HLG - Hallenstein Glassons Holdings

[winner (n)]

It was pleasing to hear the CEO acknowledge that over the last couple of years they did have support from the government wage subsidies and rent relief from the majority of landlords

He also said they've come out of these tumultuous times stronger. It could be said that some companies like HLG have actually 'benefited' from the pandemic like I don't think their annual sales would be over $400m now if it hadn't been for it.

So pandemic been good to them and the governments and landlords have been generous to them (which boosted profits)

In return for the charity given to them I'd think it would be cool if HLG bundled up a lot of pants and dresses and things and gave them to the likes of food banks to distribute to the those who aren't so well off.

[Ferg]

It could be said that some companies like HLG have actually 'benefited' from the pandemic...[snip]

For sure.  I know some businesses that not only benefited from the lockdown but are now going from strength to strength to unheard of turnover levels.

[Basil]

Had a lovely day at the beach with wife, granddaughter and new rescued dog Tony, now named, (was provisionally called Buck due to his huge size and remarkable likeness to Buck from Jack London's "Call of the Wild" movie).  I am referring to the 2020 version of the movie with the very cleverly animated version of Buck but Merry Christmas, you can see the original here on youtube for free, enjoy: https://www.youtube.com/watch?v=JoPmexwf_E0

Asked L what she wanted for Christmas, going on 13 but very mature for her age.
Happened to drop into the conversation that I own a very small part of Glassons.  You should have seen her eyes light up like a Christmas Tree.  Oh my goodness Granddad, do you really own some of Glassons she exclaimed with sheer delight, like I was sitting on a goldmine and they sell the coolest gear in the world.  I explained that yes, in effect I own some of our local Glassons store.  That started our first conversation about what shares are.  Asked her again what she'd like for Christmas, oh well that's an easy choice then she said, seeing as you part own Glassons, can I please have some Glassons vouchers.  What a bright young lady she's turning out to be.   Next Christmas she'll probably ask me for some of my Glassons shares lol

[Red Baron]

Had a lovely day at the beach with wife, granddaughter and new rescued dog Tony.
Asked L what she wanted for Christmas, going on 13 but very mature for her age.
Happened to drop into the conversation that I own a very small part of Glassons.  You should have seen her eyes light up like a Christmas Tree.  Oh my goodness Granddad, do you really own some of Glassons she exclaimed with great delight, like I was sitting on a goldmine.  I explained that yes, in effect I own some of our local Glassons store.  That started our first conversation about what shares are, I know I should have started earlier.  Asked her what she'd like for Christmas, oh well that's an easy choice then she said, can I please have some Glassons vouchers.  What a bright young lady she's turning out to be.

Good work Basil, but you are right. You should have started your grand daughter's share education earlier.  If you had done that, then the g.d. would have figured out that if she had asked for some HLG shares for Christmas, then she would be getting a Glassons voucher (via dividend) for every year for the rest of her life!

RB

[Basil]

Must admit it was a bit disappointing seeing 33% withholding tax coming out of Friday's unimputed dividend. 
First time I can recall they've paid a dividend with no imputation credits whatsoever.
I understand what's happened with FY22's shocker year for N.Z. operations and have posted already extensively about this but nonetheless a good friend asked me this weekend a question which I won't disclose but it forced me to consider as a rough guess what level of imputation we might expect going forward.

I am hopeful we will see FY23 N.Z. profitability restored to previously enjoyed level's before FY22...not super confident but hopeful would be how I would best describe my level of confidence around this and note HLG paid N.Z. tax of $7.6m in 2018, $7.3m in 2019, $5.9M in 2020 and $6.4m in 2021.
The arithmetic average of these is $6.8m or the average of 2020 and 2021, more recent data, is $6.1m.
It takes just on $11.1m of N.Z. tax paid to fully impute annual divvies of 48 cents per share.

Looking through the level of imputation credit available at the next dividend in April because there could be some wash through effect of the state of the ICA account in terms of the modest tax paid last year in the medium term it would appear if they restore N.Z. profitability to the average level of the 4 years before FY22, they will be paying about $6.8m in tax and that will impute 48 cents of annual dividends (which is my mid level case in the near term) to the tune of about 61% of the full level (6.8 / 11.1)

Grossing up 48 cents for 61% imputation level gives 48 / 0.8292 = 57.9 cps gross dividends.
On a share price of $5.39 my forecast yield going forward is 57.9 / 539 = 10.74% gross.
This assumes N.Z. profitability can be restored in FY23 to the average level enjoyed in the previous 4 years.  I would caution it could be materially different, I have less confidence around this than the very high level of confidence I have around ongoing strong growth in Australian gross sales and net profit.

That's the best as I can forecast at this point.  I'll know a LOT more when I see the divisional breakdown of the half year report in late March 2023.

[winner (n)]

NZ operations will suffer for rest of financial year after the post lockdown boost in sales in first 18 weeks

Consumer confidence tumbles to lowest level on record.

https://library.westpaciq.com.au/content/dam/public/westpaciq/secure/economics/documents/nz/2022/12/Economic-Data_Q4-Consumer-confidence_bulletin_19Dec22.pdf

But then the media could be giving themselves a pat on the back for telling us that the country is stuffed ....surprisingly the 'rich' are about as gloomy as the poor

[Basil]

Looks like Adrian Orr's message has got through.  Warren had a bit of a dig at Orr in his address, you would have liked that Winner.  Even suggested Orr go and talk with the Australian central bank Governer who has been raising interest rates in 25bp increments.

Was talk during the annual meeting that an easy way to buy Christas presents is Glassons gift vouchers, so I have been a good dog this morning and done exactly that.  I preferred the old way when it was paper vouchers...everything electronic and loaded onto a card these days.

The economy goes in swings and roundabouts, and I am not concerned and didn't go hard on this for a short-term play, its long-term retirement income.
One thing my late Mother often said, there's always sunshine after rain.  I doubt the young ones headed out peacocking this summer will care about interest rates or house price movements, they just want to look cool and strut their stuff in cool looking affordable clothes.

[winner (n)]

Looks like Adrian Orr's message has got through.  Warren had a bit of a dig at Orr in his address, you would have liked that Winner.  Even suggested Orr go and talk with the Australian central bank Governer who has been raising interest rates in 25bp increments.

Was talk during the annual meeting that an easy way to buy Christas presents is Glassons gift vouchers, so I have been a good dog this morning and done exactly that.  I preferred the old way when it was paper vouchers...everything electronic and loaded onto a card these days.

The economy goes in swings and roundabouts, and I am not concerned and didn't go hard on this for a short-term play, its long-term retirement income.
One thing my late Mother often said, there's always sunshine after rain.  I doubt the young ones headed out peacocking this summer will care about interest rates or house price movements, they just want to look cool and strut their stuff in cool looking affordable clothes.

Did your Mum teach Mark Knopfler of Dire Straits to write lyrics -

One of the best is Why Worry

Why worry
There should be laughter after pain
There should be sunshine after rain
These things have always been the same
So why worry now
Why worry now

[Basil]

Awesome song, know it very well.  Dad taught me Mathew 6 v 27
Can any one of you by worrying add a single hour to your life?
Maybe Mark Knopfler read the odd Bible verse for inspiration with his songwriting 
I'm cautiously optimistic inflation has peaked and people will see some relief, for example at the fuel bowser this summer.

Here's a look at the 10 year history of earnings per share (eps) dividends per share (dps) and payout ratio
Year....eps, dps, payout
2013 31.3 33.5 107%
2014 23.9 28.5 119%
2015 29.2 31.0 106%
2016 22.9 30.0 131%
2017 29.0 31.5 109%
2018 45.9 44.0 96%
2019 48.7 44.0 90%
2020 46.6 39.0 84%
2021 55.9 47.0 84%
2022 42.9 42.0 98%

Average payout ratio last decade 98%
Average payout ratio last 5 years 90%

I think its very impressive indeed that they've been able to grow Glassons Australia so strongly over the last 5 years and in spite of challenges with Covid payout 90% of earnings.  Whatever the payout ratio is going forward I am sure we can rely on Tim Glassons influence on the board with his 20% stake to make sure its the right one for the company and its shareholders.

Gosh if they make 80 cps this year and payout 90% that's 72 cps in dividends, surely not 

[Waltzing]

'rich' are about as gloomy as the poor

the new doomsday book was sent to them... they will all be looking which country they can move to next...

they will all ringing up Mike Faye... "Get us out of here!!! please"

https://en.wikipedia.org/wiki/Stasi

[Waltzing]

"Gosh if they make 80 cps this year and payout 90% that's 72 cps in dividends"

Gosh doesnt cover it....

[winner (n)]

Hallensteins closed their 4 Australian stores in 2003/2004. They said at the time " weve concluded that the Hallensteins formula, which is so successful in New Zealand, does not fit the Australian marketplace".

Suppose 20 years later they'll work that out again and close their 4 Australian stores.

Interesting never disclosed,Hallensteins Australia sales or profitability ...hmmmm

Latest foray into Australia was F17 when they opened 3 stores ......I'd say struggled so not been tempted to expand any more?

[Basil]

You should have told your dog to wait for his walk like I told Tony on Friday morning.  There was more important things to do like listen in to the annual meeting to how successful they have been with Hallensteins online sales in Australia now exceeding online Hallensteins sales here despite 42 stores here and only 4 over there.  You would also have seen the cool image of Hallensteins totally new concept store in the new mall in Invercargill and learned from Hallensteins new CEO how that's going to revitalize this iconic 150 year old brand going forward.   Try and keep up, there's a good chap 😜
They obviously have strict budgets as to how much they will spend on capex, hence the very high dividend payout ratio.  It's clear their focus in terms of retail footprint expansion is Glassons Au.  Hallensteins will remain a digital + minimal store footprint strategy in Australia
Next year when the annual meeting is on, tell your dog, I am not going to let the tail wag the dog, you'll get your walk when I'm good and ready.
Had oysters and chips at the beach with your dividend yet ?
 

[Waltzing]

Its not possible .....

to fast ... and once again left holding a half empty bowl....

https://www.youtube.com/watch?v=YMN3nZJ1RF4

[Waltzing]

 
Ausi dollar to the Dixie is called now for 75 by later next year...

Now that could really power up HLG AUS

if this SP stays down a buy opportunity could emerge early next year...