Wesfarmers (Wes) :
Argo Investments managing director Jason Beddow said losses and writedowns at Bunnings' two-year-old home improvement business in the UK could dent Wesfarmers' appetite for acquisitions, especially offshore, forcing the conglomerate to focus on the low-growth Australian market.
Mr Scott has not ruled out pulling the plug on Bunnings' $1 billion investment in the UK after admitting the retailer suffered "self-inflicted" wounds by removing popular products from Homebase stores and sacking local staff following its $705 million acquisition of the UK's second largest home improvement chain.
"The initial strategy was to rapidly reset the Homebase business to facilitate conversion to Bunnings," he said, "but the pace and nature of this change was not well received by Homebase customers and significant management change led to loss of local knowledge and insight." The performance of 19 Bunnings pilot stores was encouraging, with sales at some converted stores rising as much as 40 per cent, but sales growth had moderated over winter, raising questions about whether the new offer was right, and capex on conversions was too high.
"The market is likely to look through the impairments due to their largely non-cash nature with no dividend impact and a firming expectation that the new senior management team will announce an exit from Bunnings UK over the next twelve months," Mr Raymond said. When Homebase was bought for $705 million in January 2016 with a commitment to invest a further $1 billion, Bunnings managing director John Gillam had responsibility for two separate teams of executives, with Michael Schneider in charge of Australia and New Zealand, and Peter Davis in charge of Bunnings UK and Ireland.
Technical Analysis Summary: 16 Feb
- [BULLISH]: Wesfarmers UIX index implies that the downside risk of the current trading price is high. Currently, the UIX is 6. 23.
- Wesfarmers current pivot point is: 40. 777. The current resistance levels are: (R1) $40. 984: (R2) $41. 297: (R3) $41. 504: The current support levels are: (S1) $40. 464: (S2) $40. 257: (S3) $39. 944
- [BULLISH]: Wesfarmers current accumulation has given strength to the share price and the continuation of bullish trading conditions.
- [BULLISH]: Wesfarmers is currently Oversold highlighting the potential for a short term trend reversal in the upward direction.
- Share Trading
- Wesfarmers has broken the first DeMark support point ($40. 725) [Bearish]. Look for a short limit order entry near this point. Exit price for WES should be set @$40. 36 & short position stoploss for Wesfarmers should be set at $40. 88
- [Bearish]: Average True Range has confirmed an downtrend is present. Wesfarmers has a TR of 0. 52, and an ATR(14) of 0. 584.
- [BEARISH]: Wesfarmers currently has negative rate of change of -21%. This means the current volume is less than the price 14 days ago and therefore losing momentum. Currently, the return on momentum is -0. 4%.
- [BEARISH]: Wesfarmers current uptrend in the first timeframe. Currently, the Low is $40. 57 (0. 4 %).
- [BEARISH]: Wesfarmerssellers are keener than buyers and are driving the price down. This is the first day of price decline for WES adding strength to a downtrend change in the first timeframe. The biggest downward movement this month has been -4. 5 & the greatest daily negative change this year has been -4. 5. The longest consecutive downswing rally over the last 12 months has been 5 days giving a total rally downward movement of -4. 7%. This quarter, the largest downswing rally has been 3 days giving a total rally downward movement of -1. 1%. The loss ratio for price decline in the first timeframe for the last 12 months is 0. 5x giving a total win/loss ratio of 1. 1x. Over the last month the average daily downward movement has been -1. 3%
- [BEARISH]: A short term Close Reversal has formed with Wesfarmers which confirms the presence of a bearish bar reversal. Over the last 12 months there have been 4 occurrences of this bar reversal giving a signal probability of 1. 6%.
- [BEARISH]: Wesfarmers is in an downtrend in the medium term timeframe. The current rally number is 6 & the highest rally count for the LTM is 24. The highest rally for the month is 11
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