Finch,Firstly both Woolies and Coles are very cagey about their...

Finch,

Firstly both Woolies and Coles are very cagey about their hotel profits, mainly because a significant part of that is attributable to gaming revenue, not a good image for "family companies", but hey, thats the industry (you don't see "Gaming Revenue up 20%" on the front of their annual reports!).

The other key difference is NLG don't really have much of a retail (take-away liquor) operation. Whilst the good thing is that this is something they can improve on there is alot they are missing out on. The margins in retail aren't that flash, once you add wages, rent and costs there isn't much left. But the rebates (2-3%+) are the kicker that make it all work. This is self perpetuating once you get volume your purchasing power increases (+ rebates) lifting your GP's on premise etc etc. If you see NLG take this side of the business seriously with some experienced personnell driving it there is some serious upside.

Coles have really struggled by growing too fast without the hotel experience in the upper echelons coupled with the Wesfarmers thing and some crazy ideas to take on Woolies/Dan Murphy's that have pretty much all failed (Who on earth thought a blanket of red was an inviting colour for a liquor store??).

The whole irony of the situation is because Woolies are so good, there is less growth in their hotel business possible, so if Coles/Wesfarmers and/or NLG can get their houses in order those business could grow substantially.

Back to NLG - I am told they have some very good people working for them. It is their debt that is the killer. If they can secure the ongoing support (beyond just short term extensions) of their bank and or another party, as well as getting serious about retail and hotel refurbishments and general operation of such a large group they will get stronger.

Would I buy in yet? Probably not, maybe just a small parcel too keep me interested. (FYI I have an indirect interest in HLG shares anyway) If they can makes some big steps in some or all of the above the share price should start to attract some well deserved support upwards.

Good luck to holders, I might join you on the way back up!

(This is not advice!!!)