new thread, page-95

"so, your saying the price wes is paying for cgj is is more on p/e multiples than what wow is at current prices?"


Yes, but CGJ has built-in scope for fixing and improving



"I respect wes and its long term approach, the greater than 5 years needed as you mentioned to get cgj on track."



It will definitely by a dilutive acquisition in the short term for WES, but it is strategically important and transformational for WES. They'll do all right long-term.
Coles will have found a good home if WES's bid succeeds.



"And believe wow has the economics, model and management to continue its growth and performance. Do you think they will grow it supermarket stores and liqour? Electronics... and which states would be the area of focus?"



The one area where WOW will not lapse is quality of management and focus on performance. Luscombe has a minimum 5 years, he knows the game and he would be motivated to better Simons, Clairs, Corbett. I am comfortable on that score.

As for growth, the day could come where WOW matures into a well run *income* stock with limited growth options. Nothing wrong with that, the dividends will be huge.
But that day is still a long way off.
* They can still increase sales in their current categories with new stores and further inroads in market share
* They can expand geographically, they are already in NZ and a small electronics JV in India, I reckon there are some possibilities in India
* New categories eg pharmaceuticals

(Bear in mind that they can continue to reduce CODB and expand margins, they havent quite finished there, although they are miles ahead of Coles.
The other factor which is usually forgotten is that WOW can increase dollar sales not only through volume but also price inflation. Inflation is a friend of fast turnover businesses, and they dont come any faster than WOW. It doesnt matter to WOW whether bananas cost $1 or $10, they still mark them up by 25%)