The Warehouse Group Ltd: Takeover Speculation Resurfaces

Update 27 June 2011, Woolworths keen on expanding WHS stake

I am going to speculate on some speculation in Businessday this morning that the appointment of Ted van Arkel as an independent director of The Warehouse Group Ltd [WHS.NZX] means the sale of the company is back on the table.

Van Arkel has a long history and ties to retail in both New Zealand and Australia and has a hard nosed reputation both as a former managing director of Progressive Enterprises, owned by Woolworths Ltd [WOW.ASX] and as an independent director of multiple boards and chairman of Restaurant Brands Ltd [RBD.NZX] and Charlie's Group Ltd [CHA.NZX]. He has also known Stephan Tindal and chairman Graham Evans for a long time, working with Tindal, through George Court, and Evans through Woolworths.

Van Arkel's links to Australasian retail maybe indeed be just a sideshow in terms of where the Warehouse is heading and he maybe there for his vast retail experience but I don't think fresh blood on the board like this is an accidental appointment apart from his resume.

Van Arkel's links to Woolworths are strong and as that company is a 10% shareholder of the company his connections here are significant. With Charlies, as chairman, he has recently presided over two big deals to get Charlies products onto Woolworth's shelves in Australia and in the stores of competitor Coles, owned by retail giant, Wesfarmers Ltd [WES.ASX]

With Restaurant Brands, under his time there, the company has transformed itself from a dog into a flourishing peacock in terms of performance and customer service. Van Arkel seems to be the goto guy if you want a director to lead to the way to better performance in retail.

He appears to be behind the brand change image of Postie Plus Group [PPG.NZX] which sadly, thus far, has failed to gain much traction or indeed profit.

His reputation as a retail "Mr Fix It" appears not to be a coincidence as The Warehouse is currently stagnating in terms of sales and profit and the introduction of such a director with such strong ties to retail in this part of the world is a significant move if Van Arkel's past has anything to go by.

While Van Arkel's appointment is not a clear sign that The Warehouse is back on the block, what is crystal clear is that his place with the company as an independent director means some significant change for the company in the months and years ahead.

His inclusion on the board does make a sale more likely because of his past track record but it is not a given.

Disclosure: I own WHS shares in the Share Investor Portfolio

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Discuss WHS @ Share Investor Forum - Register free
Download WHS company reports


 
c Share Investor 2011

Share Investor Buying One Million Postie Plus Shares

I have stoically held Postie Plus Ltd [PPG.NZX] shares now for 3-4 years.

I own 2540 shares.

PPG shares have paid me a dividend of about 20 bucks over those years and are now worth a total of $709.80c, a drop of around 50% from the total purchase price of $1463.20.

To say then that it is a bad investment is a major understatement. It is the investment equivalent of backing Paris Hilton, Lindsay Lohan and Charlie Sheen in a movie and expecting them to show up at work every day, and sober no less.

So it is a loser plain and simple and should really have no place in my portfolio one would think?

Well, initially I thought it was such a small part of the overall portfolio I would sell and put it behind me but I hate to lose money but I know that some time in the future when management get their proverbial together and actually make some money somebody is actually going to make me a much better offer than 26c per share.

Well, I am thinking if Jan Cameron can take a big stake in the company then this boy can flash a few shekels around and get a bigger stake in the expectation that the share price will at least double.

With this in mind I am going to splash out $259339.60 to buy 997460 PPG shares to take my stake to 1 million shares. I am going to sell the whole Share Investor Portfolio to make this transaction happen.

The remaining unspent funds I am going to buy Allied Farmers Ltd [ALF.NZX] shares with and maybe a little gold.

I would appreciate any feedback on this.


Postie Plus Group @ Share Investor

Long Term View: Postie Plus Group Ltd
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Discuss PPG @ Share Investor Forum




c Share Investor 2011

Mixed Retail Outlook

Recent announcements by retailers Briscoe Group Ltd [BGR.NZX] Kathmandu Holding Ltd [KMD.NZX] and Hallenstein Glasson Holdings Ltd [HLG.NZX] has got me thinking about the fortunes or otherwise of the other retailers in the Share Investor Portfolio.

Briscoes had a mild upswing in sales for the last half year to 1 August 2010 but in the last quarter of that half sales were down on the same period in 2009. This clearly indicates that the economy is not well at all. Kathmandu over-promised in their IPO Prospectus and last week delivered under par sales revenue. They cited a poor overall retail environment for the gap between their promises and last weeks reality.

Hallenstein Glasson had a different story to tell however with a sizable lift in projected profit for 2010 when compared to the same period in 2009 and a reasonable lift in sales considering the current poor retail environment. This is of course off a reasonably poor 2009 profit but the company is showing promise in a time of closed consumer wallets by concentrating on all important margins, avoiding frequent sales and keeping down costs. All the things the aforementioned seem to be ignoring - with the exception of BGR on costs.

The Warehouse Group Ltd [WHS.NZX] I suspect is going to have disappointing results coming up in September and Postie Plus Group [PPG.NZX] is likely to similarly disappoint the market - nothing new there then.

With the exception of expenses incurred from thus far failed attempts by Michael Hill International [MHI.NZX] and Pumpkin Patch Ltd [PPL.NZX] to expand in North America I think those two companies will see some improvement.

Retail successes over the last year seem to be concentrated on the specialist retailers who have a loyal following of their strong brands rather than the larger broad based "department store" type operators. They seem to have been able to cuts costs in the lean times in a more expeditious manner than their bigger competitors and keeping costs down, while attracting higher margin custom in this recession is key to staying in business.

You simply cant make money by selling stuff too cheaply just to get rid off it.


Disc I own BGR, HLG, MHI, PPL, PPG & WHS shares in the Share Investor Portfolio


Briscoe Group @ Share Investor

Long Term View: Briscoe Group Ltd
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Download BGR Company Reports

Discuss BGR @ Share Investor Forum - Register free

Hallenstein Glasson @ Share Investor

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Download HLG Company Reports
Download HLG Company History


Kathmandu @ Share Investor

Chart of the Day: Kathmandu Holdings Ltd
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Discuss Kathmandu @ Share Investor Forum
Download KMD Company Reports


Michael Hill International @ Share Investor

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Postie Plus Group @ Share Investor

Long Term View: Postie Plus Group Ltd
I'm Buying: Redux
What is Jan Cameron up to?
Whats on Rod Duke's shopping list?

Discuss PPG @ Share Investor Forum
Download PPG Company Reports

Pumpkin Patch @ Share Investor

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Discuss PPL @ Share Investor Forum
Download PPL Company Reports


The Warehouse Group @ Share Investor

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Long vs Short: The Warehouse Group
Warehouse bidders ready to lay money down
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The Warehouse sale could hinge on "Extra" decision
The case for The Warehouse without a buyer
Foodstuffs take their foot off the gas
Woolworths seek leave to appeal to Supreme Court
Warehouse appeal decision imminent
Warehouse decision a loser for all
Warehouse Court of appeal decision in Commerce Commission's favour
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The Warehouse takeover saga continues
Why did you buy that stock? [The Warehouse]
History of Warehouse takeover players suggest a long winding road
Court of Appeal delays Warehouse bid
The Warehouse set for turbulent 2008
The Warehouse Court of Appeal case lay in "Extras" hands
WHS Court of Appeal case could be dismissed next week
Commerce Commission impacts on the Warehouse bottom line
The Warehouse in play
Outcomes of Commerce Commission decision
The fight for control begins soon

Discuss WHS @ Share Investor Forum - Register free
Download WHS company reports





c Share Investor 2010

Jan Cameron ready to move on Postie Plus Group?

Not totally sure what her end game is but Jan Cameron, ex Kathmandu Ltd [KMD.NZ] and retailer with several different brands selling goods to the public, along with nearly 10% of Pumpkin Patch Ltd [PPL.NZ] has just topped up her holding in Postie Plus Group Ltd [PPG.NZ].

On Monday 5 July she bought 600,000 shares to take her holding in PPG to 19.26% or 7,702,537 shares. She previously held 17.76%.

Under the Takeovers Code the owner of 20% or more of shares in a company must make a bid for 51% of that company.



With 32,297,463 shares held by family associated with PPG and various smaller shareholders like myself and larger holders like ACC, Jan would only have to purchase a further 12,697,463 shares to make a play for a 51% holding. Just over $3.8 million.

The market capitalisation of PPG is just $12 million.

What are Jan's intentions though?

Well, one can only do some fancy guesswork on this so lets have a go.

Jan has had a holding in PPG for many years and just two years ago snapped up their distressed manchester brand Arbuckles and used some of the 23 store sites to install her own businesses.

Postie Plus runs three brands. Baby City, Postie and Schoolltex. Baby City being the most successful of the three. Overall though the company hasn't turned a profit for the last 3 years and its recent result, the half year to 31 Jan 2010 is another significant loss. Management have performed poorly over the entire 7 year listing of the company and any redemption from PPG shareholders would surely lay in how much they could get if they sold the company to a better operator.

What I think Jan is doing is buying up and waiting until the company gets in such a state the remaining shareholders will be more than willing to sell.

Jan will have to pay more than the 30c per share she paid on Monday because none of the family interests will want to have a complete fire sale but lets just say that they would probably be open to offers.

The sites that PPG currently operate their brands in would be perfect for her new outdoor goods venture or another of her many retail interests in New Zealand.

Whatever she does do with her PPG holding you can be sure it will fit into her larger retailing empire.

Disc - I own PPG shares in the Share Investor Portfolio



Postie Plus Group @ Share Investor

Long Term View: Postie Plus Group Ltd
I'm Buying: Redux
What is Jan Cameron up to?
Whats on Rod Duke's shopping list?

Jan Cameron @ Share Investor

Kathmandu's 2011 Results Under Pressure from Jan Cameron
Kathmandu IPO: Jan Cameron lands a blow to IPO
What is Jan Cameron up to?

Discuss PPG @ Share Investor Forum

Download PPG Company Reports




c Share Investor 2010

Long Term View: Postie Plus Group Ltd

In this series of posts I am going to be looking at stocks listed on the NZX in relation to their returns to shareholders over the life of their listing -what shareholders would now see in their back pockets if they had invested in the company IPO. The calculation of returns includes dividends and tax credits.

Postie Plus Group Ltd [PPG.NZ] has been a very poor investment for those who have been shareholders since it listed in September 2003 at $1.00.

With 21c in net dividends and 30% more in tax credits (see chart above) gives PPG a negative 43% return (see chart below for the share price percentage gain against the average of all NZX indexes - does not include dividends and tax credits in its calculation) over the 7 year listing of PPG gives an approximate annual net return of negative 6.14 %.



I own PPG shares in the Share Investor Portfolio


Long Term View Series

Auckland International Airport
Air New Zealand
AMP Ltd
Briscoe Group Ltd
Contact Energy Ltd
Delegats Group Ltd
EBOS Group Ltd
Fletcher Building Ltd
Fisher & Paykel Appliances
Fisher & Paykel Healthcare
Freightways Ltd
Goodman Fielder Ltd
Hallenstein Glasson Holdings Ltd
Hellaby Holdings Ltd
Mainfreight Ltd
Michael Hill International Ltd
Metlifecare Ltd
New Zealand Refining Ltd
New Zealand Stock Exchange Ltd
Port Of Tauranga Ltd
Pumpkin Patch Ltd
Restaurant Brands Ltd
Ryman Healthcare Ltd
Sanford Ltd
Sky City Entertainment Group Ltd
Sky Network Television Ltd
Steel & Tube Ltd
Telecom NZ Ltd
Telstra Corp Ltd
Tourism Holdings Ltd
The Warehouse Group Ltd

Postie Plus Group @ Share Investor

I'm Buying: Redux
What is Jan Cameron up to?
Whats on Rod Duke's shopping list?

Discuss PPG @ Share Investor Forum





c Share Investor 2010

I'm Buying: Redux

Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well Warren Buffett


Well, I have had my eyes on Hallenstein Glasson [HLG.NZ] for some time and today it came down far enough for me to buy a very small holding of 1000 for NZ$2.53 per share. This is a new addition to my portfolio.

I also added another 1500 Postie Plus Group [PPG.NZ] at .44c per share, considering it a good punt since Jan Cameron revealed a 15.10% stake last week.

I am enjoying the sale that the NZX is having at the moment and will probably add more of what I already have if stocks get cheaper.

I have no desire to add any new companies to the Share Investor Portfolio and simply do not have the capacity in regard to time available for additional research or understanding of different sectors of the economy.

The Share Investor Portfolio now contains:

Auckland Airport
ASB Preference "B" Shares
Briscoe
Fisher & Paykel Healthcare
Fletcher Building
Freightways
Goodman Fielder
Hallenstein Glasson
Kiwi Income Property
Mainfreight
Michael Hill International
Postie Plus
Pumpkin Patch Ltd
Ryman Healthcare
Sky City Entertainment
Steel and Tube
The Warehouse


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c Share Investor 2008