HLG - Hallenstein Glassons Holdings

[BlackPeter]

Just curious ... I guess I see all the amazing linear approximations of the recent uprise. Feels a bit like students calculating the final velocity of a rocket based on checking the early launch movements.

Of course, nothing can go wrong (hey, it never does, doesn't it), but still wondering - anybody checking into the risks for HLG?

So - what are the 3 largest risks for HLG to get the price down again?

Competition?

Teenagers brandloyalty for cheap Asian clothes?

WW3?

Anyway - happy $30 ...+

[Bev]

So - what are the 3 largest risks for HLG to get the price down again?

Gravity!?!

Most of us bought cheaply enough to withstand a price correction as the dividends are good and the forward pe reasonable.

[Pierre]

So - what are the 3 largest risks for HLG to get the price down again?

Competition?

Teenagers brandloyalty for cheap Asian clothes?

WW3?

Anyway - happy $30 ...+

Well, today, it's  certainly not a surfeit of sellers. As I write there are only around 10k shares on offer from sellers on Invest Direct.

As for your suggestions:
* Competition?
Most of the current and forecast growth is in Australia where significant numbers of other fashion retailers have been failing and falling by the wayside over recent years. HLG's runway for new stores over the ditch is very long and is a key factor providing confidence in the company's future prospects.

* Teenagers brand loyalty for cheap Asian clothes?
I doubt that fashion conscious young women have much interest in cheap Asian products. They've been around for years - and there's not much brand value in clothing from Temu and the like.

* WW3
When/if that occurs it won't only impact HLG.

One of the principal factors that attracts me to HLG is that the Glasson family hold somewhere around 20% of the equity in the company. They have their name on the door, work in or direct the business, and have their lives heavily invested in the company.That personal commitment to success distinguishes HLG from being just another corporate led by greedy carpet bagger executives. (WHS, FBU anyone?)

The same applies to TRA where, while they dont have their names on the door, the chair, other directors, and the CE all have significant financial holdings in the company.

What's good for them is great for me!

[winner (n)]

Just curious ... I guess I see all the amazing linear approximations of the recent uprise. Feels a bit like students calculating the final velocity of a rocket based on checking the early launch movements.

Of course, nothing can go wrong (hey, it never does, doesn't it), but still wondering - anybody checking into the risks for HLG?

So - what are the 3 largest risks for HLG to get the price down again?

Competition?

Teenagers brandloyalty for cheap Asian clothes?

WW3?

Anyway - happy $30 ...+

Good questions BP and one punters should consider.

A few years ago I had a discussion with a HLG exec and discussed risk management.....inc the what could go wrong question.

It was good to hear that as part of their strategic planning process they do spend a fair bit of time asking themselves that question and putting in place plans to mitigate any possible downside. What reassured me was that considering the what can go wrong question often led to new opportunities and business improvement...and that shows in their results.

Of course the unexpected can happen but the experienced team at HLG will see them through those.

Might try to catch up with him again.

[Basil]

One of the principal factors that attracts me to HLG is that the Glasson family hold somewhere around 20% of the equity in the company. They have their name on the door, work in or direct the business, and have their lives heavily invested in the company.That personal commitment to success distinguishes HLG

Very well said Pierre. Lorriana calls this "the owners eye". No question that companies where the directors and senior management have a really meaningful stake in the business outperform those that don't.  You can see this is the low risk way HLG go about growing this business with no debt and a reluctance to sign new leases until a pop up store has confirmed the suitability of the area.  Quite apart from that Its extremely rare that the forward PE (11) is lower than the 10 year CAGR (14.5%) of a well proven business.  I was out on the boat with a group of friends and investors yesterday.  Consensus view was this would be close to double the price it is if it were listed in Australia.    One didn't like it because its in the apparel sector but my rebuttal is the numbers don't lie.  When HLG reports for FY26 I expect they will announce EPS that is ~ quadruple what it was 10 years ago and Glassons Au sales that are approx. 8 times what they were a decade ago and that against a backdrop of all the extraordinary challenges for the sector since Covid hit 6 years ago.  Glassons as a brand has been around for 107 years and Hallensteins for over 150 years.  HLG is N.Z.'s oldest listed company.  How much more proof do you need that this is a successful and enduring growth company...
How many wars have there been in the last 150 years BlackPeter...   

[Otago K]

................  One didn't like it because it's in the apparel sector  ........  Glassons as a brand has been around for 107 years and Hallensteins for over 150 years.  HLG is N.Z.'s oldest listed company.  ..... 

I don't want to be merely pumping any one's tyres, especially when I am probably in all reality underweighted in HLG, that said for me as a retailer in that sector they're not really likely to fall into a commodity price trap as they do seem able to differentiate on other than price, and also avoid the price squeeze clothing manufacturers might face in their businesses. Clothes need replacement, even when they are quality items they have a limited life for their target market, whether that be down to fashion of the season or degradation to some extent, and chances are clothes for most folk will always be a necessity.

Perhaps other's might express it in their thoughts;

...........* Teenagers brand loyalty for cheap Asian clothes?
I doubt that fashion conscious young women have much interest in cheap Asian products. They've been around for years - and there's not much brand value in clothing from Temu and the like......

.......... They have their name on the door, work in or direct the business, and have their lives heavily invested in the company. That personal commitment to success distinguishes HLG from ..........

Which might lead on to in my thoughts

......... the what could go wrong question.....
It was good to hear that as part of their strategic planning process they do spend a fair bit of time asking themselves that question and putting in place plans to mitigate any possible downside. What reassured me was that considering the what can go wrong question often led to new opportunities and business improvement...................

Thanks for your perspectives.

[BlackPeter]

Very well said Pierre. Lorriana calls this "the owners eye". No question that companies where the directors and senior management have a really meaningful stake in the business outperform those that don't.  You can see this is the low risk way HLG go about growing this business with no debt and a reluctance to sign new leases until a pop up store has confirmed the suitability of the area.  Quite apart from that Its extremely rare that the forward PE (11) is lower than the 10 year CAGR (14.5%) of a well proven business.  I was out on the boat with a group of friends and investors yesterday.  Consensus view was this would be close to double the price it is if it were listed in Australia.    One didn't like it because its in the apparel sector but my rebuttal is the numbers don't lie.  When HLG reports for FY26 I expect they will announce EPS that is ~ quadruple what it was 10 years ago and Glassons Au sales that are approx. 8 times what they were a decade ago and that against a backdrop of all the extraordinary challenges for the sector since Covid hit 6 years ago.  Glassons as a brand has been around for 107 years and Hallensteins for over 150 years.  HLG is N.Z.'s oldest listed company.  How much more proof do you need that this is a successful and enduring growth company...
How many wars have there been in the last 150 years BlackPeter...   

Look Basil, I do see the favorables ... and just noticed that people don't seem to talk about the risks anymore. Given that there is no investment without risks, this typically means that markets move towards a peak ... ah well, and we all know what happens afterwards.

Looking into economics - if there is this amazing option to generate endless profits with selling pricesensitive asian clothes, it is hard to see why not others are following this strategy. The result is always - supply increases, price drops ... and the markets find their new balance.

No doubt, even HLG's australian starshooter shops will find that.

So - all good, and enjoy the hope for your $30 share. Sure - might work out, or HLG owners find as well that things in nature don't move in lines, but in circles. They always do.

[Basil]

In the long run the market is a weighing machine not a voting machine.
Share prices follow earning therefore for example, is it really any surprise that HLG share price has quadrupled in the last 10 years when EPS has quadrupled or that by way of example the share price of OCA has gone nowhere in the last 9 years since it listed seeing as EPS has gone nowhere.
How much more proof do you need than a decade if earnings are growing...or not, as the case may be.
Glassons is a young cool brand in Australia.  The opposite is the Warehouse which is an old stale brand in N.Z.  Its important with marketing to have an understanding of brands and their value and where they are in their life cycle.

All stocks have risk, yes, some a LOT more than others.  You keep saying that nobody can predict the future so my question to you is why are you stock picking at all and not in index funds if you don't believe that the past history of a company and its earnings is not a decent guide to the future ?
With HLG the trend is your friend, with many other stocks, its not.

What I try and do mate, is vision cast.  Where do I think a business is going to be 5-10 years from now.  $30 is quite possible in due course.  Its quadrupled in the last 10 years.  Just as well we know history never repeats eh 

[Ferg]

For those who doubt the growth runway, I recommend they listen to James Glasson at the last AGM and his outline for how they are growing the Australian side of the business.  The model has proved itself.....so far.  The pop up store as a trial for a new area is a good tactic.  He also talked about managed growth / expansion which IMHO is the way it should be.  It doesn't spread your resources too thinly or create problems for back end logistics and working capital.

So the runway for growth in Australia is there and it is real....of course there are risks for shareholders as with any business.  IMO the biggest risks for HLG are FX exposure & brand destruction - plus the cycles of retail spend & confidence.  The law of diminishing returns will kick in at some point....as they get bigger, 3 new stores per year is a smaller % of new stores each year.

[Pierre]

In the meantime the dividends should keep rolling on.

Forbar's estimates (cps):
FY26 71.5
FY27 77.0
FY28 83.0

[Basil]

In the meantime the dividends should keep rolling on.

Forbar's estimates (cps):
FY26 71.5
FY27 77.0
FY28 83.0

Crickey mate, how are we going to spend all that ?  I might even as a last desperate resort have to ask my wife to help me with that "difficult" task lol
Might even be $1 a share in dividends by FY30      First class suite on Singapore airlines A380 looks pretty good to me  https://www.youtube.com/shorts/R9JO98V4HFY

[Pierre]

Crickey mate, how are we going to spend all that ?  I might even as a last desperate resort have to ask my wife to help me with that "difficult" task lol
Might even be $1 a share in dividends by FY30      First class suite on Singapore airlines A380 looks pretty good to me  https://www.youtube.com/shorts/R9JO98V4HFY

This year's divvie is committed to biz class to Rome. But when, (not if), we hit $1.00 per share that First Class suite looks pretty appealing, though I suspect my wife won't be happy if I'm sharing it with the lovely young lady in the video!