HLG - Hallenstein Glassons Holdings

[Ferg]

A solid result indeed and an increased dividend.

The result might need some unpicking to see why NPAT didn't grow as much as sales.

But in light of NZ economic conditions and based on a cursory read they have done well.

Just leave the shares in the bottom drawer and forget about them.

[Basil]

Unpicking not really needed based on my brief review Ferg. In a nutshell the Hallensteins division result was very disappointing.

[Ferg]

More of a curiosity than anything else.  If the lower NPAT was due to worse FX rates on purchases then that would have shown up in the gross margin line.....but that % was almost stable.  Work is waiting so it's a job for later....

Edit: just quickly I think most of the impact was from FX on purchases - the split of lower NPAT being about 63% from COGS versus 37% from CODB.

[Basil]

Thanks, I look forward to your thoughts mate.  I've only had a brief review.  Did note CODB rose slightly higher than the growth rate in sales so that's a good place to start looking but mostly that shocker Hallensteins result.

[BlackPeter]

Hmm - turnover increasing at twice the rate of inflation but earnings stagnating (i.e. margin dropping and earnings in in real terms dropping).

They well might have reached their (in real terms) earnings peak last year.

Will be interesting to see whether the trees are this time growing into the sky, or whether the growth falls back as it usually does with a cyclical.

Wondering as well, what Dumps tradewars will do for them. The price for hedging might go up as well - that's what the uncertainty of a chimpanzee throwing live grenades into markets does to them.

[lorraina]

 continued investment in our operational capabilities to support the growth of our Australian brands, which continue to deliver strong performance. Inventory levels were tightly controlled and ended the period lower than the prior year end.

At their AGM this is what they said they would do.
For more read my posts that I posted after their agm.

[Basil]

BP - Have a look at how all the other retailers have performed including many closing their doors in Australia.  "Blind Freddy" can tell you we've been through the worst recession in decades and the bottom of the retail cycle.  In that context HLG have done really well indeed and with a record amount of cash on hand and no debt, are extremely well positioned to continue to grow in Australia in the years ahead.  Maybe you've overlooked the 21% CAGR in Australian sales over the last 8 years. 

[BlackPeter]

BP - Have a look at how all the other retailers have performed including many closing their doors in Australia.  "Blind Freddy" can tell you we've been through the worst recession in decades and the bottom of the retail cycle.  In that context HLG have done really well indeed and with a record amount of cash on hand and no debt, are extremely well positioned to continue to grow in Australia in the years ahead.  Maybe you've overlooked the 21% CAGR in Australian sales over the last 8 years. 

I normally look at the big picture, and this includes the quite average performing NZ market. Are you saying they close down here to enjoy the better Ossie growth rates?

Apart from that - I don't really see what moat might be helping them to keep these growth rates. The only thing they do is pick cheap Chinese and Indian / Bangladeshi rags and hope that they correctly predicted the fickle mood of fashion for the coming season. In the ragtrade the dice are thrown twice  year ... and while they certainly did well with the forecasting in the last couple of years, I don't see what guarantees them to keep this position.

Anyway - maybe its just my trade. Not many (consistently) linear movements in engineering, but plenty of sinewaves ; Actually - there used to be a French mathematicisan and physicist (Joseph Fourier), who demonstrated that all movements can be composed from since waves of varying frequencies. The analysis called after him can be quite fun, if you like maths and interested to explore the domains of integration and differentiation.

[Waltzing]

ok its therefor the marketing that is working for them and they have cash and havnt blown that..

they must have a good supply chain back to the huts where the stuff is sown up...

[Basil]

BP - Glassons Au sales have grown from ~ $50m in 2017 and are on track to be ~ $250m in FY25, that's 5 times what they used to be 8 years ago.  Clearly you don't understand "brand value".  Glassons is seen by young women as really cool.  I have a 14-year-old granddaughter and her friends that are happy to confirm that.  That's what's behind their growth.  Our market here is saturated with stores and there's no growth in N.Z., something I've said a number of times already.

On the other hand, market penetration in Australia in the women's apparel market on a per capita basis is only one fifth of what it is here, hence there's room for store footprint to quadruple or even quintuple in Australia over the next 20-30 years.  Glassons Au is already bigger than all other parts of the business combined.  Think about that and then consider their 21% CAGR in Australian sales over the last 8 years and even growing sales at 16% in a deep recession.   They have never been in a stronger financial position to pursue growth opportunities with ~ $50m cash on hand. We're at the bottom of the retail cycle.  If you don't even understand that mate, I can't help you.

[winner (n)]

Just for you Basil

Disappointed you didn't use quadruple in your last post ....oh I see it's now nearly 5 times.

Share growth from more stores and big increase in average sales per store driven by the things you outlined.

Di did a wonderful job in getting Glassons going forward and luckily James didn't undo her good work

I need to change y axis scale eh lol

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[winner (n)]

HLG stock management really good

Sales approaching half billion and they do it on $27m of stock

Stock turns are 7 times

And what's impressive is that every $ of stock generates $9.60 of Gross Margin ....... WHS was so proud of theirv$1.93 the other day

No wonder they have such a robust Balance Sheet and high ROE

[BlackPeter]

BP - Glassons Au sales have grown from ~ $50m in 2017 and are on track to be ~ $250m in FY25, that's 5 times what they used to be 8 years ago.  Clearly you don't understand "brand value".  Glassons is seen by young women as really cool.  I have a 14-year-old granddaughter and her friends that are happy to confirm that.  That's what's behind their growth.  Our market here is saturated with stores and there's no growth in N.Z., something I've said a number of times already.

On the other hand, market penetration in Australia in the women's apparel market on a per capita basis is only one fifth of what it is here, hence there's room for store footprint to quadruple or even quintuple in Australia over the next 20-30 years.  Glassons Au is already bigger than all other parts of the business combined.  Think about that and then consider their 21% CAGR in Australian sales over the last 8 years and even growing sales at 16% in a deep recession.   They have never been in a stronger financial position to pursue growth opportunities with ~ $50m cash on hand. We're at the bottom of the retail cycle.  If you don't even understand that mate, I can't help you.

Look basil, I hear your message and understand the (backwards looking) numbers you present.

What I don't understand is how anybody could think that they are able to predict a fickle fashion-based market not just for the next season, not just for the next 2 seasons, not just for the next 2 years, but for the next two decades.

Based on predicting the development of HLG's market share in Australia you seem to be privvy to what any of their current and future competitors might do over the next couple of decades, you can predict the development of the textile fashion market overall as well as the development of the the international economy.

You seem to assume that the current favorite of your granddaughter will not just stay her favorite for the next couple of decades (which is nearly 1.5 times her current overall lifespan), but that the girl generations following her will have the same taste and stick with it for the next handful of decades as well.

I hear that both Australians as well as Kiwis change their partner more than 13 times during their lifetime (which would be - if we exclude pre-puberty - something like one partner every 5 years). Amazing that you think the same people stick with the same fashion shop for more than 20 years.   

But anyway - it feels this subject is more important to you (you are holding), than it is to me (I am not) - i.e. no damage done and good luck with that.

[Waltzing]

does this mean there marketing is better than TINA...

[mike2023]

13 times! For a partner? Well your user name makes sense now anyway 🙄