The Fed
I am just going to share this quote from JPow on inflation —
“We don’t really know if this is a bump on the road or something more. We’ll to have to find out.”
I mean — I guess we will have to??? I don’t have any special economic insight for you here, sorry guys. Anyway, dovish discussion and the Fed used QT Tapering discussion to offset the doveish tone (“The general sense of the committee is that it’ll be appropriate to slow the pace of runoff fairly soon, consistent with the plans we previously issued”)
OK then. I don’t get it either.
Rakon watch day 105
No announcement to market, nada, nothing. Paging Lorraine (the chair). We’re all waiting for you. A sign — anything. Smoke signal would be fine. Bat signal, even better. Has she gotten cast away on some island out there?? Is that why there’s been no communication to shareholders???
The Warehouse — closing down “The Market”, a half baked Amazon competitor that never made money or much sense. CEO Nick Graytson said “We are re-directing our focus and learnings into growing Group Marketplace on The Warehouse site and app”
LEARNINGS. Anyone who says “learnings” in a serious capacity — I mean — it makes me feel queasy. Here’s the same Nick Graytson talking about it in 2019.
“In the US where they have 110 million households who have Amazon Prime, its their first go to point for anything they want to buy.”
Grayston said The Market could capture the same sort of territory in New Zealand.
I am trying not to laugh too much but I mean, we’re in 2024 and The Market is not Amazon Prime, and the suggestion that they could’ve captured the same sort of territory is delusional. Amazon has:
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An obsessive focus on the long term, as evidenced by Bezos’ letters
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A freight and warehouse network in the US which is now the de-facto largest fright company
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An immense profit centre with AWS
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A loyal network of people and data, built up over decades
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Amazon Prime, which owns mindshare via membership (like CostCo)
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+392 million square feet of warehouse space
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A clear vision and focus
The Warehouse has:
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Some red sheds, which have been eclipsed by Kmart
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An electronics store, which has been eclipsed by JB Hi Fi
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“Learnings”???
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Torpedo 7 -
A drop shipping website
OK then. I swear I don’t make it my mission in life to see CEOs depart, and frankly I’m very focused on the NZX’s ridiculous suggestion to increase director compensation — my energy for scorn is limited. Graytson has been CEO since 2016 and he has presided over significant value destruction
Why on earth would anybody invest in this bucket shop stock? You could have invested in boring old Walmart and doubled your money since 2016, or quadrupled it in Amazon, or 5x’d it in my beloved CostCo. Why bother?
I was curious to see what staff think of management — so I went on Glassdoor. Oh boy.
Well, at least the cafe is good. Grayston was previously an executive at Sears Holdings, which filed for chapter 11 in 2018.
Aus
Chemist Warehouse Bonanza —
My girlfriend bought me some stuff from Chemist Warehouse because I am invariably lazy. Also, Chemist Warehouses are a complete assault upon the senses — it’s like going into the Guantanamo Bay of beauty and skincare products. I have to say though, the thermal water cream they sell is every bit as good as the water cream from Tatcha and about 1/10th of the price. It’s a no brainer. Their other stuff is good too and they really give Mecca a run for their money — who is buying from Mecca in this economy?! (A: rich ladies who eat at SQPR in Ponsonby and their daughters, I guess).
Anyway, they just recorded a near 30% in profit in the six months to December 31, ahead of its proposed ASX debut, according to the latest accounts published by Sigma Healthcare, with which it intends to merge. It’s the ASX listing I’m most excited about. On a combined basis worth $1.40 a share — they have a near monopoly on pharmacies in Aus and here in NZ they make Unichem Pharmacies look like a child’s lemonade stand.
Cettire — good piece here on the luxury fashion retailer understating the value of goods it imports in order to (on paper) charge a lower price. Remember how Farfetch collapsed and Yoox/Net-a-Porter makes no money? Yeah, no faith in this stock. See it as a dud.
More luxury (skip here if you don’t care about fashion) —
We all know that Kering, the owner of Gucci, is in a phase of “transition”. Early sales reports of Sabato’s “new” Gucci appear to be going well in the States, while it’s largely a question mark in Asia (the Asian market loved the kitschy kitsch of Alessandro Michele’s Gucci). Still, Kering warned the sales at Gucci would likely drop around 20% for the first quarter (you don’t have to be a weatherman to know which way the wind blows). Kering owns more than just Gucci, of course, but Saint Laurent and Alexander McQueen aren’t going to cut it on their own. Balenciaga is exceptional — Demna is a master at his craft — but again, that volume of sales Gucci was doing on its own was just head-and-shoulders above every other house they own. I’ve been talking about the “bifurcation” of fashion for a while — Brunello, Hermes, LVMH and Richemont on one hand while the smaller houses struggle away with a more random chance of success (Moncler has done fabulously, while Burberry and Ferragamo are more questionable choices).
Speaking of luxury — we found the following charts on Domaine de la Romanée-Conti to be very interesting (enlarge to get a better look) — money for jam?
Source post: Blackbull Research - Substack