Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>General merchandise retailer <strong><a href="https://www.smartkarma.com/entities/warehouse-group-limited-the" target="_blank" data-smartkarma-citation="entities:1721:1" rel="noopener">Warehouse Group Limited (WHS NZ)</a></strong> (TWG) has <a href="https://www.nzx.com/announcements/434820" target="_blank" rel="noopener">announced</a> it has received an approach from Stephen Tindall and PE outfit, Adamantem Capital Partners</li>
<li>Founder and major shareholder Tindall holds a shade over 50%. He launched a $1.6bn privatisation attempt in 2006, but Foodstuffs and <strong><a href="https://www.smartkarma.com/entities/woolworths-ltd" target="_blank" data-smartkarma-citation="entities:500:1" rel="noopener">Woolworths Ltd (WOW AU)</a></strong> effectively blocked the Offer.</li>
<li>The approach arrives after TWG's shares trade around multi-year lows. </li>
</ul>


General merchandise retailer Warehouse Group Limited (WHS NZ) (TWG) has announced it has received an approach from Stephen Tindall and PE outfit, Adamantem Capital Partners
Founder and major shareholder Tindall holds a shade over 50%. He launched a $1.6bn privatisation attempt in 2006, but Foodstuffs and Woolworths Ltd (WOW AU) effectively blocked the Offer.
The approach arrives after TWG's shares trade around multi-year lows. 


The Warehouse Group (WHS NZ): Tindall (Potentially) Reloads

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Equity Bottom-Up

Warehouse Group Limited / Equity Bottom-Up

<ul><li>The Warehouse Group (WHS) is the second NZ listed retailer in as many days to provide a disappointing trading update.</li><li>WHS guided to a full-year sales decline of -6% to -7% and EBIT (pre IFRS-16) of NZ$22m–NZ$30m, which implies double-digit declines in 4Q24 sales and a second-half operating loss.</li><li>The NZ consumer is clearly under increased pressure, with company commentary and channel checks suggesting that the rate of deterioration in spending has accelerated over recent weeks. </li></ul>

The Warehouse Group (WHS) is the second NZ listed retailer in as many days to provide a disappointing trading update.WHS guided to a full-year sales decline of -6% to -7% and EBIT (pre IFRS-16) of NZ$22m–NZ$30m, which implies double-digit declines in 4Q24 sales and a second-half operating loss.The NZ consumer is clearly under increased pressure, with company commentary and channel checks suggesting that the rate of deterioration in spending has accelerated over recent weeks. 

The Warehouse Group - Tough Times Roll On

<ul><li>The Warehouse Group (WHS) reported a weaker-than-expected 3Q24 sales update.</li><li>While we had expected the domestic operating backdrop to remain challenging, the biggest negative surprise was the fall-off in Noel Leeming sales, with both Red and Blue sheds coming in broadly in-line with our expectations.</li><li>Gross margins were also negatively impacted, falling -130 bps on the prior year.  </li></ul>

The Warehouse Group (WHS) reported a weaker-than-expected 3Q24 sales update.While we had expected the domestic operating backdrop to remain challenging, the biggest negative surprise was the fall-off in Noel Leeming sales, with both Red and Blue sheds coming in broadly in-line with our expectations.Gross margins were also negatively impacted, falling -130 bps on the prior year.  

The Warehouse Group - Noel Profit, Noel Cry

<ul><li>The Warehouse Group (WHS) reported a 1H24 that was broadly in-line with our expectations.</li><li>The more significant revelation was that the group has doubled down on its strategic focus on core brands, with the announcement to exit The Market.</li><li>WHS has had a patchy history in acquiring businesses and attempting to grow outside of its key competencies.</li></ul>

The Warehouse Group (WHS) reported a 1H24 that was broadly in-line with our expectations.The more significant revelation was that the group has doubled down on its strategic focus on core brands, with the announcement to exit The Market.WHS has had a patchy history in acquiring businesses and attempting to grow outside of its key competencies.

Thematic (Sector/Industry)

<ul><li>Much of the action for the upcoming retail reporting season came to light during confession season in February.</li><li>KMD Brands (KMD) reported disappointing half year sales with declines across all brands; Hallenstein Glassons' (HLG) sales were flat, supported by a strong Christmas trading season and trading down trends; and the Warehouse Group (WHS) announced the sale of its under performing Torpedo 7 business for NZ$1. </li><li>The consumer backdrop has been challenging and we can't see any signs of that changing in the near-term. </li></ul>

Much of the action for the upcoming retail reporting season came to light during confession season in February.KMD Brands (KMD) reported disappointing half year sales with declines across all brands; Hallenstein Glassons' (HLG) sales were flat, supported by a strong Christmas trading season and trading down trends; and the Warehouse Group (WHS) announced the sale of its under performing Torpedo 7 business for NZ$1. The consumer backdrop has been challenging and we can't see any signs of that changing in the near-term. 

Retail Sector - Checking Out Reporting Season

New Zealand

The Warehouse Group Limited operates general merchandise and stationery supply retail stores throughout New Zealand.

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Warehouse Group Limited (WHS NZ)

The Warehouse Group (WHS NZ): Tindall (Potentially) Reloads

Although there is no firm Offer on the table; given where shares are trading, and interest is apparent from the major shareholder, I'd look to get...

David Blennerhassett

The Warehouse Group - Tough Times Roll On

WHS guided to a full-year sales decline of -6% to -7% and EBIT (pre IFRS-16) of NZ$22m–NZ$30m, which implies double-digit declines in 4Q24 sales...

Forsyth Barr

The Warehouse Group - Noel Profit, Noel Cry

The Warehouse Group (WHS) reported a weaker-than-expected 3Q24 sales update. While we had expected the domestic operating backdrop to remain...

Forsyth Barr

The Warehouse Group - Back to Basics

The more significant revelation was that the group has doubled down on its strategic focus on core brands, with the announcement to exit The Market.

Forsyth Barr

Retail Sector - Checking Out Reporting Season

Much of the action for the upcoming retail reporting season came to light during confession season in February. KMD Brands (KMD) reported...

Forsyth Barr

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