HLG - Hallenstein Glassons Holdings

[Waltzing]

Pass the TUI.... its starting to look like a sell on the next pop..

[KW]

In Australia, rents are going up at a rate of 11-13% a year in Australia (and contributing to the hot inflation numbers over there) and today the student debt (HECS) interest rate just got indexed at 7.10%.  Being young in Australia aint no bed of roses.  

[Basil]

You need to get out there and fully update your wardrobe, that'll save us and ensure the next dividend is at least 24 cps 😁
I'd also help if Hallensteins made gear for super luxury sized Beagles lol 

[winner (n)]

OZ rent increases horrendous as per chart Westpac

Peacockers probably shifting back to mom and dad so no worries for HLG

They say NZ numbers will look like this soon

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[Onemootpoint]

You need to get out there and fully update your wardrobe, that'll save us and ensure the next dividend is at least 24 cps 😁
I'd also help if Hallensteins made gear for super luxury sized Beagles lol 

Well, a close family member recently made a decently huge purchase at the G part of HLG.

Hope that helps. 

[winner (n)]

You need to get out there and fully update your wardrobe, that'll save us and ensure the next dividend is at least 24 cps 😁
I'd also help if Hallensteins made gear for super luxury sized Beagles lol 

I'm not like their models but get my jeans and tees from them.

Recently needed a decent white shirt to go with suit for dinner with Governor General. Hallensteins had one that fitted fine. Deliveries pretty fast as well

[winner (n)]

Big Kings Birthday Sale on at moment

Getting a merino jumper for myself ....keep me warm this winter ......$59.99

[Basil]

I'm told young Wellington ladies are raving about Lululemon stuff ...better than Glassons they say
Can even invest in them LULU on Nasdaq

Your LULU going gangbusters.  https://www.cnbc.com/2023/06/01/stocks-making-the-biggest-moves-after-hours-lulu-mdb-five.html  Just reported latest quarter this morning...Younger demographic still spending and peacocking around in cool gear, no worries.
Seen some of their cool gear worn by young ladies at the dog park.  Very shapely     Tony the Pony is not the only one enjoying trips to the dog park lol

[Fiordland Moose]

I'm quite curious Basil - did you sell down into the index inclusion POP(!)? Or did you keep ALL your shares?

[Basil]

I think you've expressed your viewpoint in a very forthright manner on the other forum.
I would comment in response that the "scary" wage increases you're talking about that will affect Glassons staff are less than the rate of inflation in Australia...but, sigh, ...you know that already...anyway, I don't have any concerns there.  Further, Glassons Au are very careful with their selection of new retail outlets and my understanding is they go through a very thorough due diligence process.  James Glasson is a smart guy with a very smart mentor!

One thing you don't mention is that lease deals in a recession can often be signed on extremely advantageous terms and locked in with the usual review clauses.  This obviously confers an advantage in better economic conditions in due course as the lease reviews are based on the initial discounted contract price. Various other significant concessions can be obtained in harder economic times as I am sure you know already but for some reason didn't mention, whereas you were very quick to mention the prospect of them overpaying for leases in better times, something I seriously doubt, especially in Covid times.. 

Regarding the under 35 demographic group thing.  I am not sure if you know this, but Glassons target market is 13-30 years and the substantial majority in that age group will still be living at home with their parents.  Care needs to be taken when considering a group of under 35's as accurately representing the Glassons demographic.  Page 6 of that report you linked suggested exactly that, in as much as under 25's are still spending up. Consider this, that the average age of a Glassons consumer is only about 21 years old. Curiosity killed the cat. Just let the WHS thing go already...for goodness sake.

[Fiordland Moose]

I think you've expressed your viewpoint in a very forthright manner on the other forum.
I would comment in response that the "scary" wage increases you're talking about that will affect Glassons staff are less than the rate of inflation in Australia, so I don't have any concerns there.  Further, Glassons Au are very careful with their selection of new retail outlets and my understanding is they go through a very thorough due diligence process.  James Glasson is a smart guy with a very smart mentor!

One thing you don't mention is that lease deals in a recession can often be signed on extremely advantageous terms and locked in with the usual review clauses.  This obviously confers an advantage in better economic conditions as the lease reviews are based on the initial discounted contract price. Various other significant concessions can be obtained in harder economic times as I am sure you know already but for some reason didn't mention, whereas you were quick to mention the prospect of them overpaying for leases in better times. 

Regarding the under 35 demographic group thing.  I am not sure if you know this, but Glassons target market is 13-30 years and the substantial majority in that age group will still be living at home with their parents.  Care needs to be taken when considering a group of under 35's as accurately representing the Glassons demographic.  Page 6 of that report you linked suggested exactly that, in as much as under 25's are still spending up. Consider this, that the average age of a Glassons consumer is only about 21 years old. Curiosity killed the cat.

The wage increase is very likely in excess of Glassons AU pricing power...IE, the evidence is that apparel companies are not able to pass on rises in their input costs as is to maintain GP margins, and if you couple that with an inability to recover rises in fixed costs, you get a doubly whammy on profit margins. That's exactly what has transpired with the WHS...GP margins fell while overheads as a % of revenue increased. To keep margins % steady, HLG would have to be able to fully pass on input costs, and fully recover fixed prices. I am doubtful they will be able to do that in 2H and very doubtful they will be able to do that in FY24, and expect profit margins to decline.

Lease deals can be signed at good rates as you rightly say. But we are no where near the bottom of the cycle! Australia is very much well above the average of the cycle. It's only just come off peak volumes and earnings, and volumes per capita are no where remotely close to being even at an average of through the cycle let alone below the cycle (re my graph on sharetrader). And in both geographies, they are still at or very near record low unemployment rates. So I really hardly believe one can say (honestly) we are at a bottom of the cycle performance when from my perspective we aren't even close to being half way down let alone being at the bottom of the cycle.

Many 13-18 year olds year glassons, as you say, but their parents pay for it. guess what their parents have? mortgages. which are going up.

Still didn't answer my question....have you sold any HLG shares during the run up to the index inclusion or after?

Plenty of reasons to be curious about that.

[Fiordland Moose]

The tragedy of retail is often that the stores opened in the peak of the cycle are often not viable through the cycle. Recently opened stores are signed at 'market' which reflect top of the market assumptions which can prove to be not viable, and the same store sales growth assumptions can prove to be utterly unachievable when run rates falter, and wages are sticky and can still rise even when the underlying run rate declines. Couple that with increased promotional and stock write off activity when the market turns, provides for a nasty impact on retailers which are ultimately quite operationally leveraged. Many will scramble to lay off headoffice, expensively exit leases, and cull staff. It's the normal retail cycle which will occur time and time again. EBIT margins are at their most expansive at the top of the cycle, and compress at a rate that surprises nearly all as they fall to the bottom.

[Fiordland Moose]

Regarding the under 35 demographic group thing.  I am not sure if you know this, but Glassons target market is 13-30 years and the substantial majority in that age group will still be living at home with their parents.  Care needs to be taken when considering a group of under 35's as accurately representing the Glassons demographic.

As far as I can tell the best quality publicly available information around Glasson's demographics comes from Similarweb.
https://www.similarweb.com/website/glassons.com/#demographics

From that we see:
*30% between 18-24 years old
*33% between 25-24 years old
*15% between 35-44 years old
*11% between 45-54 years old
*7% between 55-64 years old
*4% above 65 years old

I know Glasson's demographic. And the data disproves that "the SUBSTANTIAL MAJORITY will still be living at home with their parents. And even if living with their parents, their parents overwhelmingly have mortgages, which is the group you had previously signaled out as the most at risk to rising rates (you can't have your cake & eat it too).

I don't think 2H FY23 will be a disaster and the full year FY23 result will look good positive given 1H performance and the residual but faltering strength in 2H. That said, I reckon the run rate will clearly show a deterioration in the 2H, FY24 will be difficult and it will carry through or worsen inFY25. Clearly you don't think the same so I'd love to know your factual basis for it.

You've seen my graph on apparel volumes relative to trend I'd love your perspective.

Given you've posted now on a different subject tonight and declined to answer my question, and together with history, I think it would be fair to question if you've sold down some of your shares into the index pop despite all your proclamations on what a fantastic long term dividend yield and growth stock it is. If that's not the case you should set the record straight and admit you got the stock index pop wrong (similar to the WHS when you advocated people
"BUY NOW before the closing match"). In my view it would be a terrible look for someone who had been promoting a stock and singing the dividend yield & growth potential to their large following only to have later & *inescapably* been found selling down into the pop at the same time. I recall you saying at the end of 2021 the WHS would be $5 by xmas and $7 by next year, and then a few weeks later you posted you had sold out at $4.11 during the interim period, so I think it's 100% fair and justifiable to ask.

[winner (n)]

I've said a few times lately that employee cost has been a worry the last few years

Up until 2020 I admired how they managed to keep a lid on total employee costs - in $ terms that flowed through to 'efficiencies' as measured by % sales

Since Jan 2020 the annual employee cost has risen by $18m or 34%

Sure sales have grown and there's been new stores and new distribution centres and all that but the increased employee cost does seem rather out of control

Latest increases in minimum rates will no doubt have an impact ...... unless HLG reduce head count I do see profits being impacted down the track ...... be interesting to see what H223 increase over pcp is and hope its not as bad as the 17% increase seen in H123

[Whome]

FM, I think you are being unfair in your criticism on a number of fronts.

1. The data from Similarweb may be factually correct based on the demographic classes of the purchasers however you only have to look at the Glassons catalogue to see that the clothing and the advertising is clearly targeted to young women, suggesting the 35% of purchasers above 35-y-o are probably buying for daughters or grand-daughters. Put another way, why would Glassons stock granny sizes!

2. Young people either living at home or flatting or renting don't give a monkeys about mum and dad's mortgage. What money young people have left over after expenses is spent on looking good, feeling good and hanging out with friends so looking good like the models in the catalogue is top priority among peers - and so it should be at their age. Not talking about deadbeat couch potatoes or drug users - Glassons target those go ahead young people who care what they look like.

3. Your comments on whether another poster has sold or not are unfair - DYOR is the rule  - and by all means factor in someone else's opinion but don't blame them if the market moves and you haven't kept up.

Re WHS, I personnally was able to pick up on clearly signalled comments way back on the forum from several posters that WHS management was not executing well in regards to The Market as a very costly and almost inappropriate on-line platform that does no favours for their margins, that WHS was being being caned by KMart who had refurbished their stores and were cutting deep into the ground previously held by WHS, and meanwhile we still had WHS outlets looking tired, lax service levels, staff lay-offs etc. etc. - yes, I too exited WHS at around $4 and gee, look at what the market values WHS today.

So it ain't your business as to whether a poster has bought or sold a particular stock.