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In reply to: BSA on Friday 14/01/05 10:53am

poor old millers finished today @86 cents.

i held about 3 years ago when they were$2.12, is there any chance that they follow ION., hope not, how low will they go? http://www.ShareScene.com/html/emoticons/thumbdown.gif

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Comments form Intelligent Investor who were once fans of MRL having it as a strong buy not all that long ago.




This discount variety and apparel retailer announced today what we had been expecting - that its profit result for the first half would be down on last year. The magnitude of the fall is expected to be 15-20% which, in fact, is a better result than we had in mind. But with the stock down 13 cents today, and 15% since issue 166/Dec 04 (Hold - $1.01), others were obviously expecting more. There were a couple of surprises, though. The main one was the announcement that, due to a further write down of the goodwill associated with the discount variety business, the company will be unable to pay any dividends this year. In our last full review we highlighted our 'lower-than-market profit and dividend forecasts for 2005' and broached the topic of a possible goodwill write down of $100m or more. At this stage directors have only seen fit to lop $29.6m off the goodwill, so there may be even more to come in the second-half result.


Directors are expecting a pick-up in the second half of the financial year which will see the company record earnings before interest, tax and amortisation of between $43m and $47m in 2005. That's higher than our current expectation but we're inclined to stick with our lower figures at this stage until we see some concrete evidence of a turnaround.

Whether now might be an opportune time to buy in is an interesting question. Based on management's forecast we'd expect Miller's to record a profit in the vicinity of $20m for the year, excluding the goodwill write down. That compares somewhat favourably to today's market value of $211m. But we're not prepared to give management the benefit of the doubt at this stage. It's disappointing to see the stock price at such levels, especially as we thought subscribers (and analysts) might have had the chance to sell at a more attractive price. As we said in our last review, we're not prepared to sell at any price and these latest figures don't seem as bad as they might have been. HOLD.

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Not a big fan of MRL at the moment but decided to trade it today as I could see some support coming in for it.


Bought $30k worth of shares on the open at 87c and sold out of it 30min later at 91c for a $1400 profit - in hindsight I sold too early now but I guess a profit is a profit as they say and I dont like to hold onto these risky companies too long.


Nice bounce back today by the way. I notices Aegis put a buy recommendation on it with a target of $1.26.

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In reply to: bullish on Monday 17/01/05 12:55pm

Glad you made a profit Bulllish, there are many bleeding in this pup.

Aegis recs can be a bit off beat at times http://www.ShareScene.com/html/emoticons/wacko.gif Surely they would like to see some evidence of a halt in the sp slide and a turn around of fundamentals?



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In reply to: BSA on Monday 17/01/05 12:00pm

I am trying to buy a few today. Friday was the capitulation i have been waiting for.

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Thanks BSA - was quickly in and out.....didn't wanna keep this pump too long cause all that was in the back of my head was ION http://www.ShareScene.com/html/emoticons/weirdsmiley.gif


I'm happy with $1400 today and just hope ETC can cap off a great week for me LOL.


The other one I like at the moment is BBB - chart/support looks great and it seems to have broken out. I think I will buy in before the close today.


Good Luck

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Mystery buyer shops for Miller's

Katherine Jimenez

January 19, 2005


AILING discount variety retailer Miller's Retail could be in for a shake-up amid speculation that a mystery buyer is accumulating its shares.


About 24 million Miller's shares have changed hands since the company revealed a profit downgrade last Friday. The share price has jumped 24c to $1.10 in that time, including a rise of 11c yesterday.


Sources said the activity was led by one buyer -- possibly a private equity company such as Catalyst -- accumulating shares via UBS.


UBS bought more than 4million of the 9.2 million shares that traded yesterday, at price of between $1 and $1.11.


The investor could have amassed a stake of up to 9 per cent and could seek to make changes in the company.


Speculation about the future of Miller's -- the owner of Katies and Go-Lo -- has been running rife for some time.


Miller's co-founders Ian Miller, who has a seat on the board, and chief executive Gary Perlstein own nearly 20percent of the stock.


But there have been suggestions that Miller's might need to close or sell parts of its business and make management and board changes.


Last year Brett Blundy, the founder and biggest shareholder of retailer Brazin, stepped aside to make way for a new chief executive.


Last Friday, Miller's issued its second profit warning in less than seven months. It advised that full-year earnings before interest, tax and amortisation would be cut by $5.2 million to $43million, after a disastrous first half in which earnings were savaged by up to 20 per cent.


The collapse in earnings was again blamed on fierce price competition from struggling rival New Zealand Warehouse Group. Price cuts in that discount variety space, poor sales in part due to supply chain issues and a "meaningful" reduction in currency gains were also blamed.


Citigroup Smith Barney immediately slashed its target price and 2005 and 2006 profit forecasts.


It questioned Miller's ability to meet its new forecast, highlighting the thin cash flow the company had to meet debt repayments. "Bank support is likely to be highly dependent on a clear turnaround in operating metrics," Citigroup said.


Miller's supply chain was another concern for the analyst.


Macquarie Bank described the first-half performance as "disappointing" and said it was surprised by the "scale of deterioration" in the apparel business. It also had concerns about its supply chain. "This is the second Christmas in a row that one of Miller's divisions has been impacted by supply chain issues," Macquarie wrote.


It concluded by saying "we expect things could get worse before they get better".


Other industry observers agreed. Miller's discount variety business would struggle to compete with powerful rivals such as Coles Myer, Woolworths and Warehouse and had other problems in its apparel business, they said.


Macquarie said that one of management's key initiatives last year was to lift its price points to raise margins. "This initiative appears to have failed to gain traction," it said.

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