodness, the bidding war was getting a bit silly.

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#Wants 80% of MyDeal
stale
Added 2 years ago

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Woolworths must be generating a lot of data pointing to 'one-off'' consumer items and are looking for a platform to make this happen. But a bit pricey?

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#Industry/competitors
stale
Added 2 years ago

Cashed up ... recently sold off their head office/data centre site at Bellavista Singaporean property group $463m.

Woolworths are on the drive to gain customers. They have recently started an unlimited home delivery subscription service for $15/mth (similar to Amazon prime) which helps to lock customers in to the one merchant - "I will check first whether it is available at Woolworths". Also reduced their minimum spend to $50 from $100.

Not only that, they have REALLY tightened their delivery timeframes with availabilities of "same day service within the hour" for $15.

In comparison, Coles doesn't have a subscription service (yet) and you need to spend $250 to get free delivery.

Disc: I don't own WOW at the current moment but am looking.

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#Acquiring stake in PETstock
stale
Added one year ago

Woolworths is reportedly seeking to acquire a major stake in unlisted pet food and accessory business PETstock as the former seeks exposure to record high levels of pet ownership encouraged by covid lockdowns. PETstock profit jumped $20m to $54m pretax profit in FY22, recently hitting $700m of sales.

https://www.marketindex.com.au/news/rising-pet-ownership-encouraged-by-covid-lockdowns-sees-woolies-eyeing-more

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Valuation of $32.00
stale
Added 4 years ago
A quality company but one that is very mature and will struggle to sustain much more than mid single-digit growth over the long term. FY20 profit was actually down a bit on a normalised basis, with EPS of $1.268 and FY dividend dropped to 94c. Personally, i'd want a 3% yield at the very least, which equates to $31.33, or $34 if you assume dividends for FY21 will recover to FY19 levels. I just see the current price as unattractive. The current earnings yield for Woolies (the inverse of the PE) is just 3%. If you have a dividend focus, and you're happy with what will likely be an average total return of 6-8%pa over the coming years, it's probably ok. But not enough for me.
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