WES is all about Coles now. If you believe the turnaround still...

WES is all about Coles now. If you believe the turnaround still has more steam, buy or hold. It still has room as WOW is still ahead in important areas. The salient question is whether Coles will continue to close the gap. Personally i think it can, though as iv'e stated before it will be harder from here. So i'm holding. Naturally WOW may become more agressive to counteract increasing competition for Coles. WOW have been asleep at the wheel for the last five years regarding the Coles turnaround imo, and that's why you see Coles being the price leader in the grocery market today.


I like this excerpt from GSJBW research though:

"This business continues to deliver double-digit EBIT growth. We note that WOW began its significant
supermarket business improvement in FY00 and delivered double-digit EBIT growth for 10 years (ranging between 11% and 24% growth in any particular year)."

Coles is five years in, so hopefully it can achieve double digit EBIT growth for another five. That said when WOW achieved this Coles wasn't a viable competitor.


And i like this on the supply chain side:


"Supply chain initiatives – With the Easy Order and Easy Warehouse complete, Coles will begin to leverage these IT platforms to facilitate further changes to the supply chain network (e.g., development of a fast / slow network, better supplier service into DCs). We note that during WOW's similar overhaul of its supply chain, EBIT per sqm of its Australian Food & Liquor business rose 88% from A$589 in FY04 to A$1,106 in FY09."