re: darn it wow dropping "based on their turnover ..% of gross profit is very minimal.....will be very difficult to survive on those no.s imho......"
That may well be your (justifiably) humble opinion, but like most humble opinions, it is completely wrong.
Against my better judgement, I will attempt to educate you, if for no other reason, someone else might actually benefit.
1) I dont know what you think 'gross profit' means, but what it actually means, is the difference between Woolwrths pays for the goods it sells, and the cost of goods sold (COGS), ie what it pays its suppliers.
In the case of WOW, the gross profit margin is 25% (commonly referred to as their mark-up).
The Sales ($M), Gross Profit ($M) and percentage margin for the past 5 years was :
2002 : $24,473 - $6,117 - 25.2%
2003 : $26,321 - $6,618 - 25.1%
2004 : $27,934 - $6,958 - 24.9%
2005 : $31,352 - $7,803 - 24.9%
2006 : $37,734 - $9,445 - 25.0%
2) The all important EBIT margin (after subtracting the cost of doing business) was :
2002 : 3.4%
2003 : 3.6%
2004 : 3.8%
2005 : 4.1%
2006 : 4.6%
The key points of the EBIT numbers are :
(a) The beat the cr*ap out of Coles
(b) WOW have been able to improve their profit margin by contiually getting better at reducing their cost of doing business. This was their famed Project Refresh, which has ripped out a cumulative $7 billion in costs, which WOW has invested in :
(i) more profits for shareholders
(ii) (predominantly) lower prices, not only giving back more to consumers than Costello's tax cuts, but also continuing to smash Coles (and others) for market share.
If you want to understand how to run an FMCG profitably, think of 2 retailers, both of whom sell 10 TV sets a year. One retailer buys 10 sets at the start of the year, the other (WOW) buys 1 and replaces it when it is sold. Both retailers make the same profit, but the latter need only employ 1/10th of the capital, making them 10 times more profitable when it comes to Return on Funds Employed. They can even afford to drop their price and win some of the less efficient retailer's market share. But to be able to do that, you need to be a sharp operator. That pretty much sums up why WOW and smashing Coles
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Last
$29.92 |
Change
0.520(1.77%) |
Mkt cap ! $36.54B |
Open | High | Low | Value | Volume |
$29.40 | $29.99 | $29.33 | $54.70M | 1.836M |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
4 | 91 | $29.90 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$29.95 | 100 | 1 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
4 | 91 | 29.900 |
3 | 11477 | 29.880 |
5 | 3646 | 29.870 |
3 | 10097 | 29.850 |
2 | 2185 | 29.840 |
Price($) | Vol. | No. |
---|---|---|
29.950 | 100 | 1 |
29.990 | 81 | 1 |
30.000 | 9163 | 24 |
30.020 | 9226 | 3 |
30.030 | 839 | 1 |
Last trade - 16.10pm 18/11/2024 (20 minute delay) ? |
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