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WOW - WOOLWORTHS GROUP LIMITED


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Ally Selby (Livewire Markets ) : Next up, we have Woolworths (ASX: WOW), whose CEO, Brad Banducci, earned a realised pay of $12.67 million in FY20. Rhett, staying on you. Is Woolies a buy, hold or sell ?

Rhett Kessler (Pengana ) : It is a buy for us. It is the ultimate inflation hedge. When you are moving boxes at a gross margin of about 35 per cent, the more boxes you move, the more money you make if there is inflation. I also think Brad has certainly focused on data and its contribution to increased distribution and profits. He is doing a great job on that, so yes, we will continue to back Brad.

Ally Selby (Livewire Markets ) : Stuart, over to you. Its share price has risen more than 17 per cent over the past 12 months. Is Woolworths a buy, hold or sell?

Stuart Welch (Alphinity ) : Woolworths has been on a bit of a tear since they spun out the Endeavour drinks and pubs business recently. It is not particularly cheap, trading on about 28 times earnings, and they have jettisoned a lot of businesses, including the pubs business most recently. So, they are back to the ANZ supermarkets and BIG W. The path forward from here is less clear. They have talked about a marketplace and food services, which we are watching to see how that evolves. I think it is a reasonably fully valued stock, but still okay. We would say to hold.

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and WOW managed a 10% drop . From $40.60 to $36.60 when the shock update came out ... now $37.50

..... the realities of supply line and compliance issues arising from the pandemic finally showing up (lockdown consumption patterns were a sugar hit, it would seem)

https://www.sharecafe.com.au/2021/12/14/new-normal-catches-up-with-woolworths/

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The first half of F22 has been one of the most challenging halves we have experienced in recent memory due to the far reaching impacts of the COVID Delta strain and its impact on our end to end stock flow and operating rhythm,  CEO Brad Banducci said.

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We have continued to put the health, safety and wellbeing of our customers and team first in the context of this challenging and volatile operating environment.

....  and that has proved to be expensive

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