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WES, WESFARMERS LIMITED
nipper
post Posted: Jul 21 2021, 03:30 PM
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WES surging .... now $61.40, an all time high.
There has been no other murmurs from other players, with API sitting a few cents above the WES offer at $1.41. Do we expect any, or will a nudge higher of a few cents get the deal across the line?


Include COL in the calculations ... at $17 ... and WES is a ten bagger for me, and that ignores the periodic capital returns along the way. Mid you, I have held it for yonks.




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Jul 16 2021, 07:24 PM
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WES making a tilt at API is going to create a shake up in the pharmacy sector, and with health, well-being, and beauty being seen as subsectors in the mix, there are some interesting dynamics. Offerings stretch from prescriptions, OTC medicines, vitamins, right through to perfumes and balms.

The $12.6 billion wholesale pharmacy distribution sector is highly concentrated, and the top three players control about 85 per cent of the market. The market leader is EBOS Group (via Symbion), which owns Terry White ChemMart, and accounts for about 45 per cent of the market for PBS medicines. Sigma with about 22 per cent, API is the third largest with 18 per cent, with Clifford Hallam Healthcare and National Pharmacies each accounting for 7.5 per cent.

In the pharmacy retail sector, which is estimated to be worth nearly $22 billion according to IBISWorld data, competitors for Priceline Pharmacy are My Chemist Retail Group (Chemist Warehouse), Terry White, other banner group pharmacies and independently owned ones, as well as supermarkets and specialty beauty retailers, including Mecca, Sephora and Adore Beauty.

In the beauty salon sector, ClearSkincare competes with Laser Clinics (KKR backed) and recently listed Silk Laser Clinics (SLA) as well as independently owned skin and beauty clinics. And there appear to be a lot of these.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: early birds  
 
nipper
post Posted: Jul 12 2021, 10:22 AM
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like a moth to a candle, WES is attracted to retail, and the competitive aspects that implies. SOL could not make a go of it and are probably glad they have found a buyer for their 19.3% stake

Wesfarmers Managing Director Rob Scott said the acquisition of API would provide an attractive opportunity to enter the growing health, wellbeing and beauty sector.
QUOTE
If the Proposal is successful, API would form the basis of a new healthcare division of Wesfarmers and a base from which to invest and develop capabilities in the health and wellbeing sector.

The combination of Wesfarmers and API is a compelling opportunity to capitalise on APIs strengths and positioning in these markets while drawing upon Wesfarmers capabilities in retail and distribution, our strong balance sheet and our willingness to invest in our businesses for growth over the long term.


Wesfarmers supports the community pharmacy model, including the pharmacy ownership and location rules, and considers the API relationships with its community pharmacy partners to be one of its key strengths. We see opportunities to build on these relationships and invest to expand ranges, improve supply chain capabilities and enhance the online experience for customers. These investments are expected to strengthen the competitive position of API and its community pharmacy partners, Mr Scott said.





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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Jun 3 2021, 08:47 PM
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Wesfarmers said sales had fallen at some of its retail businesses and growth had slowed at others as they cycled a boom in spending on hardware, technology and homewares at the height of the pandemic last year.
QUOTE
Year on year sales growth had generally moderated and been negative in some months for some businesses, due to elevated activity in the prior year, the company said in a high level trading update released at its annual strategy day on Thursday.
Online growth had moderated as customers returned to bricks and mortar stores and online penetration, ecommerce sales as a percentage of total sales, had fallen but remained above pre COVID levels. For example, Bunnings online penetration had dropped below 2 per cent from 3.1 per cent at the end of December, while gross transaction values at Catch Group had been negative in recent months.

Wesfarmers chief executive Rob Scott did not provide sales figures and did not elaborate on the performance of individual businesses, saying only that the group was experiencing significant volatility in monthly sales results.
.................................xx................xx...............x.x.x.x.....
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Rob Scott was confident about the group prospects for growth and happy about the quality of its portfolio following the demerger of Coles, the sale of coal and other assets, derisking Target by closing stores and slashing its cost base, and the restructure of industrial and safety supplier Blackwoods.
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We think we have a phenomenal mix of businesses that represent a unique balance between defensiveness and high cash generation and good growth perspectives, he said.

Mr Scott and chief financial officer Anthony Gianotti hinted that Wesfarmers, which is cashed up after selling two thirds of its 15 per cent stake in Coles for more than $2 billion, was closer to returning surplus capital to shareholders, saying they were evaluating options to right size the balance sheet and get capital back to investors.
QUOTE
I have consistently said it is unlikely we'll go out and do a really big acquisition, because often big acquisitions are very expensive and not in the best interests of shareholders, Mr Scott told the Financial Review.
In terms of right sizing the balance sheet, we acknowledge that we have plenty of capacity at the moment. We're also not sitting on surplus franking credits, so if we were to get cash back to shareholders in a tax effective way we would need to consider a capital return which would require Tax Office approval and shareholder approval and those things take time.




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: May 5 2021, 03:05 PM
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Wesfarmers had a presentation at a conference today.. update talking about digital strategy and a few surprises.

Bunnings still expanding its footprint and service offering to commercial trades:
• Expanded supply and install product offer for builders
• New trade service desk format and more trailer parking spaces
• Increased PowerPass app functionality and engagement
• Opened new format Adelaide Tools store in Parafield, South Australia (March 2021)
• Agreement to acquire Beaumont Tiles in April 2021 (subject to conditions, including regulatory approval)

There is a lot about online marketing: a focus on leveraging data and digital platforms to develop new revenue streams. Including Catch.
Divisional online penetration has been increasing y.o.y. and ranges from 37% for Officeworks (up from 29%), Target at 16% up from 7%, KMart at 8.7% up from 3.7% while Bunnings, at 3.1% from almost nothing, is the laggard. (But I would kind of expect that for hardware)

And the Mt Holland lithium project, including mine, concentrator on site and refinery at Kwinana: Wesfarmers’ expected share of total project capital expenditure estimated at approximately $950m
• Indicative construction timeline, subject to approvals:
... Project construction to commence: 2H CY21
... First production from refinery: 2H CY24



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Apr 23 2021, 03:30 PM
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there is e-commerce and there is e-commerce
QUOTE
The Bunnings website attracted on average 13 million visits a month in 2017 and 15 million a month in 2018, even though the retailer did not have an online store at that stage.

In 2019, website visits rose to an average of 19 million a month, boosted by the launch of a fully transactional e-commerce site and marketplace.

In 2020, website visits grew to more than 30 million a month and the level of interest had remained strong into 2021 ....
I am glad they got it right!!

In addition, Bunnings has created more than 750 how-to videos to date for its website and YouTube channel. Bunnings is filming the fourth series of a home renovation show that has helped Australia’s largest home improvement retailer boost sales by inspiring customers to undertake DIY projects, large and small, in their houses and gardens.
QUOTE
Two years ago, Bunnings bought and renovated a home in the Melbourne suburb of Knoxfield to create fresh DIY content for its website and YouTube channel. The home was also used to create a TV series, Make It Yours, which aired on the Seven Network.

It still owns the Knoxfield property but sold two other properties renovated in previous seasons soon after filming finished.

This year, Bunnings is renovating the homes of Bunnings staff, transforming different rooms and gardens in several houses, rather than renovating a single home, showing customers how to transform their living spaces.






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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 


nipper
post Posted: Aug 20 2020, 10:27 AM
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Wesfarmers reported a 7.4 per cent increase in underlying net profit from continuing operations to $2.08 billion as strong profit growth at Bunnings and Officeworks offset weaker earnings from Target and the industrials businesses.

Wesfarmers slashed the value of Target by $525 million, or $437 million after tax, and booked $110 million or $83 million net in restructuring costs. It also booked a $310 million impairment ($298 million net) against the value of the industrial and safety businesses. These large one off items were partly offset by a $290 million gain on the sale of a 10.1 per cent stake in Coles and a $220 million revaluation of its remaining 5 per cent stake.

Revenues grew 10.5 per cent to $30.85 billion, beating consensus of $30.3 billion, underpinned by strong sales growth at Bunnings, Kmart, Officeworks and online retailer Catch Group. Bunnings and Officeworks sales soared as consumers forced to spend more time at home stocked up on home office equipment, educational needs, and hardware and gardening supplies, while Catch has benefited from the acceleration in online spending during the pandemic.

Bunnings profits rose 13.9 per cent to $1.8 billion, and Officeworks profits were up 13.8 per cent to $190 million, but Kmart Group profits fell 23.5 per cent to $413 million despite the Catch acquisition. Kmart delivered solid sales growth of 5.4 per cent despite volatile trading conditions, but Target sales fell 2.6 per cent.
In the chemicals, energy and fertilisers business, earnings fell 9.2 per cent to $393 million, while industrial and safety profits plunged 53.5 per cent to $40 million.

Online sales across the group rose 60 per cent to $1.5 billion, or $2.1 billion including Catch, which is part of the Kmart Group.

Plans were announced in May to close between 10 to 25 large format Target stores, convert between 10 and 40 large format stores into Kmart, swap 52 Target Country stores to small format Kmart stores, and significantly reduce Target store support office staff.

Wesfarmers kept most of its retail stores open during the first national lockdown in April and May, when strong demand for hardware, homewares and home office equipment boosted sales. However, Kmart and Target have been forced to close in Melbourne during stage 4 restrictions and Bunnings and Officeworks are open to trade customers only for six weeks, forcing the retailers to rely on online operations to generate sales.

Wesfarmers did not receive material Australian government support payments and is not currently part of the JobKeeper program. One small entity was eligible for JobKeeper but this application was withdrawn. Wesfarmers received approximately $40 million in wage subsidies outside of Australia, almost entirely in New Zealand, where it was forced to temporarily close Bunnings stores to the public.


Wesfarmers will also pay a final dividend of 77¢ a share, plus a special 18c dividend arising from the sale of the 10.1% share of Coles.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
mullokintyre
post Posted: Aug 4 2020, 10:13 AM
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Surprised that WES didn't take a hit on the open this morning.
Given that about 15% of their stores in Vic metro area are closed to the public, you would think the market would take a slightly less sanguine view of WES.
Mick



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nipper
post Posted: Jun 13 2020, 11:06 AM
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Is Wesfarmers heading to a sales cliff?
https://www.sharecafe.com.au/2020/06/10/is-...-a-sales-cliff/

Yes and no.
QUOTE
Sales growth has come at a cost. [A broker] points out the incremental margin on the latest sales is 14.5%, lower than what would normally be expected with such strong growth. The broker expects this situation will continue in the second half.

Costs were higher at Bunnings, as around $20m was invested in cleaning, security and protective equipment over the past three months....

Every business has carried these costs. Is the advantage WES gained now grafted in, is a better question. And supply line reliance, with related reliability, on Chinese product is lurking. Saved by a stronger AUD, is one bit of upside for margins.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Jun 9 2020, 09:11 AM
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In a trading update on Tuesday, Wesfarmers said sales atBunnings had risen 19.2 per cent in the June-half to date, after 5.8 per cent growth in the December-half, lifting sales so far this year by 11.3 per cent. Officeworks sales have risen 27.8 per cent in the June-half, following 11.5 per cent growth in the December half, lifting year-to-date sales by 19.3 per cent.

At online retailer Catch Group, acquired a year ago, gross transaction values soared 68.7 per cent in the June-half, up from 21.4 per cent growth in the December-half, lifting sales so far this year by 43.7 per cent. Wesfarmers' total e-commerce sales, across all divisions, rose 89 per cent as consumers ordered online to avoid the shops.

However, the strong sales growth will not flow straight through to the bottom line. More than $20mill spent on cleaning, security and protective equioment, plus $70mill down from total closure of NZ Bunnings stores



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
 


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