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.
Printable View
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.
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!
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
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/...ectid=12324373
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-...rvive-covid-19
A fortnight ago Beagle asked:
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.
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 :)
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
It is remotely possible that Gen Ys may not do so badly. When the rehiring starts in bits and pieces there might be a preference to take back the smart, hungry, tech savvy 30yo on $120k ahead of the irritable, tired 45yo on $200+k. Speculation of course but if so our clothing market (plus others) may have resilience.
I guess not all apparel is equal though. HLG is probably pitched towards the lower-to-mid end range of the market, so may benefit more than its industry peers who offer 'high end' fashion, that customers can no longer afford (i.e. luxury items), much the same way fast food chains tend to do okay in a recession. not saying there wouldn't be any impact on HLG, just that it might not be as bad as punters think.... the product mix and offering has to be right though. I remember months ago we talked about a pair of.... pink flamingo shorts(??)... yeah... nah....
disc. holding & happy
yep. likely to tread water for a bit. if sales can get something close to (or thereabouts) vs previous few years, that would be okay in my view. it was never the growth company some made it out to be, just a normal cyclical, with a reliable divi - prudently deferred not cancelled.
I sold out a while ago at a lower price than they are trading at now. Timing was bad but I still think I did the right thing. I Just cannot see that HLG will come out of this disaster anytime soon. Shopping malls are closed and sure they will reopen in the near future but unemployment will persist driven by the collapse of the tourism industry and all the restaurants and bars and hotels that rely on tourism. Many businesses HLG included are going to have a very rough ride for a long time.
HLG is one retailer which has not only survived but thrived with the test of time and numerous crises.
This one will be no different for a company with very conservative balance sheet (zero debts & $12.8m in cash as at 30 March 2020) and top class management.
If any clothing retailer is going to survive the recession, HLG not only will but its product range can be re-designed and price points adjusted to meet the market.
Dis. Not a holder but big supporter of NZ companies (Briscoe is another) which are well run and conservatively financed with no debts.
I agree balance this is a very well managed company but this crisis is one out of the bag. In February I thought the virus was just another flu. Some medical guys thought the same. I am trying to invest in companies with a tail wind and in these times an occasional puff will do. My view is that HLG is going to have to work very hard and be exceptionally smart to get through this. The cards are not stacked in its favour.
No matter what happens, people still need clothes. Right now I am in need of something as simple as a couple of pair of socks. I agree that many clothing stores will struggle, yet I see HLG as being able to make the most of it and come out ahead of their competition.