HLG - Hallenstein Glasson

[winner69]

Australia Stats prelim numbers for February said Supermarkets saved the day but special note was “Offsetting weakness was seen in the Clothing, footwear and personal accessory retailing sub industry where businesses reported adverse impacts from COVID-19.”

Glassons AU struggling I reckon.

[couta1]

Australia Stats prelim numbers for February said Supermarkets saved the day but special note was “Offsetting weakness was seen in the Clothing, footwear and personal accessory retailing sub industry where businesses reported adverse impacts from COVID-19.”

Glassons AU struggling I reckon. Think I'll head on back outa here for a while longer, this place no good for the mind or soul and some of us have the awful burden of having too many shares to exit even if we wanted to, and we dont

[bull....]

this is reality man not your made up fantasy

[jonu]

Think I'll head on back outa here for a while longer, this place no good for the mind or soul and some of us have the awful burden of having too many shares to exit even if we wanted to, and we dont

HLG will survive this Couta. When things return to normal they will be as profitable as ever. Just means you will be locked into them for a while. As you've noted before, it's only a loss if you sell.

[peat]

Just a gentle reminder that HLG been around 130 years , so they made it through the SPanish Flu ..... they'll make it through the Corona virus

[couta1]

Just a gentle reminder that HLG been around 130 years , so they made it through the SPanish Flu ..... they'll make it through the Corona virus Just a slight adjustment, that be 147 yrs, founded 1873.

[winner69]

Just a gentle reminder that HLG been around 130 years , so they made it through the SPanish Flu ..... they'll make it through the Corona virus

Actually 146 years ...and they've survived World Wars and The Depression and many recessions

Even survived Savage, Fraser, Douglas and Muldoon ...and of course Nordmeyer

[winner69]

Just a slight adjustment, that be 147 yrs.

Don’t think they’ve had their 147th yet :)

[Raz]

Don’t think they’ve had their 147th yet :)

Lets hope they will, a reminder here of the human face of investing.

[couta1]

Actually 146 years ...and they've survived World Wars and The Depression and many recessions

Even survived Savage, Fraser, Douglas and Muldoon ...and of course Nordmeyer And they are even going to survive" The Bull". Lol

[James108]

Has anyone bothered to run some scenarios and calculate a range of fair values, how is everyone determining what they think fair value should be?

For instance as a base case I put into my dcf sheet a loss of 18 cents a share in the coming year a profit of 10 cents then 18 cents then 24 cents then 35 cents thereafter.

I feel they should comfortably stay solvent in this case if they don’t pay an upcoming dividend. I also feel that with no debt and a track record of surviving they are well positioned following a recovery.

[winner69]

And they are even going to survive" The Bull". Lol

.....thats a good end to the day

[winner69]

Has anyone bothered to run some scenarios and calculate a range of fair values, how is everyone determining what they think fair value should be?

For instance as a base case I put into my dcf sheet a loss of 18 cents a share in the coming year a profit of 10 cents then 18 cents then 24 cents then 35 cents thereafter.

I feel they should comfortably stay solvent in this case if they don’t pay an upcoming dividend. I also feel that with no debt and a track record of surviving they are well positioned following a recovery.

If HLG lose 18 cents a share this year ($10m) then things like the msrket) must be really really dire and any turn around from that level would take ages.

If that is what HLG lose I’d hate to guess how the other retailers would have fared

[James108]

Yes a long turn around is what I have modelled. I can see them loseing money in aus if people avoid malls. Maybe not in NZ. I guess rather than a base case it may be a moderately conservative case (I am an engineer and my default is to be moderately conservative).

[Bobdn]

When i'm in a funk over my investments, i always like to think of worse investments to make me feel better. like these...

https://www.cnbc.com/2020/03/18/coronavirus-world-bank-pandemic-bond-investors-face-big-losses.html

[Beagle]

Massive shuttering of stores overseas in Europe for a lot of retailiers. If we get community transmission we could see the same here.
Low during the GFC according to a long term chart I reviewed this morning appears to be $2.13 on 27/02/09.
Might be a useful marker to remember. Good luck Coutts. I am not tempted by the current price.

[BlackPeter]

Hmm .. just looking at the depth am I not quite sure the GFC bottom will provide meaningful resistance.

HLG sells discretionary consumer items, nothing anybody really would need short term.

People still will need food, medication and information, but really - who would need to buy over the coming say 12 to 18 months a new t-shirt, suit or dress if people are working from home and events are called off? Last years fashion will be good enough for the home office.

HLG probably best close their shops (unless landlords are very reasonable) or otherwise move them into "maintenance and care" and try to keep some sales going over the internet. What this means for the SP - I don't know, but I would buy at this stage other retailers (providing essential products), no matter how low HLG drop.

[Beagle]

They should have moved to stocking hazmat suits, gloves, masks and other personal protective equipment and they would have been enjoying boom times !

Landlords are going to have to accept that they will have to come to the party and share some of the pain to get through this. Not much point in owning a mall devoid of a large percentage of tenants in 2021 is there !

My nephew owns two restaurants. I believe he is on the cusp of asking the landlord for a rent holiday to get through this.

[BlackPeter]

They should have moved to stocking hazmat suits, gloves, masks and other personal protective equipment and they would have been enjoying boom times !

I proposed that some weeks ago on this thread ... but unfortunately they don't seem to read it :):

[Beagle]

I proposed that some weeks ago on this thread ... but unfortunately they don't seem to read it :):

Yeap, I remember it well mate.
28 Cases now, another big leap ! (Was just 12 cases 2 days ago). https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12318127
Note the change in tone to "when" we get community spread, not "if"
When community spread is confirmed I expect this to be really severe in terms of its impact on N.Z. retail.

[macduffy]

I proposed that some weeks ago on this thread ... but unfortunately they don't seem to read it :):

All these items would have been easily sourced by HLG at the time? Unlikely.

;)

[bull....]

with the rate aussie retail stocks are falling and doing profit warnings hard to see how hlg aussie stores havnt been severely impacted. guess the price is holding up with the 15% div yield lol poor buyers attracted by the yield

[couta1]

Broking companies custodial accounts selling today and pushing the price down, they dont have a bottom price limit so lots of damage being done, I feel sorry for the clients who are the losers not the brokers.

[Bobdn]

Massive shuttering of stores overseas in Europe for a lot of retailiers. If we get community transmission we could see the same here.
Low during the GFC according to a long term chart I reviewed this morning appears to be $2.13 on 27/02/09.
Might be a useful marker to remember. Good luck Coutts. I am not tempted by the current price.

Put an offer in for $2.62 for a small parcel but have just cancelled out of it partly due to your post. $2.62 will be a 5 year low. Will do nothing at this stage now.

Interestingly I was just at the Warehouse this afternoon. There was a steady stream of customers buying bleach (one bottle left on the shelf) and the usual other stuff. Pallets of tissues and other house hold cleaners were being steadily depleted. Looks like this crisis will affect different retail sectors quite differently.

[couta1]

with the rate aussie retail stocks are falling and doing profit warnings hard to see how hlg aussie stores havnt been severely impacted. guess the price is holding up with the 15% div yield lol poor buyers attracted by the yield You need to do your homework, as I've said before avg divvy paid over the last 17 yrs which included the GFC is 30c fully imputed, no poor long term holders only Lemmings or those forced to sell for other reasons.

[bull....]

You need to do your homework, as I've said before avg divvy paid over the last umpteen yrs including the GFC is 30.5c fully imputed, no poor long term holders only Lemmings or those forced to sell for other reasons.

i dont think there is any comparable time in history to now , where countries go into lockdown , stores forced to close etc. anyway time will tell

[couta1]

i dont think there is any comparable time in history to now , where countries go into lockdown , stores forced to close etc. anyway time will tell I think a couple of world wars would disagree with you. PS-NO HLG stores have been forced to close and may or may not be going forward, not knowable.

[Beagle]

Could be worse mate. At least you don't have any Kathmandu shares :eek2:

[couta1]

Could be worse mate. At least you don't have any Kathmandu shares :eek2: Dog of a stock mate.:cool:

[bull....]

micheal hills announcement today of there whole canada stores closing due to virus is the biggest risk to all retailers. also the fact they are seeking rent relief in a number of stores outside canada says it all

[Beagle]

Hope this announcement from Australian listed LOV isn't an ominous sign of things to come for HLG :eek2: https://www.asx.com.au/asxpdf/20200319/pdf/44g63kmnwjlr54.pdf

[couta1]

micheal hills announcement today of there whole canada stores closing due to virus is the biggest risk to all retailers. also the fact they are seeking rent relief in a number of stores outside canada says it all No stores will close here and the online side of the business will be going gangbusters, now back under your bridge.

[couta1]

Hope this announcement from Australian listed LOV isn't an ominous sign of things to come for HLG :eek2: https://www.asx.com.au/asxpdf/20200319/pdf/44g63kmnwjlr54.pdf Lol stores in Spain/France/US and Malaysia, dont spread the bull.

[bull....]

if hlg end up closing down it wouldnt be the first company in history to do so

[couta1]

if hlg end up closing down it wouldnt be the first company in history to do so Your so full of it its pathetic, goodbye, i've got better things to do than waste my times conversing with Trolls.

[Beagle]

Lol stores in Spain/France/US and Malaysia, dont spread the bull.

No chance its gets that bad here...or is there ?

[bull....]

Your so full of it its pathetic, goodbye, i've got better things to do than waste my times conversing with Trolls.

i just cant for me understand you dont see reality , retailers are in distress now and will be for many mths to come , many will have to close because of lease commitments. they wont have the revenue to service the lease debt. you need to know how much lease debt retailers have .

for reality read micheal hill announcement of the grim reality or all the warnings be issued in aus . all retailers will be affected

[Beagle]

He's in denial Bull. Its best to leave him to lick his wounds in peace. Plenty of licking to be done.

[couta1]

He's in denial Bull. Its best to leave him to lick his wounds in peace. Plenty of licking to be done. Lol your becoming more like bull every day.

[Beagle]

Good luck with it mate and I do mean that.

[bull....]

He's in denial Bull. Its best to leave him to lick his wounds in peace. Plenty of licking to be done.

probably right only trying to help

[Cadalac123]

Beagle and bull delusional and just fed by journalists

[macduffy]

Beagle and bull delusional and just fed by journalists

It's a competition, Cadalac. Whoever spins the scariest story is the winner.

:ohmy:

[Beagle]

Beagle and bull delusional and just fed by journalists

I sold at an average of just on $6. A few months later its now $2.25. Some people were calling it a screaming buy around $5.50. I was not one of them. I'll just let those numbers do the talking.

[JeremyALD]

Can someone please explain how this is $2.25? I just don't understand. Its at a PE of under 5, they have no debt and the performance of the business is the best its ever been.

Sure things might get hard for a while, but this just dosen't seem logical?

[couta1]

I sold at an average of just on $6. A few months later its now $2.25. Some people were calling it a screaming buy around $5.50. I was not one of them. I'll just let those numbers do the talking. Good call but then you really didnt have many.:cool:

[couta1]

Can someone please explain how this is $2.25? I just don't understand. Its at a PE of under 5, they have no debt and the performance of the business is the best its ever been.

Sure things might get hard for a while, but this just dosen't seem logical? Its not logical but I can tell you what's been going on over the last few days, a couple of big broking firms have been selling some of their clients shares, they dont have a bottom price so they just keep pushing the price down to meet the market, I will be able to see who they are for sure on monday and the net share sales over the top 100 holders, fortnight before this one the net was positive. PS-My wife bought me a lovely sweat top from the local Hallensteins today and the manager told her sales were steady with no probs with inventory supply at this point, winter stock is already being put out with the summer stock.PPS-Unless the company is about to go broke then the current price is just plain stupid.

[Cadalac123]

Its not logical but I can tell you what's been going on over the last few days, a couple of big broking firms have been selling some of their clients shares, they dont have a bottom price so they just keep pushing the price down to meet the market, I will be able to see who they are for sure on monday and the net share sales over the top 100 holders, fortnight before this one the net was positive. PS-My wife bought me a lovely sweat top from the local Hallensteins today and the manager told her sales were steady with no probs with inventory supply at this point, winter stock is already being put out with the summer stock.PPS-Unless the company is about to go broke then the current price is just plain stupid.

Like usual institutions will benefit from the weak hands and retail investors will lose out..

[couta1]

Like usual institutions will benefit from the weak hands and retail investors will lose out.. Yep I wonder how their clients will feel if Friday's report isn't Armageddon and they realise they have been screwed over.

[macduffy]

Can someone please explain how this is $2.25? I just don't understand. Its at a PE of under 5, they have no debt and the performance of the business is the best its ever been.

Sure things might get hard for a while, but this just dosen't seem logical?

No, it's not, but then the whole market has lost its nerve. Everything and anything is liable to be savaged.

[Beagle]

Hope this announcement from Australian listed LOV isn't an ominous sign of things to come for HLG :eek2: https://www.asx.com.au/asxpdf/20200319/pdf/44g63kmnwjlr54.pdf


Can someone please explain how this is $2.25? I just don't understand. Its at a PE of under 5, they have no debt and the performance of the business is the best its ever been.

Sure things might get hard for a while, but this just dosen't seem logical?

Two greatest motivators in the market has always been fear and greed. Have a look at how the virus has affected LOV in the link above. Some people think that's coming here. I for one think widespread community transmission with consequent severe effects on HLG is highly probable and looking at the share price its clear I'm not alone.

[couta1]

No, it's not, but then the whole market has lost its nerve. Everything and anything is liable to be savaged. So true, even PAZ got savaged on the unlisted market, not that I'm complaining. PS-I shouldnt have told my wife that Beagle called for a sell up a while back cause I'm never going to here the end of it now.

[winner69]

Lol your becoming more like bull every day.

Right on couts ......all traders are the same ...can’t contain themselves and you know which side of the trade they’re on eh.

[winner69]

I was really bored and sinned yesterday ...I watched a bit of CNBC ....and regret it.

Best insight was a guy who said you can’t help miss those who went 100% cash in January ....they keep telling everybody about it.

[Cadalac123]

The best people are guys on this forum saying they went all cash in January and then posting it multiple times ... only to then post in some threads about how “they still had a small holding” in something

Yeah sure buddy

[carrom74]

[QUOTE=Cadalac123;801024]The best people are guys on this forum saying they went all cash in January and then posting it multiple times ... only to then post in some threads about how “they still had a small holding” in something

Yeah sure buddy[/QUOT

Good observation!

[Beagle]

For the sake of complete clarity I am not short HLG. I sounded some notes of caution last month when the shares where about $5.50. Anyone who listened to the barking and acted on it has done well and feel free to give the dog a pat on the back (as there's so much unwarranted angst on this thread).

The truth is contained in Proverbs 27 v 12 The sensible man watches for problems ahead and prepares to meet them. The simpleton never looks and suffers the consequences. (The Living Bible translation).

I think it was pretty obvious by late February there was serious trouble coming for retail and articulated that quite clearly. I am not down-ramping and am not short this stock, (am short AIR, HGH and TRA), and have no intention to buy back until there is solid technical indicators to be reasonably confident this has found a bottom.

[allfromacell]

I think the angst comes because some posts have an obvious excitement to them, not just beagles but many other 'cashed up' traders. Sure you guys have hit the jackpot here and nailed the timing but a bit of empathy for the many people going through some very dark days right now wouldn't hurt. This it a time when people's mental health is pushed to the limit.

Please keep barking Mr beagle your posts are very valuable but you don't need to rub it too deep :).

[couta1]

For the sake of complete clarity I am not short HLG. I sounded some notes of caution last month when the shares where about $5.50. Anyone who listened to the barking and acted on it has done well and feel free to give the dog a pat on the back (as there's so much unwarranted angst on this thread).

The truth is contained in Proverbs 27 v 12 The sensible man watches for problems ahead and prepares to meet them. The simpleton never looks and suffers the consequences. (The Living Bible translation).

I think it was pretty obvious by late February there was serious trouble coming for retail and articulated that quite clearly. I am not down-ramping and am not short this stock, (am short AIR, HGH and TRA), and have no intention to buy back until there is solid technical indicators to be reasonably confident this has found a bottom. I wouldn't consider myself/Hickman and Glasson as simpletons which means a foolish /gullible person lacking common sense.

[Beagle]

I think the angst comes because some posts have an obvious excitement to them, not just beagles but many other 'cashed up' traders. Sure you guys have hit the jackpot here and nailed the timing but a bit of empathy for the many people going through some very dark days right now wouldn't hurt. This it a time when people's mental health is pushed to the limit.

Please keep barking Mr beagle your posts are very valuable but you don't need to rub it too deep :).

Fair enough and thank you for your comment and for saying it in a respectful way. I will definitely keep that in mind.


I wouldn't consider myself/Hickman and Glasson as simpletons which means a foolish /gullible person lacking common sense.

They can't sell a quantity like they have on the market, it simply can't absorb that sort of volume.

[macduffy]

Fair enough and thank you for your comment and for saying it in a respectful way. I will definitely keep that in mind.



They can't sell a quantity like they have on the market, it simply can't absorb that sort of volume.

Perhaps they're not looking to sell!

[winner69]

Perhaps they're not looking to sell!

Real investors eh macduffy

Most punters who call themselves ‘investors’ are only really ‘traders’

[couta1]

Perhaps they're not looking to sell! Exactly, Beagle would make a good politician as he simply avoided the essence of my post by going off on a tangent.

[Beagle]

HLG is a very good and extremely well managed company with a REALLY long history. I think its highly likely they will get through this (but not unscathed).
These are unprecedented time's and in my opinion it makes good common sense not to announce any dividend when they report next week. Keep their powder dry for a rainy day...because it could be raining for quite a while. I'll let TA tell me where the bottom is.

[couta1]

HLG is a very good and extremely well managed company with a REALLY long history. I think its highly likely they will get through this (but not unscathed).
These are unprecedented time's and in my opinion it makes good common sense not to announce any dividend when they report next week. Keep their powder dry for a rainy day...because it could be raining for quite a while. I'll let TA tell me where the bottom is. Well yes easy to say when you dont hold and dont rely on the dividend for income, it's a pure divvy income stock, not a growth company in any true sense, I for one would be extremely disappointed if no dividend was declared, a reduced one is fine but none at all would go down like a lead balloon and the market would react accordingly. PS-No we dont live in unprecedented times, check out how many died from the swine flu in 2009(Around 250k) what is unprecedented is the massive hype and overreaction.

[Flugenbear]

When Jacinda raises the alert level and they have to close all their stores for the coming winter, the current share price will seem rather expensive. It's not a matter of if but when. We will not escape a complete shutdown. Painful months ahead I'm sorry to say.

[couta1]

When Jacinda raises the alert level and they have to close all their stores for the coming winter, the current share price will seem rather expensive. It's not a matter of if but when. We will not escape a complete shutdown. Painful months ahead I'm sorry to say. We have a Prophet in our midst and a gloomy one at that.

[FatTed]

We have a Prophet in our midst and a gloomy one at that.

WE are no different from UK, Australia and the US. We will be in lock down very soon. This is different from SARS, because COVID 19 has the potential to overwhelm healthcare resources, stay at home wash your hands and maybe we can keep the infection rate low enough so the health system can look after us all.

[bull....]

most retailers will be forced to shut shop in level 4 , malls might have to shut up level 3 . not much time left before we get there. hlg , kmd, bgr , etc etc etc face this reality

[James108]

As a shareholder I hope they do not declare a dividend. Anyone have any comment regarding landlords coming to the party regarding rent? I assume if they close the malls HLG would not have to pay rent.

[Beagle]

When Jacinda raises the alert level and they have to close all their stores for the coming winter, the current share price will seem rather expensive. It's not a matter of if but when. We will not escape a complete shutdown. Painful months ahead I'm sorry to say.


WE are no different from UK, Australia and the US. We will be in lock down very soon. This is different from SARS, because COVID 19 has the potential to overwhelm healthcare resources, stay at home wash your hands and maybe we can keep the infection rate low enough so the health system can look after us all.

I agree 100%.

[bull....]

As a shareholder I hope they do not declare a dividend. Anyone have any comment regarding landlords coming to the party regarding rent? I assume if they close the malls HLG would not have to pay rent.

I would be very surprised if they went ahead with the dividend. would border on recklessness. as far as rents or lease obligations they are entirely at the mercy of the landlords. they do not have to give rent relieve. I think hlg have 90 odd million in lease payments they are obligated to pay in total.

[bull....]

far fetched people might think lockdown

https://www.abc.net.au/news/2020-03-22/victoria-new-south-wales-push-for-lockdown-due-to-coronavirus/12079124

New South Wales moves to comprehensive shutdown of non-essential services amid coronavirus pandemic

[kiora]

I would be very surprised if they went ahead with the dividend. would border on recklessness. as far as rents or lease obligations they are entirely at the mercy of the landlords. they do not have to give rent relieve. I think hlg have 90 odd million in lease payments they are obligated to pay in total.

Who owns the properties? Some they own & some they lease from majority shareholders I thought?
https://app.companiesoffice.govt.nz/companies/app/ui/pages/companies/150126/shareholdings?backurl=H4sIAAAAAAAAAC2MsQ7CMBBD%2Fy ZLhn5BhJhgyFAJfuCUWBApuYS7K1L%2FvqFis%2F1sL4Ne0CX1 NojLVAqS9L60nhHUiDNJdrYPBLAVmxX3Cf5OtYLVUNiv0gfkR3 wsrRiyo%2FwlTsgrMWow2eDO9f6cRxquMf79w8g2vUnfxhkfqa EZd48AAAA%3D

[bull....]

Who owns the properties? Some they own & some they lease from majority shareholders I thought?
https://app.companiesoffice.govt.nz/companies/app/ui/pages/companies/150126/shareholdings?backurl=H4sIAAAAAAAAAC2MsQ7CMBBD%2Fy ZLhn5BhJhgyFAJfuCUWBApuYS7K1L%2FvqFis%2F1sL4Ne0CX1 NojLVAqS9L60nhHUiDNJdrYPBLAVmxX3Cf5OtYLVUNiv0gfkR3 wsrRiyo%2FwlTsgrMWow2eDO9f6cRxquMf79w8g2vUnfxhkfqa EZd48AAAA%3D

they own some property , but they rent a lot too. lease obligations total 90 odd million off the top head , exact $ number is in there annual report. I doubt they own any of there mall shops. kmd and all retailers in same boat.

[couta1]

I have decided this will be my last post on this thread for some time, I'm going to leave it to the Trolls/Downrampers/Mischief makers and the Smug, excluding the odd few posts from holders and genuine people with an ounce of compassion it's simply a waste of time as far as I'm concerned as no matter what the report says I will continue to hold, so enjoy your feeding frenzy.

[Beagle]

Occupancy costs are $29.8m as per note 2 to the 2019 financial statements, see page 32 http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HLG/343341/310636.pdf

No question a full lock down on both sides of the Tasman will put HLG under real pressure. They will need to right size their staff and admin costs very quickly and I would expect they will be seeking rent relief / deferrals from landlords. Malls will not attract people back when this is over if they're half empty so they have a vested interest to work with well respected companies like HLG who drive a lot of foot traffic to their mall. I am pretty sure, (not certain), they will get through this but it is highly likely there will be some serious financial pain involved.

For the record I am not smug. I was clearly signalling real caution was required a month ago when the share price was in the low to mid $5 range. Good luck to holders. Sadly I think this is going to get significantly worse before it gets better for both the company and its share price.

[bull....]

Occupancy costs are $29.8m as per note 2 to the 2019 financial statements, see page 32 http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HLG/343341/310636.pdf

No question a full lock down on both sides of the Tasman will put HLG under real pressure. They will need to right size their staff and admin costs very quickly and I would expect they will be seeking rent relief / deferral from landlords. Malls will not attract people back when this is over if they're half empty so they have a vested interest to work with well respected companies like HLG who drive a lot of foot traffic to their mall. I am pretty sure, (not certain), they will get through this but its going to seriously hurt them, there's no question about that.

29 million is this years cost , 90 million odd is there total they owe and your right how they going to pay if there stores closed down? or malls thats why reatiler stocks in AUS have been slaughtered some by 60 + %

[Beagle]

29 million is this years cost , 90 million odd is there total they owe and your right how they going to pay if there stores closed down? or malls thats why reatiler stocks in AUS have been slaughtered some by 60 + %

Most mall rents have 3 components. 1. A fixed monthly lease. 2. A percentage of gross sales. 3. A smaller percentage of gross sales that goes towards a marketing fund for the mall to promote itself in the media. In a shutdown situation neither 2 or 3 are payable and HLG will be working with Mall owners for rent relief / deferral for the fixed monthly lease. I am sure the Mall owners will have to take a pragmatic "we're all in this together approach" There is no point bankrupting almost everyone as they will end up with a ghost mall nobody wants to come back too. I don't think its as dire as you are suggesting but it certainly is a very serious situation which calls for a pragmatic approach by all stakeholders and some fast action on cost cutting.

[Pipi]

I have decided this will be my last post on this thread for some time, I'm going to leave it to the Trolls/Downrampers/Mischief makers and the Smug, excluding the odd few posts from holders and genuine people with an ounce of compassion it's simply a waste of time as far as I'm concerned as no matter what the report says I will continue to hold, so enjoy your feeding frenzy.

See you back here when its all over. Stay safe.

[bull....]

Most mall rents have 3 components. 1. A fixed monthly lease. 2. A percentage of gross sales. 3. A smaller percentage of gross sales that goes towards a marketing fund for the mall to promote itself in the media. In a shutdown situation neither 2 or 3 are payable and HLG will be working with Mall owners for rent relief / deferral for the fixed monthly lease. I am sure the Mall owners will have to take a pragmatic "we're all in this together approach" There is no point bankrupting almost everyone as they will end up with a ghost mall nobody wants to come back too. I don't think its as dire as you are suggesting but it certainly is a very serious situation which calls for a pragmatic approach by all stakeholders and some fast action on cost cutting.

nice breakdown , I see premier investments in aus saying if landlords dont reduce rents they will just close the stores

https://nz.finance.yahoo.com/news/lew-landlords-more-stores-shut-223916205--spt.html

mall traffic well down

Shopping mall giant Vicinity slashes profit forecast amid coronavirus crisis
https://www.smh.com.au/business/companies/coronavirus-effect-shopping-mall-giant-vicinity-downgrades-earnings-forecast-20200219-p5427u.html

[Beagle]

Thanks for the links Bull...very interesting. (Coutts you'd better not click on them unless you want a really bad day).
I have noted KPG owner of many malls here very seriously under the pump lately. Unless malls take a pragmatic approach to rent relief they will shoot themselves in the foot and they will end up with a massive level of vacancies unlike anything experienced before.

[bull....]

briscoes just cancelled there dividend and no guidance given. hlg will be next in there update

[Beagle]

WHS will be next. Just announced a 10 cent divvy the other day. I can't see that being paid now. They'll do an "AIR"

[Flugenbear]

briscoes just cancelled there dividend and no guidance given. hlg will be next in there update
I agree, and if they don't it is completely irresponsible from the board.
A complete shutdown was inevitable, a little shocked it'll come in 48 hours. I thought 2.20 was expensive on Friday. I think 1.82 is expensive now.
This is going to be brutal for retailers.
Who knows how long we will be locked down for.
It could be many months based on some modeling.
Crazy times.

[James108]

If 1.82 is expensive where do you think fair value is? And what have you based that on?

[Snoopy]

I agree, and if they don't it is completely irresponsible from the board.
A complete shutdown was inevitable, a little shocked it'll come in 48 hours. I thought 2.20 was expensive on Friday. I think 1.82 is expensive now.
This is going to be brutal for retailers.
Who knows how long we will be locked down for.
It could be many months based on some modeling.
Crazy times.


If 1.82 is expensive where do you think fair value is? And what have you based that on?

Fear.

In a situation like this, it is possible to imagine a future scenario as gloomy as you like and in your own mind it is real. I would suggest 'zooming out' and looking at the bigger picture. First reflect on the facts.

1/ HLG is right at the top of the retail class on stock turn, profit margin and store design. They have no term debt, even if some of those lease terms look onerous right now.
2/ HLG is a gold star tenant that lifts the appearance of any shopping precinct they are in.
3/ HLG sells stuff that everybody needs: clothes

Now consider that if retailing as we know it were to end, who would be the last to turn out the lights. HLG would be near the top of my guesses.

Now consider if the mall owners lose HLG, which other brands would have gone before them? Probably everyone else except the coffee shop. Do you really think the future of shopping centres is as a ghost mall with a coffee shop?

The 'new normal' will be different to what it was. There will be compromises to be made, in rents, in stock turn and maybe even in fashion. And yes shareholders on the 'retail end' and the 'building rental end' will see some pain.

However do you expect Jacinda to spend her next election campaign walking through empty shopping streets dressed in rags, like a cave woman, and handing out shekels to the former retail workers turned squatting beggars so that they can boil up a dessert spoon full of rice for dinner? Get real!

The new reality will be a compromise, but it won't be as calamitous as some here think. Fred Flintstone will be elected prime minister before some of these doomsday predictions for HLG on this forum come true.

SNOOPY

[winner69]

They will do a strategic withdrawal from Oz I reckon

Going to be too hard and risky to make a buck over there

[Stranger_Danger]

However do you expect Jacinda to spend her next election campaign walking through empty shopping streets dressed in rags, like a cave woman, and handing out shekels to the former retail workers turned squatting beggars so that they can boil up a dessert spoon full of rice for dinner? Get real!

SNOOPY

She could buy some clothes online?

As for the shekels, I can't think of a person I've talked to in the last week that isn't currently implementing plans to get as much "free money" as they can from the Government, through any scheme possible, producing any explanation that is plausible.

The shekels part is happening now, but like the clothes buying, it is happening electronically.

[Flugenbear]

Good post Snoopy.
And I agree, they are a top player and logic says they will come out OK.
But the thing right now is the uncertainty.
No one knows.
Will this be 4 weeks, 4 months, 1 year?
I won't even try to answer James's post....I can't. I have no idea where fair value is.
All I know, for me, 1.82 is expensive.
Because of the unknown.
For others it might be a bargain.
They can fill their boots, and my sincere good wishes to them.

[Snoopy]

Good post Snoopy.
And I agree, they are a top player and logic says they will come out OK.
But the thing right now is the uncertainty.
No one knows.
Will this be 4 weeks, 4 months, 1 year?

Because of the unknown.


This is where you can make some educated guesses.

The share price of mall owners the Kiwi Income Property Group has fallen by about 50% over the last month. That equates to the market expecting a 50% fall in income. Some of that fall might relate to businesses that do fail. So for businesses that remain, lets say they negotiate a base price rent fall of 30% (base rent now 70% of what it was). And to encourage mall owners to do this, they might negotiate a greater percentage of turnover as compensation.

Now we look at the one off hit before the rent negotiation

If:

1/ the shopping ban closes stores for 4 weeks AND
2 / the average rental cost per square meter is known, AND
3/ the average size of store is known AND
4/ the number of stores to be closed down is known

THEN a one off figure for 'rent due without income' can be calculated.

You could repeat this exercise for four months, and then a year, to see what a longer 'extended shopping break' would look like. With those longer periods, I would factor in a reduction in rent per square metre too. Looked at this way, you can calculate three possible scenarios of a one off capital hit.

Next look at the debt servicing costs on that one off hit. Could a 'new order' HLG service that debt?

Now see what would happen to profitability in the 'new order' revenue picture , where revenue was only 80% of what it was before. How would the bottom line be affected?

You are right about the future being unknown. But that doesn't mean there is not sufficient information out there to make an educated guess as to what will happen. I suggest you get cracking....

SNOOPY

discl: Not an HLG shareholder. I will not be 'getting cracking' myself on this exercise, as I have a few shares which I do own that need some solid cracking first!

[Flugenbear]

Cheers Snoopy.
But I'm too busy trying to find toilet paper.
I just want a roll or 2.

[Snoopy]

Cheers Snoopy.
But I'm too busy trying to find toilet paper.
I just want a roll or 2.


Gee that was fast work Flugenbear. $2 it is then? Or did you mean 2c!

SNOOPY

[Flugenbear]

Gee that was fast work Flugenbear. $2 it is then? Or did you mean 2c!

SNOOPY
Yeah.....based on lack of toilet rolls and pasta, shutting down a country where it hasn't even put someone in ICU let alone killed them, I reckon fair value is about......
Can I answer tomorrow?
I'm going to pack n save and maybe I'll come home with a bog roll.
That could make all the difference.

[JeremyALD]

So if retail stores can't trade for a month how will it work? Do they get a full subsidy to cover the period, or will they make a big loss over that month? There's a clear lack of information.

[Beagle]

Fear.

In a situation like this, it is possible to imagine a future scenario as gloomy as you like and in your own mind it is real. I would suggest 'zooming out' and looking at the bigger picture. First reflect on the facts.

1/ HLG is right at the top of the retail class on stock turn, profit margin and store design. They have no term debt, even if some of those lease terms look onerous right now.
2/ HLG is a gold star tenant that lifts the appearance of any shopping precinct they are in.
3/ HLG sells stuff that everybody needs: clothes

Now consider that if retailing as we know it were to end, who would be the last to turn out the lights. HLG would be near the top of my guesses.

Now consider if the mall owners lose HLG, which other brands would have gone before them? Probably everyone else except the coffee shop. Do you really think the future of shopping centres is as a ghost mall with a coffee shop?

The 'new normal' will be different to what it was. There will be compromises to be made, in rents, in stock turn and maybe even in fashion. And yes shareholders on the 'retail end' and the 'building rental end' will see some pain.

However do you expect Jacinda to spend her next election campaign walking through empty shopping streets dressed in rags, like a cave woman, and handing out shekels to the former retail workers turned squatting beggars so that they can boil up a dessert spoon full of rice for dinner? Get real!

The new reality will be a compromise, but it won't be as calamitous as some here think. Fred Flintstone will be elected prime minister before some of these doomsday predictions for HLG on this forum come true.

SNOOPY

Good to see your Beagle nose working properly again Snoop dog. I reckon you are bang on the money. The way the mall owners shares are also being pummelled KPG about 50%, they will wear a lot of the pain from this. No way it sheets home all to the retailers otherwise they will have ghost malls with no tenants left !

I think Glassons will get through this in Australia too Winner. Sadly I think there could be even more pain ahead for the share price but it will find a floor eventually and in the long term HLG has the pedigree and the long term track record to bounce back well.

I can imagine the conversation with the property manager at KPG who own Lynmall, down the road from where I live. I'd love to be a fly on the wall when it goes down.
Look mate we've been here, both a Glassons and Hallensteins store for over 30 years and paid your rent on time every month right through the GFC and every other tough time we've encountered. We drive a lot of foot traffic to Lynmall. We live in unprecedented times. You need to cut us some slack here and work with us, we're all in this together. Do you really want to be the proud manager of a ghost mall ?

[Joshuatree]

Think id put JB Hi Fi, Supermarkets, Kmart, Farmers, Briscoes, Noel Leaming, Harvey Norman , other Womans clothing shops and anchor tenants up there ahead but get your point Snoops.
And hey we dont want everyone walking around naked ,do we? We need Hallys(at some price point).

[winner69]

I suppose that HLG can’t even do online selling if warehouse workers self isolating

[bull....]

Fear.

In a situation like this, it is possible to imagine a future scenario as gloomy as you like and in your own mind it is real. I would suggest 'zooming out' and looking at the bigger picture. First reflect on the facts.

1/ HLG is right at the top of the retail class on stock turn, profit margin and store design. They have no term debt, even if some of those lease terms look onerous right now.
2/ HLG is a gold star tenant that lifts the appearance of any shopping precinct they are in.
3/ HLG sells stuff that everybody needs: clothes

Now consider that if retailing as we know it were to end, who would be the last to turn out the lights. HLG would be near the top of my guesses.

Now consider if the mall owners lose HLG, which other brands would have gone before them? Probably everyone else except the coffee shop. Do you really think the future of shopping centres is as a ghost mall with a coffee shop?

The 'new normal' will be different to what it was. There will be compromises to be made, in rents, in stock turn and maybe even in fashion. And yes shareholders on the 'retail end' and the 'building rental end' will see some pain.

However do you expect Jacinda to spend her next election campaign walking through empty shopping streets dressed in rags, like a cave woman, and handing out shekels to the former retail workers turned squatting beggars so that they can boil up a dessert spoon full of rice for dinner? Get real!

The new reality will be a compromise, but it won't be as calamitous as some here think. Fred Flintstone will be elected prime minister before some of these doomsday predictions for HLG on this forum come true.

SNOOPY

Im afraid i dis - agree with some of your fine points and tend to agree with flugenbear more. Your trying to predict the unknown ( virus and lenght of time its here)
do you really believe they will solve this in 4 weeks.?
isnt hlg demographic the one to take the biggest job hit?
how high is cloths buying on your shopping list when your on the benefit?
are not malls in decline overseas as a means of people shopping , thats why mall owners are changing them to experiences so i doubt mall owners will care if a few shops close , there will be plenty to replace them in time. If supermarkets are any guide they are putting there prices up and gouging the consumer in a pandemic , can you believe it.

[ratkin]

Im afraid i dis - agree with some of your fine points and tend to agree with flugenbear more. Your trying to predict the unknown ( virus and lenght of time its here)
do you really believe they will solve this in 4 weeks.?
isnt hlg demographic the one to take the biggest job hit?
how high is cloths buying on your shopping list when your on the benefit?
are not malls in decline overseas as a means of people shopping , thats why mall owners are changing them to experiences so i doubt mall owners will care if a few shops close , there will be plenty to replace them in time. If supermarkets are any guide they are putting there prices up and gouging the consumer in a pandemic , can you believe it.

Will be charity shops full of clothes when this thing finishes. I buy most my clothes from charity shops, and they very popular, will be more so when this is over.

[Pipi]

Will be charity shops full of clothes when this thing finishes. I buy most my clothes from charity shops, and they very popular, will be more so when this is over.

Why will there be more?

[stoploss]

Why will there be more?

It's prtetty grim , but when people die , in a lot of cases they call the sallies etc to come and take it all away .... ( sadly speaking from experience )

[Snoopy]

I'm afraid i dis - agree with some of your fine points and tend to agree with flugenbear more. Your trying to predict the unknown (virus and length of time its here)
do you really believe they will solve this in 4 weeks.?


You misread my post bull. I am not suggesting that this whole mess will be done in four weeks. I am thinking in terms of scenarios.

I am suggesting that four weeks is the absolute minimum disruption time, just one scenario. You then have to look at a more pessimistic (but realistic?) scenario of 4 months. Then look at what might happen if one year is the true lock down scenario. Then run each scenario as a separate analysis.

Finally assign a probability for each option you choose, and you will come out with a probability related result. This isn't an estimate of what will happen. In fact the answer you get will almost certainly not reflect what actually happens. But it does give you a result that is the best estimate you can get of the financial return you might expect.



Isnt hlg demographic the one to take the biggest job hit?
how high is cloths buying on your shopping list when your on the benefit?


If the garment you buy has a shelf life of twelve wears, then I do expect those customers to come back. They would have no choice. How many washes do those pre-ripped jeans last for anyway?



Are not malls in decline overseas as a means of people shopping, thats why mall owners are changing them to experiences so i doubt mall owners will care if a few shops close, there will be plenty to replace them in time.


You are talking about a long term trend here bull. This is a different issue to a pandemic event which has immediate effect. The future you paint here may turn out to be what happens. But short term, having people roll up for entertainment experiences to replace retail in the current climate isn't going to happen.

SNOOPY

[ratkin]

Why will there be more?

For the past few years they have been replacing retail stores on many main streets. When I visit Cornwall in the UK nearly every other shop is now a charity shop. The rents have got cheaper and they have moved in to replace more traditional retailers. Plus in any recession they will be busy, at the moment it is mainly he shabby sheek brigade that use them.

[bull....]

You misread my post bull. I am not suggesting that this whole mess will be done in four weeks. I am thinking in terms of scenarios.

I am suggesting that four weeks is the absolute minimum disruption time, just one scenario. You then have to look at a more pessimistic (but realistic?) scenario of 4 months. Then look at what might happen if one year is the true lock down scenario. Then run each scenario as a separate analysis.

Finally assign a probability for each option you choose, and you will come out with a probability related result. This isn't an estimate of what will happen. In fact the answer you get will almost certainly not reflect what actually happens. But it does give you a result that is the best estimate you can get of the financial return you might expect.



You are talking about a long term trend here bull. This is a different issue to a pandemic event which has immediate effect. The future you paint here may turn out to be what happens. But short term, having people roll up for entertainment experiences to replace retail in the current climate isn't going to happen.

SNOOPY

fair point snoopy and totally like the way you think. analysis takes in all senarios.

It would be good to hear what your thoughts are about the demographics and there impact on hlg. mine are that they will lose jobs mostly young casuals and part timers etc a large number of these maybe hlg shoppers

[bull....]

They will do a strategic withdrawal from Oz I reckon

Going to be too hard and risky to make a buck over there

maybe. micheal hill just announced

In the interests of the health and safety of our people and our customers, Michael Hill today announces that it will suspend operations of its Australian store network for an indefinite period with immediate effect.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MHJ/350480/319429.pdf

[mikeybycrikey]

They will do a strategic withdrawal from Oz I reckon

Going to be too hard and risky to make a buck over there

I don't think that is likely. But I'm sure lots of unlikely things are happening right now.

They have quite a few Glassons stores in Aus (32 Glassons, 4 Hallensteins) vs NZ which is 37 Glassons and 43 Hallensteins. The scale of their Aussie operation is bigger than you might realise.

[Bobdn]

Wow, HLG surging today.

[winner69]

Wow, HLG surging today.

Good day for the losers today ...hope there's not too much regret from the panic sellers of last few days

[Snoopy]

Good to see your Beagle nose working properly again Snoop dog. I reckon you are bang on the money. The way the mall owners shares are also being pummelled KPG about 50%, they will wear a lot of the pain from this. No way it sheets home all to the retailers otherwise they will have ghost malls with no tenants left !


From

"https://www.nzx.com/announcements/350510" A non-price sensitive announcement apparently (from Kiwi Property Group).

"In light of the four-week closure of non-essential business ordered by the Government yesterday, Kiwi Property has identified a small number of tenants, relative to the total number of tenants in its portfolio, with a contractual right to suspend rental payments if they are unable or chose not to occupy or utilise their premises because of the Government order."

I wonder if HLG is one of those tenants?

"If all of the tenants exercise this right for the entire four-week shutdown period, the Company expects it would result in a drop in gross rental income of around $6 million, representing less than 3% of the prior year’s gross rental income."

Hang on, this is just for four weeks. If we extend to four months (17 weeks) then the gross income loss extends to:

$6m x ( 17/4 ) = $25.5m (13% of the prior year’s gross rental income)

And if we extend out for the whole year, then the rental loss adds up to:

$6m x 52/4 = $78m (39% of the prior year’s gross rental income)

Now what percentage of Kiwi Property Group assets are in shopping mall assets again?

But none of that is material. Right? (It might be material for HLG though!)

SNOOPY

[trader_jackson]

HLG confirming they are going to have virtually no revenue for the next 4 weeks (nearly 10% of the year)
Yet going to have plenty of bills to pay still.
As I've said many times before, retail is risky and tough.. being around 100 years or so and having no debt will help, but it won't guarantee you survive.


https://www.nzx.com/announcements/348525

Not great... profit going backwards and future uncertain

They sounded the alarm (when reading between the lines) over 5 weeks ago... turned out to be very uncertain future indeed... and absolutely stunning that the share price rises on this kind of news.

[Pipi]

HLG confirming they are going to have virtually no revenue for the next 4 weeks (nearly 10% of the year)
Yet going to have plenty of bills to pay still.
As I've said many times before, retail is risky and tough.. being around 100 years or so and having no debt will help, but it won't guarantee you survive.

Yes but they are in the same boat as everyone else in the retail sector. Surely everyone won't go under. Many will survive and they are probably in a better place than anyone else.

[Joshuatree]

China is getting back up to speed so yes there will be supply line probs but maybe some revenue from online sales? Pipi to me its more about whether HLG is a good investment proposition atm. Disclose not a holder atpit.

[Beagle]

Online sales in N.Z. closed, only online sales in Australia for now, for as long as permitted https://www.nzx.com/announcements/350722

[winner69]

"....."..................

[waterboy]

[QUOTE=winner69;802507]Kathmandu sending online orders to nz from Australia

That would fit into non essential, couriers told not to deliver non essential goods, ports are saying they will run out of space for essential goods

[Cyclical]

Some lucky punters must be 50+% up on this one this week. Really do have to wonder why it's gone up so quickly and if it will actually hold.

[dreamcatcher]

Cats out of the bag Monday and probably won't be pretty.........

[JeremyALD]

The thing about fashion retailers is they are going to be left with a ridiculous amount of stock they have not sold. They would of ordered their autumn and winter season in advance (usually fashion plans at least 6 months ahead). They are going to have to sell down their stock significantly when this lifts. Even if there's huge demand, a month without trade is too much to catch up on.

Farmers will be hit even harder I imagine

[Lewylewylewy]

I bought some of these yesterday. A small amount to cover FOMO, with a plan to average down.

I now regret that.

I was thinking that they are still under priced considering the percentage damage to income from lockdown.

I did not consider longer term currency damage or upcoming recession.

Oh well, still under my long term goal to pay less than $3.20 for this cyclic stock.

[Joshuatree]

No divi

HGH Ltd Results for the 6 months ended 1 February 2020 (https://www.nzx.com/announcements/350899)

[Beagle]

HLG paid a divvy throughout the GFC. Directors obviously think this is worse.

Shareholders of all sorts of companies on the NZX are going to have to get used to the fact that the primary fiduciary duty of the directors is the long run survival of the company. They are duty bound to make this their #1 priority. "Out of an abundance of caution", (get used to that sort of thinking by directors) dividend cancellations are going to be really widespread on the NZX in 2020.

[mikeybycrikey]

HLG paid a divvy throughout the GFC. Directors obviously think this is worse.

Shareholders of all sorts of companies on the NZX are going to have to get used to the fact that the primary fiduciary duty of the directors is the long run survival of the company. They are duty bound to make this their #1 priority. "Out of an abundance of caution", (get used to that sort of thinking by directors) dividend cancellations are going to be really widespread on the NZX in 2020.

I would've thought that any company would be insane if they were paying dividends out now. Not necessarily because this is worse than the GFC, but because they have no idea when they can open again. How do you even compare a shock that played out over 2 years with one that has played out over 2 weeks?

Four weeks of the current lockdown is also the best case situation, and that's only NZ. In Australia, who knows what's going to happen over the next few weeks.

Paying out $12 million to shareholders right now would be reckless. And if they have got money to spare, they can always just pay it out later. I reckon that the only companies paying any sort of dividend are going to be the utilities.

[trader_jackson]

No divi

HGH Ltd Results for the 6 months ended 1 February 2020 (https://www.nzx.com/announcements/350899)

Was someone on here telling us it was all good because one is holding for the dividend (so share price doesn't matter) or something like that? And a bit of a worry NPAT was already going backwards (prior to things turning even worse - mainly, the NZD going down further against the USD and not being able to do business for at least 4 weeks, probably longer)... no worries, being in business over 100 years is certainly a nice story, and hopefully that story continues.

[JeremyALD]

A big concern for me is Glassons Australia is now 1/3 of the business and where a significant amount of growth has come from. I see Australian retail as high risk right now and I see them taking a big hit there over the next year with less government support than what they'll get in NZ

[James108]

As a shareholder I would have been quite concerned if they did pay a dividend. Not much news here, decent sales in first 7 weeks despite some people at that point probably avoiding malls.

[macduffy]

I would've thought that any company would be insane if they were paying dividends out now. Not necessarily because this is worse than the GFC, but because they have no idea when they can open again. How do you even compare a shock that played out over 2 years with one that has played out over 2 weeks?

Four weeks of the current lockdown is also the best case situation, and that's only NZ. In Australia, who knows what's going to happen over the next few weeks.

Paying out $12 million to shareholders right now would be reckless. And if they have got money to spare, they can always just pay it out later. I reckon that the only companies paying any sort of dividend are going to be the utilities.

Spot on, mikey! My thoughts, exactly!

:cool:

[kiwidollabill]

A big concern for me is Glassons Australia is now 1/3 of the business and where a significant amount of growth has come from. I see Australian retail as high risk right now and I see them taking a big hit there over the next year with less government support than what they'll get in NZ

Yep, though at the moment they can at least trade through online.

Companies I know in the industry are potentially forecasting a 75% decline in revenue....

[James108]

For this year or for lockdown period?

[kiwidollabill]

For this year or for lockdown period?

For the year.

Best case -25%, worse case -75%

Comparable in size/scale to HLG but different sector of the market.

[Leftfield]

Was someone on here telling us it was all good because one is holding for the dividend (so share price doesn't matter) or something like that? And a bit of a worry NPAT was already going backwards (prior to things turning even worse - mainly, the NZD going down further against the USD and not being able to do business for at least 4 weeks, probably longer)... no worries, being in business over 100 years is certainly a nice story, and hopefully that story continues.

More bad news to come I suspect. GLH.

[James108]

For the year.

Best case -25%, worse case -75%

Comparable in size/scale to HLG but different sector of the market.

Interesting, I had this pencilled as -30% for the year as base case.

[winner69]

I still contend strategic withdrawal from Aussie is very likely

[Beagle]

I still contend strategic withdrawal from Aussie is very likely

Okay, I'll take the bait. I am curious mate. Why do you think that's likely ?
Glassons have been growing really strongly over there and profitability has been very good there too, up until now of course.

[boysy]

Mall owners don’t operate on standard ADLS leases so no generic escape/access clause as per other commercial property operators. No doubt the malls will offer concessions but you would imagine it’s still a huge hit to HLG bottom line, what’s the monthly staff/lease liabilities at the moment ?

[James108]

I agree with beagle, I don’t see why they would kill the golden goose because it isn’t expected to lay an egg for a few months.

Thanks for that info boysy have just googled that.

[macduffy]

I would think that Hallensteins and Glassons would be regarded as anchor tenants in a lot of malls and that owners would be keen to keep them. If concessions are necessary I'd expect to see some mutually beneficial solutions.

[trader_jackson]

I would think that Hallensteins and Glassons would be regarded as anchor tenants in a lot of malls and that owners would be keen to keep them. If concessions are necessary I'd expect to see some mutually beneficial solutions.

Sorry, but I would have to completely disagree... I would be very surprised if Hallensteins and Glassons were considered anchor tenants in any mall/complex, so they would not be able to throw their weight around like a typical Farmers or The Warehouse of JB Hifi would... however there is likely to be 'somewhat' of a solution to help... whether it is mutually beneficial (aka both sides benefit the same) I am not too sure on either... I would think Hallensteins and Glassons would be very lucky if it was mutually beneficial.

[boysy]

Dito I would not call HGL an anchor tenant at all they are no supermarket or farmers or Kmart their floor area is modest in most malls compared to other retailers afterall. This could be different throughout the country but not the case in any Auckland malls .....

[winner69]

They got a few million in the bank but that won’t last long

Be a new experience for them talking to banks for a loan to tide them over

[trader_jackson]

They got a few million in the bank but that won’t last long

Be a new experience for them talking to banks for a loan to tide them over

At least they didn't pay it out in dividends...
Banks might not like them too much, not because its personal, but because its retail... Smith City has that feel good, been around 100 years+ feel and yet don't seem to be getting alot of love from their bank.

No worries, this time (or company) is different.

[macduffy]

Dito I would not call HGL an anchor tenant at all they are no supermarket or farmers or Kmart their floor area is modest in most malls compared to other retailers afterall. This could be different throughout the country but not the case in any Auckland malls .....

Okay, I'll substitute "valuable" for "anchor" which I realise is the term for the big supermarket/department store that takes up the big floorspace.

:mellow:

[Arbroath]

I'd say they are a valuable tenant in many malls in NZ as they have both a Hallensteins and a Glassons and would be paying quite a bit more per square metre than an anchor tenant like Farmers etc. So if I was a Kiwi Property exec for instance I'd want to retain a company with their track record because if they are going bust /leaving just have a think how many other vacancies they'd have in their malls, mainly because HLG operate a far more conservative business model. They will get some reductions/incentives to stay for sure...

[kiwidollabill]

A macro trend that I think that comes out of this is that it'll be what starts to kill brick and mortar retail (if that hasnt started already).

Those that'll be able to own the digital space as the main part of the customer experience will win in market share.

Gut feeling is that HLG will manage the transition quite well, IMHO Farmers, Myer etc will go the way of the dinosaur....

[macduffy]

Thanks, Arbroath. That's what I meant and you have said it so much better!

:)

[Cyclical]

It blows my mind that this one is still trading at more than 50% above last week's low. Surely this stock is going to be hugely impacted by the unfolding events. People still in denial?

[James108]

It blows my mind that this one is still trading at more than 50% above last week's low. Surely this stock is going to be hugely impacted by the unfolding events. People still in denial?

The stock price has also been hugely impacted, moreso than most. Where do You see fair value?

[Cyclical]

The stock price has also been hugely impacted, moreso than most. Where do You see fair value?

Somewhere closer to $2, but edging lower by the day. Let's face it, they have virtually zero income, but the outgoings are still there. The longer this event drags on for, the less relevant their seasonal stock becomes. The weaker dollar will do them no favours (but there may be a glut in the market for suppliers to offset this). A good portion of their target market is about to find themselves out of work. A large portion of their shareholders will be used to the nice regular dividends, which will disappear for a while. Will the minimum wage increase affect them? The only light at the end of the tunnel is that they are probably better placed to weather the storm than much of the competition (some of which will disappear) and maybe they can negotiate lower leasing costs. 2 years of pain?

[James108]

Somewhere closer to $2, but edging lower by the day. Let's face it, they have virtually zero income, but the outgoings are still there. The longer this event drags on for, the less relevant their seasonal stock becomes. The weaker dollar will do them no favours (but there may be a glut in the market for suppliers to offset this). A good portion of their target market is about to find themselves out of work. A large portion of their shareholders will be used to the nice regular dividends, which will disappear for a while. Will the minimum wage increase affect them? The only light at the end of the tunnel is that they are probably better placed to weather the storm than much of the competition (some of which will disappear) and maybe they can negotiate lower leasing costs. 2 years of pain?

So to arrive at a fair value of close to $2/share what kind of losses are you forecasting? I checked my model and to arrive at a valuation close to $2/share earnings would look something like a $30m loss this year, break even next year and long term average EPS of 28c/share (down from long term average 35c/share and recent earnings of 40+c/share).

Personally that seems slightly pessimistic to me. Maybe useful as part of a downside risk valuation.

[Cyclical]

So to arrive at a fair value of close to $2/share what kind of losses are you forecasting? I checked my model and to arrive at a valuation close to $2/share earnings would look something like a $30m loss this year, break even next year and long term average EPS of 28c/share (down from long term average 35c/share and recent earnings of 40+c/share).

Personally that seems slightly pessimistic to me. Maybe useful as part of a downside risk valuation.

Running up some rough figures using your prediction of a 30% drop in sales, I think you are expecting more or less break even this year, is that about right? If so, you could well be right and things may not be as grim as I'm suggesting. Some might argue a 30% sales reduction is conservative, although the fact 2 thirds of the year is already gone might be a saving grace. But with a world of unknowns about how all this is going to pan out, a pessimistic bear market might dictate $2/share is not that unrealistic.

[DarkHorse]

Maybe a silly question, but I wonder if there's any data on clothes shopping behaviour patterns? For me it's a bit like going to the dentist or getting car serviced - a chore to do once or twice a year. I wonder how many are on this end of the spectrum (pun intended) versus frequent impulse buyers and those in between? And how much sales vary from month to month. ie how much pent up demand that will result in higher sales on reopening?

[macduffy]

I'd treat any such data with extreme caution. There's too many unknowns here - when do "normal" patterns resume?- how much money is left in customers' pockets? - what retailers are left standing?
And so on.

[James108]

A $30m loss I.e bottom line. I agree, I wouldn’t be surprised to see $2/share again but that doesn’t mean $2/share is fair value.

[dreamcatcher]

GS reckons discretionary spending such as clothing and footwear may fall 50% as a result of the containment measures with restaurants and hotels even higher. On the PLUS side food, alcohol, tobacco and communication. ..........Numbers slightly less for Australia.

Glad I retired from the clothing game many moons ago.

[Beagle]

KMD having to do a major cash issue at 50 cents is a very sobering reality check for investors in all retail.
The fact that the legendary guru of retail Rod Duke refused to participate, (despite the bargain basement price), should serve as a warning that he thinks the road ahead is extremely difficult and probably may never have been this challenging since the great depression of the 1930's.

For what its worth, in recent days my intentions have changed and I am not intending to buy back in to HLG until they can prove their business model is viable again.
The bear will determine the bottom price and I don't think we've seen that yet.

[kiora]

Can no one see there will be pent up demand returning after lock down?
Deferred spending rather than put off altogether

[Toasty]

Can no one see there will be pent up demand returning after lock down?
Deferred spending rather than put off altogether

I would be inclined to believe that there will be an explosion of consumerism once humans are let loose on the world again but it is also possible that people who are still able to earn a living or receive income during this event will be amazed at the amount of money left in their pockets now that casual spending has been made more difficult. I can't help but wonder if maybe we become a bit more thoughtful about where our money goes. Probably just transferring my own thoughts to the masses but it feels like a lot of things will be different at the end of this, at least for a while....

[flyer]

Yes, but people will have less money to spend (those that are still working) and all those that will be new to unemployment, a lot less.

[Sideshow Bob]

Yes, but people will have less money to spend (those that are still working) and all those that will be new to unemployment, a lot less.

Will be interesting to see if they benefit on punters "trade down" to HGL - shopping there rather than a more expensive brand/store.

[dreamcatcher]

imo ........thing that could HELP the most for HLG is if their competition closes down as every 4th shop in malls are clothing. But not until those stores clear all stock @ bargain basement prices which all stores will be attempting to do.

I don't believe people will rush out to buy clothes once Covid-19 lockdown is finished probably the last item on my thoughts.

[clip]

imo ........thing that could HELP the most for HLG is if their comopetition closes down as every 4th shop in malls are clothing. But not until those stores clear all stock @ bargain basement prices which all stores will be attempting to do.

I don't believe people will rush out to buy clothes once Covid-19 lockdown is finished probably the last item on my thoughts.

I need some new tshirts, if they are 50% off or more I would buy them. I wouldn't buy them from HLG, I'd buy AS Colour or from culture kings, but surely a regular customer would go shopping again if I would, provided the discount for pent up stock was there.

[Snoopy]

KMD having to do a major cash issue at 50 cents is a very sobering reality check for investors in all retail.
The fact that the legendary guru of retail Rod Duke refused to participate, (despite the bargain basement price), should serve as a warning that he thinks the road ahead is extremely difficult and probably may never have been this challenging since the great depression of the 1930's.

For what its worth, in recent days my intentions have changed and I am not intending to buy back in to HLG until they can prove their business model is viable again.
The bear will determine the bottom price and I don't think we've seen that yet.


I think you are misreading Rod's motivation here Beagle. Rod may have modest debt in his own BGR business. But he does have lease obligations to sort out. And he is probably considering the elasticity in demand for some of his stock lines too. Those non-essential lines might end up as dead stock.

IMO the outlook for clothing retailers is much more straightforward, and in the medium term all the stock will be in the essential category. IMO, the fact that Rod is not supporting a cash issue in KMD is because he is busy putting his own house in order first. It is not a commentary on the medium term strength of the rag trade.

SNOOPY

[kiora]

I think you are misreading Rod's motivation here Beagle. Rod may have modest debt in his own BGR business. But he does have lease obligations to sort out. And he is probably considering the elasticity in demand for some of his stock lines too. Those non-essential lines might end up as dead stock.

IMO the outlook for clothing retailers is much more straightforward, and in the medium term all the stock will be in the essential category. IMO, the fact that Rod is not supporting a cash issue in KMD is because he is busy putting his own house in order first. It is not a commentary on the medium term strength of the rag trade.

SNOOPY

Wise words Snoops
" he is busy putting his own house in order first"
Just as we all should be

[Brain]

Wise words Snoops
" he is busy putting his own house in order first"
Just as we all should be

Yes and that is the problem for retail. It is entirely possible that a significant number of people will be more concerned about reducing their debt and will be less likely to spend their money at the malls. In the long term when the threat has gone and the concern of the virus re-emerging is gone than it will be back to the shops because that is what people do. The devastation of the tourism industry will have a significant effect on retail turnover.

[Filthy]

apparently there should be a GOV announcement out soon (within 48 hours) around rent relief
I assume this will address ADLS clause 27.5 and hopefully clarify what a 'fair portion' is and it might even maybe extend something to older leases which don't carry 27.5 which might help HLG

[winner69]

Covid19 no respect for longevity -

ual leave.

Founded in Adelaide in 1932 R.M.Williams has survived its fair share of crises; it has been through the worst of World War II and has continued to operate ever since. "Now, 88 years later, the Covid-19 crisis has stopped us in our tracks," says R.M.Williams.

Went to that factory once ....awesome place

[dreamcatcher]

Covid-19 empties shopping centres..............

https://www.abc.net.au/news/2020-04-01/coronavirus-queensland-brisbane-empty-cbd-shopping-centres/12098356?section=business

Expecting massive sales when stores finally open trying to entice people to spend with everybody chasing the same dollar..

Currently not on my shopping list as game has become a lot harder now.

[Flugenbear]

Covid-19 empties shopping centres..............

https://www.abc.net.au/news/2020-04-01/coronavirus-queensland-brisbane-empty-cbd-shopping-centres/12098356?section=business

Expecting massive sales when stores finally open trying to entice people to spend with everybody chasing the same dollar..

Currently not on my shopping list as game has become a lot harder now.

Agree dreamcatcher. The next 2 or 3 years could be hell for retailers. I hope HLG survive. Pretty sure they will though might need more capital.

[Balance]

Agree dreamcatcher. The next 2 or 3 years could be hell for retailers. I hope HLG survive. Pretty sure they will though might need more capital.

Would not waste one minute sleep to worry about HLG's survival - along with BGR, two of the strongest consistently performing retailers with very strong balance sheets.

[Beagle]

I think you are misreading Rod's motivation here Beagle. Rod may have modest debt in his own BGR business. But he does have lease obligations to sort out. And he is probably considering the elasticity in demand for some of his stock lines too. Those non-essential lines might end up as dead stock.

IMO the outlook for clothing retailers is much more straightforward, and in the medium term all the stock will be in the essential category. IMO, the fact that Rod is not supporting a cash issue in KMD is because he is busy putting his own house in order first. It is not a commentary on the medium term strength of the rag trade.

SNOOPY
https://www.hallensteins.com/
https://www.glassons.com/

Good call Snoop Dog

[Flugenbear]

Would not waste one minute sleep to worry about HLG's survival - along with BGR, two of the strongest consistently performing retailers with very strong balance sheets.
Agree Balance, they are two of the best no question.
But no retailer enjoys a recession, and this one has the potential to be the worst for 90 years.
My guess is the board will be losing sleep in the coming months.
Hopefully not too much, perhaps just a sleeping pill will fix it.
But I don't think so.

[Snoopy]

https://www.hallensteins.com/
https://www.glassons.com/

Good call Snoop Dog

HLG back up and running - in a website way at least! Couta on the way back! It is interesting to see what is deemed essential at Hallensteins. Our volunteer firemen can buy a new pair of pants (Park Pursuit Jogger Jeans $69.99) but they can't buy a Kitt Ronney Belt ($29.95) to hold them up!

I guess our fireman can live without a 'Game Pad Hand Trainer' and a 'Fake News Game - Kayne Edition'. A bit off that they can't enjoy a 'Wireless Shower Speaker' at the hose down at the end of the day though. Those last three have all been marked down to 5 bucks. Will they still be that price when Level 4 is lifted?

SNOOPY

P.S. I was right about HLG being back. But even I didn't expect it to be this quickly!

[bull....]

Agree dreamcatcher. The next 2 or 3 years could be hell for retailers. I hope HLG survive. Pretty sure they will though might need more capital.

agree with you again. no dividends this year they will really need all there cash they can get there ands on might even need to raise bank debt. situation more serious with each % decline in sales vrs there fixed cost base.

[percy]

No help from a Landlord.

“In the meantime, we wish to remind our tenants that their obligation to pay rent and other usual charges continues throughout this period unless the lease expressly states otherwise.
“Yours sincerely Kiwi Property Group Limited.”

[Cyclical]

No help from a Landlord.

“In the meantime, we wish to remind our tenants that their obligation to pay rent and other usual charges continues throughout this period unless the lease expressly states otherwise.
“Yours sincerely Kiwi Property Group Limited.”

Of course KPG will need to be seen to be saying the right things in order to extract as much as possible from a bad situation, but behind the scenes there is little doubt there will be some confidential negotiations going on...

[Balance]

Of course KPG will need to be seen to be saying the right things in order to extract as much as possible from a bad situation, but behind the scenes there is little doubt there will be some confidential negotiations going on...

Yup.

I personally know a few mall tenants who have collectively withdrawn their rental payments - what are the KPGs of NZ going to do? Terminate their leases and sue them? Not going to happen - especially post lockdown, good tenants are going to be hard to find to replace the broke tenants.

[percy]

Yup.

I personally know a few mall tenants who have collectively withdrawn their rental payments - what are the KPGs of NZ going to do? Terminate their leases and sue them? Not going to happen - especially post lockdown, good tenants are going to be hard to find to replace the broke tenants.

Hopefully they are not "collectively" locked out of their stores.
Wish I had some faith in landlords doing the right thing.

[Snoopy]

Hopefully they are not "collectively" locked out of their stores.
Wish I had some faith in landlords doing the right thing.

A review of the rent situation by Jane Holland, Partner, Bell Gully

https://www.propertynz.co.nz/news/rent-payments-during-lockdown

The conclusion:

"In my view that clause ((Clause 27.5 and 27.6 of Auckland District Law Society Sixth Edition), introduced in 2012 in response to the Christchurch earthquakes) will operate to suspend rent and outgoings (for businesses providing non-essential services) during the Alert Level 4 lockdown. Where a tenant is providing an essential service, but doing so from only part of the premises, the position is less clear at this early stage."

That means no rent from HLG due to property owners until we drop back to level 3.

SNOOPY

[percy]

Depends on their lease.

During this current lockdown period some leases will require the tenant to keep paying the rent even though the premises are closed. Other leases may allow for rent to be suspended for businesses that provide non–essential services. However, there are a variety of different lease clauses in the market so it is obviously important to check the exact wording of the lease.

Going from Kiwi Income Properties letter I previosly posted, very few of their leases will have an out clause.
I expect other Mall owners to have similar leases.

[dreamcatcher]

Do companies imagine Landlords have no bills.

You sign a lease honour it as no doubt companies will........

[macduffy]

I think Balance is on the right track here. Practicalities will trump legalities in many cases, I reckon.

(Apologies for using the T word!)

[BlackPeter]

Depends on their lease.

During this current lockdown period some leases will require the tenant to keep paying the rent even though the premises are closed. Other leases may allow for rent to be suspended for businesses that provide non–essential services. However, there are a variety of different lease clauses in the market so it is obviously important to check the exact wording of the lease.

Going from Kiwi Income Properties letter I previosly posted, very few of their leases will have an out clause.
I expect other Mall owners to have similar leases.

... and they would say that, wouldn't they?

But I think it doesn't really matter whether they can enforce ongoing rent payments or not. The option for landlords is to either bankrupt most of their tenants (which would be bad for landlords, because it means they lose their respective income streams forever unless you see plenty of companies queuing up for expensive mall space) or to temporarily forfeit some of their rents but keep the income stream long term.

The real question is - do we expect in a year from now most malls be empty, closed and in disrepair? If yes, than this is due to landlords demanding their rent now.

Being an optimist I hope for a pragmatic solution with business, landlords, government, insurance companies (business continuity insurance) and banks each coming to the table, which would be good for HLG as well.

Obviously - they all will carry some part of the burden, which means nothing good for tax payers and (in the short term) for shareholders of any of these.

[Beagle]

Assuming their is no out-clause from a pragmatic point of view I think good tenants will find landlords are prepared to "do a deal". This might be part rent forgiveness and part rent deferral. At the end of the day this lockdown is hopefully only going to be a short term issue and if a landlord makes a tenant bankrupt there's every chance they're going to experience a longer period without rental income than if they work with their existing tenant.

[percy]

Changes happening in ChCh.
Spotlight has left The Colombo.
KMart has left The Palms and there is talk Countdown will also leave.
New World has left City South.
Pak'n Save will move from Northlands to Foodstuffs Main North Road site.
Smiths City left Bush Inn.

[percy]

Assuming their is no out-clause from a pragmatic point of view I think good tenants will find landlords are prepared to "do a deal". This might be part rent forgiveness and part rent deferral. At the end of the day this lockdown is hopefully only going to be a short term issue and if a landlord makes a tenant bankrupt there's every chance they're going to experience a longer period without rental income than if they work with their existing tenant.

We all hope you are right,however, those who had dealt with Mall landlords will have their doubts.

[Beagle]

We all hope you are right,however, those who had dealt with Mall landlords will have their doubts.

Yeah I hear what you're saying, they are as tough as old boots. That said HLG have demonstrated a history of being quite nimble with the closure of unprofitable stores previously so one can only be left to speculate on the exact terms of their leases. I think they're big enough to take an assertive approach with landlords.

[dreamcatcher]

@BlackPeter Question I ask is when is enough rent relief enough after 1 or 2 months half rent for a year? or should businesses solve their own problems first by removing excesses like huge cuts to directors fees and managements wages. Will the banks write off loans or just defer payments.

If I was THE landlord be rather upset after giving rent relief and watching directors fees and managements wages increase after Covid-19 for doing such a wonderful job getting through crisis.

[Balance]

We all hope you are right,however, those who had dealt with Mall landlords will have their doubts.

They are hard bastards to deal with - mainly because of the demise of strip shopping in favour of mall shopping. The malls could cling on a queue of prospective tenants wanting to lease space in the malls.

But that’s prior to the recession we are now experiencing and which is going to get worse before getting better.

Doubt there’s going to be the same queue of prospective tenants wanting in. More like many tenants looking to exit.

[percy]

I do not know which would be worse,being a retailer or a Mall owner.


ps.
I remember office staff of one Mall owner, used to buy their lunch from the bakery over the road, as they were cheaper than the cafes in their Mall.[who were paying their high rentals]

[Snoopy]

I do not know which would be worse,being a retailer or a Mall owner.


Exactly the point. As long as each side can see the problems the other faces, then the solution of working together through this becomes obvious. Neither side will win with COVID-19. But going back into your respective silo will ensure that both sides will lose much more.

And the banks in the background will need to co-operate too!

SNOOPY

[freddagg]

I have several commercial tenants (all solid ) and one deal I would be happy to do with all of them is trade 6-12 months rent in return for a 10 year lease extension.

[iceman]

Do companies imagine Landlords have no bills.

You sign a lease honour it as no doubt companies will........

I agree with yo dreamcatcher. There has been some good discussion on this thread about commercial leases. Both landlrods and tenants are i an awful postion imposed on them by Government action.

But you have a similar situation with residential rental property of which I have a little. The Government has been very bad in this regard and shown their inexperience in unduly raising tenants expectations ad painting landlords as enemies. The latest is making a law change saying landlords can't increase rents or terminate contracts but tenants can terminate. That's after going public saying they were giving "landlords" a mortgage holiday, which is no such thing at all. It simply means delaying payments while you clock up extra interest. Where is the fairness in this ? I think Labour has pushed their political agenda too far now and they will get a big backlash from mum dad residential "landlords" or investors. That is sad and what we need right now

[Snoopy]

Depends on their lease.

During this current lockdown period some leases will require the tenant to keep paying the rent even though the premises are closed. Other leases may allow for rent to be suspended for businesses that provide non–essential services. However, there are a variety of different lease clauses in the market so it is obviously important to check the exact wording of the lease.


Quite right percy. Another quote from the reference:

https://www.propertynz.co.nz/news/rent-payments-during-lockdown

"There is a similar clause in the Property Council NZ Office and Property Council NZ Retail leases but it limits the rent suspension to what the landlord can claim under its loss of rent insurance. In these circumstances that probably means the tenant gets no rent suspension at all." (under a COVID-19 closedown).

Ouch!

SNOOPY

[percy]

The big trouble I see is bullying.
Major anchor tenants,ie The Farmers,or Countdown will say to Landlords this is what we will pay.
Strong Landlords will say to weak tenants you must pay this.
The ongoing "fair" rent will not be adjusted quickly,or perhaps not at all.So although tenant/landlord may come to a temporary agreement,longer term retail will still be very difficult.[which means to me current rentals will not be sustainable].
Private landlords [mums and dads] I see a lot differently.Newly unemployed "should"/will receive a welfare rent payment to cover,or nearly cover their rent.A great number of mums and dads are in no position to offer rent holidays.[and should not be expected to].

[kiwico]

Depends on their lease.

I would imagine the ADLS standard lease will apply to small businesses in properties of small landlords. I would expect a company like KPG to have their own standard lease that all their tenants would be required to sign, with perhaps some alterations for anchor tenants. In my job I sometimes see leases signed by companies and for larger malls I've never seen any reference to the ADLS (assuming they have their name all over the agreement like they do on their residential purchase agreements).

Many mall tenants sign the lease they are given as they have no other option. Hopefully an outfit like HLG has more nous.

[winner69]

A big property guy(with some malls) once told me our real profit is in the leases we draw up ....inferring nearly everything is to their advantage.

[percy]

A big property guy(with some malls) once told me our real profit is in the leases we draw up ....inferring nearly everything is to their advantage.

Did he also tell you the tenant can be sued for going to the media complaining about his lease,or their landlords unfair actions.[yes written into leases].?

Next question.
I believe Tim Glasson is the landlord of HLG's ChCh City store.Will he waiver the rent for the lockout.?

[Snoopy]

Next question.
I believe Tim Glasson is the landlord of HLG's ChCh City store.Will he waiver the rent for the lockout.?


Now there is an interesting philosophical dilemma! If Tim waives the rent for his own building that would be a foot-shot. But if Tim doesn't waive the rent, on consideration of all the HLG shares he holds, that would also be a foot-shot. Perhaps the answer is that Tim should buy a pair of crutches ;-P?

SNOOPY

[winner69]

Mr Tim got just over $2m rental from the company - on independent commecial terms of course

I think the NZSA weren't too impressed with the disclosures when the Chch premises came up.

[dreamcatcher]

Think stores in malls with the largest square footage having the largest CLOUT anyway probably locked in for next 10yrs plus where termination fees would be expensive.

vacant space in malls a NO deal would be better then a BAD deal which has the potential to lower standards and price

[winner69]

Might sell plenty of these puffer jackets made out of recycled plastic bottles

They are an essential item

https://www.hallensteins.com/product/absent-100-recycled-puffer-jacket-9632611?c=Beige&sc_src=email_315664&sc_lid=19490153&sc_uid=rQibxOgmKB&sc_llid=76684&sc_customer=2315410&utm_source=Emarsys&utm_medium=Email&utm_campaign=Full+Price&utm_content=200408-NZ-RECYCLED_PUFFER

[winner69]

Stats NZ Electronic Card Spend for March month

Apparel sector sales down from $307m in Mar19 to $200m this March ...down 35%

HLG stores usually about 5% of total so that’s their sales down about $5m ..probably most in the last week?

[causecelebre]

Stats NZ Electronic Card Spend for March month

Apparel sector sales down from $307m in Mar19 to $200m this March ...down 35%

HLG stores usually about 5% of total so that’s their sales down about $5m ..probably most in the last week?

Do you know why they are up 12.9% with volume today?

[dreamcatcher]

Stats NZ Electronic Card Spend for March month

Apparel sector sales down from $307m in Mar19 to $200m this March ...down 35%

HLG stores usually about 5% of total so that’s their sales down about $5m ..probably most in the last week?

Wonder if the same applies to Aussie stores.....

[Balance]

Do you know why they are up 12.9% with volume today?

Market now pricing in a return to business in 2 weeks' time.

Many stocks which cater to the export sector or domestic demand are up.

[peat]

Do you know why they are up 12.9% with volume today?


puffer jackets
in beige or black

[peat]

Market now pricing in a return to business in 2 weeks' time.


And I thought valuations were based on long term cash flows.

[clip]

And I thought valuations were based on long term cash flows.

Not with all the stimulus being injected everywhere.. $3 trillion announced between US/Japan alone?

[dreamcatcher]

Valuations nay old school FOMO Pump-and-Dump works wonders ........

[macduffy]

Valuations nay old school FOMO Pump-and-Dump works wonders ........

Really? The old school PnD's that I remember had a very visible party at the pump. Who do you think's working this handle?

Personally, I think it's a case of the market waking up and realising that there's life after this virus for the best of the retailers!

[JeremyALD]

Jeepers I don't think with the risks to retail at the moment I would pay $3.70, but all the best to those going in!

[Balance]

Really? The old school PnD's that I remember had a very visible party at the pump. Who do you think's working this handle?

Personally, I think it's a case of the market waking up and realising that there's life after this virus for the best of the retailers!

Market dropped like a stone from $5.90 to a low of $1.82 - so HLG is but recovering some of the lost ground.

Great yield - just watch the yield chasers post the lockdown search around for the high yielders.

Not a holder but respect how well HLG has operated through good times and tough times over the decades.

[peat]

Not with all the stimulus being injected everywhere.. $3 trillion announced between US/Japan alone?

but the stimulus doesn't make much of its way to Main St fashion ? I guess it keeps the general bubble going which helps HLG.


IF and its a very big IF things retail normalise moderately quickly I'll be looking who reinstates some of their dividend because Beagle was right to point out how conservative investors rate continuity of dividend highly.
Even if some is paid in the correct period I will rate it highly. But to miss a divi!

[Bobdn]

wow, up 100 per cent off it's lows. Wish i had had the courage to buy. Did have a bid in for the low $2 range but withdrew it. C'est la vie.

At this rate, Couta, you'll have almost been made whole!

[BlackPeter]

Do you know why they are up 12.9% with volume today?

Oops - I think we talked cross purpose ... deleted.

[Balance]

Probably just the rush before Easter. People are always challenged when they have to plan for a second day without access to the supermarket. Remember - tomorrow is a full day without any option to panic buy toilet paper :scared:.

Haha - good one, BP.

[winner69]

HLG might get a speeding ticket with such big increases

Might respond saying words leaked about how many puffer jackets made out recycled bottles they’re selling.

[DarkHorse]

Because I've just sold!

[DarkHorse]

Do you know why they are up 12.9% with volume today? Because I'd just sold:ohmy:

[nztx]

Because I'd just sold:ohmy:

Thanks probably some of the ones I just picked up .. for the longer term ride back up..

[dreamcatcher]

Really? The old school PnD's that I remember had a very visible party at the pump. Who do you think's working this handle?

Personally, I think it's a case of the market waking up and realising that there's life after this virus for the best of the retailers!

"Valuations nay old school" ........was my sense-of-humour as recent increases for HLG have nothing to do with valuations as everything is currently guess work maybe a raving bargain or another KMD

[clip]

but the stimulus doesn't make much of its way to Main St fashion ? I guess it keeps the general bubble going which helps HLG.


IF and its a very big IF things retail normalise moderately quickly I'll be looking who reinstates some of their dividend because Beagle was right to point out how conservative investors rate continuity of dividend highly.
Even if some is paid in the correct period I will rate it highly. But to miss a divi!

Honestly I don't think market cares and is trying to eke out the bubble for another 2 months and will make money where money is to be made, buying where things are oversold. Disc this would be the first bear and black swan I've been through so I'm not talking from any experience, just what I think will happen

[Pricey]

Jeepers I don't think with the risks to retail at the moment I would pay $3.70, but all the best to those going in!

Completely agree. I wouldn't touch this sector at all. A quick list of all the retail companies that went bust in the UK in 2019, prior to any COVID related issues:

- Bonmarché
- Watt Brothers
- Khaadi Fashion
- Gerry Weber
- Forever 21
- Karen Millen and Coast
- Jack Wills
- Laura Ashley
- Arcadia retail empire
- Stefanel
- Select
- Debenhams
- Pretty Green
- LK Bennett
- TReds

Appreciate NZ is a different market, but ASOS and Boohoo will rise in the same fashion as Amazon and impact all home-grown retail companies.

[peat]

obvs HLG do something different to all those failures

Only two weeks ago or less they advised you that Group sales for the six months to 1 February 2020 were $160.27 million, an increase of 5.7% over the corresponding period last year ($151.66 million) with a Net profit after tax of $15.44 million,
that's nearly 25c per share earnings in six months. So why you comparing them with belly up businesses.

[nztx]

No real comparison really to those other ones, which turned belly up

Knowing the Rag Trade very well, I would say HLG are very respected & astute operators
Their financials reflect a solid very well run operation, with a sound balance sheet &
long history of sound earnings & dividend history

Aside from seasonal working capital requirements & perhaps the odd extraordinary event,
how many other Operators are there in Retail with little or no external debt ?

I would be more concerned with KMD even after their recent Cap Raise, as the market
seems to be suggesting in pricing even carrying through to BGP as a diluted stakeholder

[Beagle]

HLG will get through this okay but no way are they worth anywhere near the closing price on Thursday in my opinion. Overpriced by at least $1.

[Pricey]

Just saying, retail is tough. Customers are fickle. You are braver than me.

[nztx]

Just saying, retail is tough. Customers are fickle. You are braver than me.


For sure 'Retail is tough & Customers are fickle'

but HLG have a long proud track record of cracking the market both here in Aussie (even tougher)
in a backdrop of others in the game falling over

Who knows, with things awash in Govt injected Ca$h & in places nowhere to spend aside from Essentials, it wouldn't
surprise if some Retailers (HLG BGP & TWH etc) didn't have some bumper trading weeks when things reopen
to make up for weeks closed..

[dreamcatcher]

For sure 'Retail is tough & Customers are fickle'

but HLG have a long proud track record of cracking the market both here in Aussie (even tougher)
in a backdrop of others in the game falling over

Who knows, with things awash in Govt injected Ca$h & in places nowhere to spend aside from Essentials, it wouldn't
surprise if some Retailers (HLG BGP & TWH etc) didn't have some bumper trading weeks when things reopen
to make up for weeks closed..

Would HLG be one of the first stores on your shopping list once normality returns. Some estimates saying clothing has taken a 40% fall in AUS fairly steep decline.........

[nztx]

Would HLG be one of the first stores on your shopping list once normality returns. Some estimates saying clothing has taken a 40% fall in AUS fairly steep decline.........


HLG are near the top of my list to add further

I note Beagle's earlier very good comment that they may be overpriced, however their track record
with sound financials appears better than others. No Apr 20 Dividend is a small sacrifice to secure further
as the market seems to concur.

Winter 20 Indent/Season may be curry or affected to a degree, but beyond that with reopening they should rebound


I remember looking closely at HLG back 2-3 years ago at around $3 levels, but never moved at the time

I regard WHS HGH OCA MET MHJ ANZ & WBC as possible value/rebound stocks for the future
along with a further list of 'punts' which may deliver quite well

[clearasmud]

HLG are near the top of my list to add further

I note Beagle's earlier very good comment that they may be overpriced, however their track record
with sound financials appears better than others. No Apr 20 Dividend is a small sacrifice to secure further
as the market seems to concur.

Winter 20 Indent/Season may be curry or affected to a degree, but beyond that with reopening they should rebound


I remember looking closely at HLG back 2-3 years ago at around $3 levels, but never moved at the time

I regard WHS HGH OCA MET MHJ ANZ & WBC as possible value/rebound stocks for the future
along with a further list of 'punts' which may deliver quite well
MHJ only has a 32M dollar debt.
Say 200k per shop
Mmm not too bad I suppose but need to get back to work soonish...

[nztx]

MHJ only has a 32M dollar debt.
Say 200k per shop
Mmm not too bad I suppose but need to get back to work soonish...

probably in the wrong thread...
but IMO MHJ possibly oversold & punished
Deferred Mar 2020 dividend out to Sep 2020 is not as draconian as some other companies either
I know where MHJ were before Covid 19 and before that rise up to that point too

[bull....]

the bounce was highly predictable ( maybe not the size ) at 1.80 it was way oversold ( probably over bounced now but looked like someone was agressively pushing the price up ). I still stick to my view for each % decline in sales the need to raise cash becomes more important. the no dividend policy i would imagine stays in place all year to cover the lease obligations. staff culling will take place as well to some degree along with inventory sell down if possible to raise cash. But as a retailer you can only cut so much and the fixed costs will bite you. So my pick raise some bank debt or cash issue?

In the US cpi announced this week apparel prices dropped 2%

[allfromacell]

I'm seeing HLG adds everywhere online right now, this will be emphasised because I opened one up to take a look which always results in more but hopefully they're selling a bit online.

I've certainly got a lot more spare $$ in the bank account due to everything being shut so perhaps I will get some new clothes.

[Beagle]

Good reason to be very cautious with retail stocks, especially apparel with operations on both sides of the Tasman. https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12322624&&ref=recommended\

We also shouldn't overlook the possibility that when lockdown restrictions are lifted in N.Z. we could see a spike in numbers and them have to revert to lockdown again, and again. I have always maintained that most people want to try clothes on for fit and to feel the fabric before buying. Sure their online sales will go up, but its not going to be a panacea for all their wows by any stretch of the imagination. I maintain my view that the bounce on this has been substantially overdone.

Huge amount of water to go under the bridge before retail looks anything like what it did before Covid 19.

[James108]

Glassons target market don't necessary think that way Beagle. Young females I know are very happy to order stuff online then send it back if they don't like it, ASOS are hugely successful with this business model. I think men are more likely to want to buy clothes in a physical store though.

Agree that retail is in for tough times, I think fair value of HLG is around $3.50 at the moment based on a simple DCF model and that includes them making a loss this year. If they don't make a loss or profit recovers more quickly than I anticipated fair value would be much higher.

[lissica]

I'm seeing HLG adds everywhere online right now, this will be emphasised because I opened one up to take a look which always results in more but hopefully they're selling a bit online.

I've certainly got a lot more spare $$ in the bank account due to everything being shut so perhaps I will get some new clothes.

Probably because google knows you have been looking in this thread.

[kiora]

Probably because google knows you have been looking in this thread.

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[Beagle]

Glassons target market don't necessary think that way Beagle. Young females I know are very happy to order stuff online then send it back if they don't like it, ASOS are hugely successful with this business model. I think men are more likely to want to buy clothes in a physical store though.

Agree that retail is in for tough times, I think fair value of HLG is around $3.50 at the moment based on a simple DCF model and that includes them making a loss this year. If they don't make a loss or profit recovers more quickly than I anticipated fair value would be much higher.

I simply think at an absolute minimum Thursday's 65 cent bounce is based on nothing but hope that this lockdown is a one off event and then its done and dusted. I don't see it that way. I think patronage at malls will be affected for a very, very long time. Online is 15% of their business model if I remember correctly. Maybe this goes up to 20% but that's still ~ 80% of their business that's materially affected for quite some time and how much will they lose in FY20 and maybe FY21 as well ? Too many unknowns for my liking.

[Stranger_Danger]

I simply think at an absolute minimum Thursday's 65 cent bounce is based on nothing but hope that this lockdown is a one off event and then its done and dusted. I don't see it that way. I think patronage at malls will be affected for a very, very long time. Online is 15% of their business model if I remember correctly. Maybe this goes up to 20% but that's still ~ 80% of their business that's materially affected for quite some time and how much will they lose in FY20 and maybe FY21 as well ? Too many unknowns for my liking.

You touch on the key thing that a potential investor needs to "calculate" at present, and calculate isn't the right word, because man, are there a wide range of outcomes...

Let's look at this as four variables

W = Current sales of the business in a lockdown state eg web sales.
X = Current expenses of the business in a lockdown state, eg assume wage subsidies and rent negotiated as low as zero as possible.
Y = Sales of the business once the lockdown is over.
Z = Expenses of the business out of lockdown, eg no wage subsidy (perhaps after a transition period where it was still paid?), rent closer to normal or normal.

Everybody is investing knowing that W - X = nothing good, while the lockdown is on, and arguably, it is right to look past this period, especially if the balance sheet is decent.

But I think people are starting to assume that Y - Z = something close to normal, but is that actually a safe assumption?

Once the lockdown is over, it is far more likely that Z returns to something more like normal than Y returning to something more like normal, at least for a while.

Given that wages and rent are such huge costs for retailers, it is actually possible that W - X produces less of a loss than Y - Z does, at least for a possibly prolonged ramp up period.

Also remember one of the main killers of businesses is fast growth. We're taught to see the rewards of fast growth, but fast growth periods are exceptionally dangerous for a business as expenses tend to ramp before revenues, systems, processes, teamwork and morale are tested etc etc.

We have a virtually unprecedented situation here : Previously low growth businesses basically halt completely. Then we want (need?) them to go from zero to lots very quickly.

I don't think that is going to go as smoothly in many cases as people expect, and people who have run businesses (especially those with lots of people) can probably appreciate some of the reasons why.

[dreamcatcher]

Full employment will be the key to retail success................ but personally would not be going to malls or any crowded places for the next 3 months.

[Cyclical]

I simply think at an absolute minimum Thursday's 65 cent bounce is based on nothing but hope that this lockdown is a one off event and then its done and dusted. I don't see it that way. I think patronage at malls will be affected for a very, very long time. Online is 15% of their business model if I remember correctly. Maybe this goes up to 20% but that's still ~ 80% of their business that's materially affected for quite some time and how much will they lose in FY20 and maybe FY21 as well ? Too many unknowns for my liking.

Crazy to think that only 10 days ago James108 and I were having an exchange of views where I was suggesting HLG were too expensive then at $2.78. James had the last laugh there. Plenty of unknowns of course, but off the back of that discussion, I ran up some figures and concluded that, while difficult, they might just be lucky enough to squeak in with a flat result this FY, or at least keep losses pretty minimal. This is on the assumption that they have one dead quarter effectively between lock down and the end of their FY on 1/8. As for the next FY, who knows.

Too scared to make any price predictions on this one anymore, but in retrospect I wish I hadn't sold my holding 25/3 at $2.75!

[ratkin]

Full employment will be the key to retail success................ but personally would not be going to malls or any crowded places for the next 3 months.

people forget that just because we are leaving level Four, it does not mean we go back to normal. Level Three is fairly draconian too. No public gathering, libraries etc closed, Malls too? We have not actuslly had a level Three yet, and the current guideline for it could easily change, but we will not go straight back to normal

[Beagle]

You touch on the key thing that a potential investor needs to "calculate" at present, and calculate isn't the right word, because man, are there a wide range of outcomes...

Let's look at this as four variables

W = Current sales of the business in a lockdown state eg web sales.
X = Current expenses of the business in a lockdown state, eg assume wage subsidies and rent negotiated as low as zero as possible.
Y = Sales of the business once the lockdown is over.
Z = Expenses of the business out of lockdown, eg no wage subsidy (perhaps after a transition period where it was still paid?), rent closer to normal or normal.

Everybody is investing knowing that W - X = nothing good, while the lockdown is on, and arguably, it is right to look past this period, especially if the balance sheet is decent.

But I think people are starting to assume that Y - Z = something close to normal, but is that actually a safe assumption?

Once the lockdown is over, it is far more likely that Z returns to something more like normal than Y returning to something more like normal, at least for a while.

Given that wages and rent are such huge costs for retailers, it is actually possible that W - X produces less of a loss than Y - Z does, at least for a possibly prolonged ramp up period.

Also remember one of the main killers of businesses is fast growth. We're taught to see the rewards of fast growth, but fast growth periods are exceptionally dangerous for a business as expenses tend to ramp before revenues, systems, processes, teamwork and morale are tested etc etc.

We have a virtually unprecedented situation here : Previously low growth businesses basically halt completely. Then we want (need?) them to go from zero to lots very quickly.

I don't think that is going to go as smoothly in many cases as people expect, and people who have run businesses (especially those with lots of people) can probably appreciate some of the reasons why.

Excellent post. You have encapsulated and articulated my concerns far better than I did. Very well done !

How long is it before people en-masse feel really safe, (read confident), to go back to shopping malls again ? That's a bit like asking how long is a bit of string.

Confidence is a curious thing. Just a small element of doubt can be enough to put people off, (for example it took the airline industry 3 years to recover from the impact of 9/11). One could ponder how many people died in 9/11 compared to this virus, (so far) and then ponder how long it might be before people are completely comfortable to go back into shopping malls again ? Hmmm Y, (or technically more correctly the gross profit from Y at the current depressed exchange rate)-Z looks like quite a confronting worry then.

An excellent article by Mark Lister https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12324373

[DarkHorse]

I've been a big fan and holder of HLG for several years (one of my few NZX holdings) but the risk reward equation at the current price in the current environment just doesn't stack up. Far better opportunities elsewhere!

[dreamcatcher]

I've been a big fan and holder of HLG for several years (one of my few NZX holdings) but the risk reward equation at the current price in the current environment just doesn't stack up. Far better opportunities elsewhere!

You are correct, people seeing risk as greater then reward currently the new norm and rightly so......

https://www.tvnz.co.nz/one-news/new-zealand/fears-new-zealands-main-shopping-strips-may-not-survive-covid-19

[kiwico]

A fortnight ago Beagle asked:


How long is it before people en-masse feel really safe, (read confident), to go back to shopping malls again ? That's a bit like asking how long is a bit of string.

Given the close contact queues outside Burger Fuel and other such places on the first day of level 3 it seems to depend very much on which generation you are. In the media's photos it seems Gen Y are very happy to get close to one other, even just for a burger.

I'm Gen X and I had to ponder yesterday as to whether I broke my bubble to help an old guy lying under his 200kg BMW motorbike (it was at a roundabout; apparently a car arriving late into the roundabout caused him to rapidly decelerate and his very heavy bike had the better of him).

So as long as HLG, or at least Glassons, continues to appeal to Gen Y and younger we should be okay.

[Cyclical]

In the media's photos it seems Gen Y are very happy to get close to one other, even just for a burger.

Yeah, made the same observation myself seeing a pic of a Burger Fuel ruck. That right there is probably why we're on a hiding to nothing on the containment of this virus at level 3 or less. I got called out to a factory yesterday to fix something, first time having to work out of home in a month, and the relaxed attitude and containment measures there were a joke. Throw in schools opening up and what chance have we got? Oh well, fingers crossed it's "eliminated" aye. Can't really see the economy or the public having the appetite for revisiting level 4 again.

HLG will be sweet though, fully targeted at Gen Y :)

[bull....]

if gen y do go back in droves ( i doubt it as heaps them be losing jobs and apparel suffers during recession) those buying around $2 odd lol got bargain of the century

[traineeinvestor]

if gen y do go back in droves ( i doubt it as heaps them be losing jobs and apparel suffers during recession) those buying around $2 odd lol got bargain of the century

FWIW, I went past the Hallenstein and Glasson stores in Newmarket yesterday and again today and there a lot of packages being collected on both days. Obviously, I have no way of knowing how that compares to pre-lockdown sales levels and how much of it is "catch up" rather than recurring business but they looked reasonably busy to me.

Disclosure: not held