HLG - Hallenstein Glassons Holdings

[scullingsweden]

Fable 5 by Anthropic - HLG Report.

  https://claude.ai/public/artifacts/f00c8792-ed4d-475c-ac47-7a065c71c7b7

Hallenstein Glasson Holdings (NZX: HLG)
FY2026 Full-Year Preview and Forward Analysis
From the 1 February 2026 Interim Report to the 28 August 2026 Full-Year Trading Update

Prepared by: AI Fable 5 Mythos Date: 29 August 2026 Watermark: Fable 5 Mythos Reporting currency: NZD unless stated. Financial year ends on or about 1 August.

Source documents (project knowledge):

HLG Interim Report, six months ended 1 February 2026 (unaudited), authorised 27 March 2026.
HLG Trading Update for the full year ended 1 August 2026, released 28 August 2026 (preliminary, unaudited, pre-dividend declaration).

Supplementary sources: RBA Monetary Policy Decision, 11 August 2026 (Media Release 2026-19); NZX market data as at close 28 August 2026; HLG Modern Slavery Statement FY2023 and company sustainability disclosures;  Full audited results and dividend declaration are scheduled for 29 September 2026.

1. Executive Summary

HLG has guided to a FY2026 result that is a structural step-change rather than a cyclical bounce. The 28 August update confirms Group sales of $563.0M (+19.6%; +15.6% constant currency) and net profit before tax (NPBT) of $83.0M–$84.5M (+42.1% to +44.7%) against $58.4M in FY2025. The implied second half (H2) is the strongest half in the company's recent history in absolute NPBT terms and materially exceeds the Chairman's own March 2026 caution that H1 growth would be "much more difficult to replicate".

[Basil]

Some number crunching today for background research threw up some interesting facts based on analysis of the last 5 years.

1. Average split first half second half EPS is 57% v 43%. That's what makes this years split so truly remarkable at 47% v 53% and what really stunned me on Friday. Such a significant shift that's so different to historical patterns hints at some fundamental improvement in the business, for example, lower stock shrinkage with their RFID stock technology, better inventory management using that technology and / or lower discounting. (It certainly can't be explained by lower costs of doing business as we know shipping and distribution costs will be well up) so a shift of this magnitude against known headwinds is really quite remarkable and noteworthy. I'm looking forward to finding out more about this when we get the full report late next month.

2. The Average dividend payout ratio for the last 5 years has been 88.4%

3. The dividend split first half is quite interesting and they always seem to go quite conservative with the first half divvy. (2022 was a real outlier at 90%)
Average payout ratio first half is 71.7%...that compares to just 61.7% in the first half for FY26, (a real outlier on the low side) so they kept 10% more of the first half 47 CPS EPS this year, i.e. 4.7 CPS held back, probably to do with the very low level of imputation. This does suggest there could be positive Implications for the final dividend.

4. Second half divvy averages 111% of second half EPS ! (Wow, I found that fascinating). That's extremely unlikely to happen this year due to the very unusual situation of higher earnings in the second half but on EPS forecast at 99 CPS and an average payout ratio for the last 5 years of 88.4%, total dividends of 87.5 CPS for FY26 would not be out of alignment with previous history. 87.5 CPS less the unusually low payout of 29 CPS for the interim dividend suggests the final dividend payable in December could be as much as 58.5 CPS...surely not !!

I would hasten to add that my preference would be for them to hold more back this year to speed up Glassons store expansion in Australia.

So what final dividend would I lobby for if I was a Director ? I'd be suggesting 40 CPS, (up from 30.5 CPS last year) to Tim Glasson and let's speed up the store expansion. But Tim's getting on a bit in years and might just want to enjoy his share of all the extra cash, (see comment below about how cash per share has been building up in recent years), so more than 40 CPS is definitely on the cards.

Interestingly HLG, (as we all know has no debt), had $1.13 per share in cash at the interim reporting date FY26 up from 98 CPS in FY25, 77 CPS in FY24 and 54 CPS in FY23. That's a pretty impressive war chest they're building there.

[Basil]

Forsyth Barr's latest research notes a significantly higher price target of $14.50 rating OUTPERFORM.
EPS for FY26 is 98 CPS, their target for FY27 aligns with my view at $1.12 rising to $1.18 in FY28.

DPS this year is 75 CPS, suggests a final of 46 CPS 47% imputed, (As you all know I'm hoping for 100% imputation with this December final divvy), rising to 90 CPS in FY27 and 95 CPS in FY28, imputation level's in the low 40% range. (I will update my view on the medium term outlook for imputation credits after they announce their result on 29 September)

Forward PE for FY27 aligns with my view of 10.4.
They note the large runway for growth in Australia that we've all been talking about.

[Soolaimon]

Forsyth Barr's latest research notes a significantly higher price target of $14.50 rating OUTPERFORM.
EPS for FY26 is 98 CPS, their target for FY27 aligns with my view at $1.12 rising to $1.18 in FY28.

DPS this year is 75 CPS, suggests a final of 46 CPS 47% imputed, (As you all know I'm hoping for 100% imputation with this December final divvy), rising to 90 CPS in FY27 and 95 CPS in FY28, imputation level's in the low 40% range. (I will update my view on the medium term outlook for imputation credits after they announce their result on 29 September)

Forward PE for FY27 aligns with my view of 10.4.
They note the large runway for growth in Australia that we've all been talking about.

Share split comming ?

[Basil]

Share split comming ?

I suggested that to the board last year.

[Dolcile]

Future Outlook
For the first eight weeks of the new financial year, Group sales were 18.4% ahead of the same period last
year on a constant currency basis. Sales were ahead of the prior corresponding period across both
brands, with the result also reflecting the contribution from recently opened and refurbished stores.
While trading to date has been ahead of the prior year, the period represents a relatively small part of
the financial year and precedes the important Black Friday and Christmas trading periods. The rate of
sales growth achieved in the opening weeks is not expected to continue at the same level through the
remainder of the first half.
The Group continues to operate against an uncertain economic and geopolitical backdrop. Changes in
consumer spending, foreign exchange rates, freight and logistics costs, and other operating costs may
affect trading and profitability over the remainder of the financial year. The Group will continue to
monitor these factors and respond as appropriate.
A further trading update will be provided at the Annual Meeting of Shareholders in December 2026.

The show rolls on 

[Ferg]

An incredible result announced this morning:
https://api.nzx.com/public/announcement/480718/attachment/478016/480718-478016.pdf

NPAT of $59m with EPS 99c per share and a final dividend of 40c with 91% imputation.  This is way ahead of my predictions.  Whilst it has been a good start to the new fiscal year, it will be interesting to see what happens if (actually when) the NZD reverts to higher levels.  The growth story remains intact with new stores being opened.  We may need to temper expectations for profit in FY27....

@Basil - do you want to post here what you posted on the other website?

[Basil]

Review of the financial statements:-

1. EPS of 99.1 CPS v 66.1 CPS up 49.9%
On the total comprehensive income basis including movements in foreign currency translation reserve
EPS is $1.05 v 65.6 cps up 60%

2. Cash and term deposits at bank.
$88.205m or $1.48 per share up 51% from $58.33m last year or 98 cents per share.
This remarkable increase in cash on hand despite new investments in purchases of property plant and equipment of $29.4m v 15.8m last year, up 86%, (I presume a some of that is the fit out of the new roboticised warehouse) They're certainly investing for the future !

3. Stock turn is still exceptionally good at almost exactly 7 times.

4. Cash Flow from Operations (after lease payments which are separately disclosed in the cash flow statement)
$91.62m $1.54 per share up 57% from $58.46m or 98.2 cps last year

5. Income tax rate
It is very gratifying to finally see this coming down towards my earlier expressed expectation of about 29.3%
This was 29.5% this year compared to 32.4% in 2025.

6. Divisional profit after tax
Glassons N.Z. $20.9m v $13.4m up 56%
Hallensteins $7.8m v $3.3m up 137%
Glassons AU $30.1m v $22.5m up 34%

7. Imputation Credit account Balance $8.521m v $3.6m, final dividend nearly met my expectations of being fully imputed

8. Sales for the first 8 weeks up 18.4% on a constant currency basis v sales growth last year of 15.6% on the same basis. Really good to see the sales momentum continuing into FY27. (I like the way Warren Bell cautions about the future, exactly what you'd expect from a Chairman that's taking a very prudent and conservative approach to governance).

9. Updating Glassons 10 year sales CAGR FY16 sales $41.6m, FY26 sales $324.4m 10 year CAGR is 22.8%

A few initial thoughts on the figures.

a) It is deeply satisfying to see the remarkable results achieved in FY26 against headwinds prevailing that I've previously alluded too. It shows the level of deep resilience the business has towards cost of living pressures and underscores my deep belief that you should never underestimate the need young people have to dress well, fit in and look cool with their peers. This is a real need to fit in, it is not a want.

b) They're obviously selling far more product at full price and I think that's the effect of their new RFID stock management system. The momentum in margin Alfie has referred too above is extremely pleasing and encouraging for FY27.

c) They're obviously investing for the future and I am very pleased with the number of new store openings and expanded stores at some locations and its great to see the new warehouse is up and running which represents a doubling at 7,000 sqm on their previous 3 warehouses which had a combined space of 3,500 sqm. They're gearing up for growth !

d) It is especially pleasing to see Hallensteins profit recovering so well. The fact that the directors are confident enough to expand the store network in Australia, albeit modestly gives me a lot of confidence in the future of the brand,

e) The cash position at $88.2m exceeded my expectations, is almost outrageous and cash flow of $1.54 per share which dividend payments of only 69 cps gives a clue as to which way that cash position is going in the future especially now that the new roboticised warehouse fit out is complete

f) Sales for the first 8 weeks exceeded my expectations and will be well north of 20% on a $NZ basis.

g) I'm comfortable lifting my forecast for FY27 to $1.20. At $13.60, last time I looked HLG trades on just 11.3 times my forward estimate of earnings and that includes trading cum the 40 cps final dividend. I think its exceptional value at the current price.

h) I think HLG has a very exciting future ahead of it. Imagine how well they will perform when we finally see headwinds from cost of living and record high fuel prices abate ?

I) I think a fair forward PE for the whole business is at least 17 times forward earnings and that's only a forward PEG of 1.1 on 10 year EPS CAGR of 15.6%. The ASX200 trades on a forward PE of 20 and a PEG ratio of 3.3. Even at 17 times forward earnings of $1.20 = $20.40 HLG would be very deep value compared to the ASX200. HLG has no real comparable retail peers in N.Z. although I note the no growth Briscoes trades on 17 times FY27 earnings.

J) HLG is the best growth at a reasonable price stock in Australasia in my opinion. Its still relatively undiscovered and represents a truly compelling opportunity for investors to build wealth over time while contemporaneously receiving a very high dividend yield that will itself, grow strongly in the years ahead. The business with by far, record ever cash on hand and no debt, a new roboticized warehouse and young and growing brands in Australia has never been better positioned to continue its strong growth in the years ahead.

Disc: I have added substantially to my position in HLG in the last month and together with organic growth from the share price gain HLG now represents ~ 33% of my portfolio. That's what I call putting your money where your mouth is !

[lorraina]

In  research today Forbar have increased their target price from $14.30 to $17.60 with an OUT PERFORM rating.

[winner (n)]

In  research today Forbar have increased their target price from $14.30 to $17.60 with an OUT PERFORM rating.

Jeez HLG share price now higher than IFT ....and soon to be higher than EBO share prices

Can't be right

[Dolcile]

Basil have forbar just copied your earlier comments ? 

[lorraina]

HLG's growth rate and margins are far superior than EBO's.

[Basil]

NZX code HLG
Target price NZ$17.60 (from 14.30)
Financials: Aug/ 26A 27E 28E 29E
Rev (NZ$m)  563.0  627.0 668.5 714.4
NPAT* (NZ$m) 59.2 69.8 74.9 82.5
EPS* (NZc) 99.2 116.9 125.7 138.3
DPS (NZc) 69.0 85.0 90.0 100.0
Imputation (%) 67 58 58 54
*Based on normalised profits
Valuation (x) 26A 27E 28E 29E
PE 14.1 12.0 11.1 10.1
EV/EBIT 9.4 8.0 7.5 6.9
EV/EBITDA 6.2 5.3 5.0 4.7
Price / NTA 6.0 5.1 4.4 3.9
Cash div yld (%) 4.9 6.1 6.4 7.1
Gross div yld (%) 6.2 7.4 7.9 8.6
Earnings: Increased our FY27 EPS forecasts by +5% in FY27 and +6% in FY28.
Target price: Increased to NZ$17.60, reflecting: (1) positive earnings changes; (2) an increase in our target 12-month forward PE
multiple to 14x (from historical PE of 12x); and (3) a lift in our longer-term store rollout assumptions, increasing our DCF valuation.

Forbar estimate on a $NZ basis sales for the first 8 weeks are up mid 20's %