those exact same factors also applied to Glassons OZ & Hallensteins Menswear NZ & OZ - yet they managed significant profit growth - so they don’t explain the poor net income performance of Glassons NZ.
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Can't help have a bit of a wry chuckle about human nature...myself included. HLG delivers a record ever profit in the midst of a Covid crisis and we're all picking it apart wondering why they didn't do even better lol. Human nature is a curious thing.
I think if I was a senior executive or director at HLG and read the tone of the posts on here today I'd be feeling more than a bit despondent. We post a record ever profit in the most challenging times ever experienced in the many decades life of the company and all people want to do is criticize and say we should have done better.
I'll say it on behalf of all shareholders. A huge thank you to Stuart Duncan our new CEO, the Directors and the whole team at HLG. We really appreciate your incredibly hard work to produce such an outstanding result in these incredibly challenging times and really appreciate the 62 cents in dividends paid out during the year. Please stay safe and keep up your excellent work !
I too can see the irony in picking apart a good result but winner and LEK are onto something.
GP improved in 2H over 1H which suggests the owner has their eye on COGS, but something is awry with the selling expenses. I wonder if we are seeing a change in cost base with a larger % being sold online....maybe? High COVID-related freight inwards costs would be in COGS and should not impact selling costs. Selling costs could include increased costs for online platforms and online staff (in addition to normal fixed store costs) and higher transaction fees on online sales as various parties clip the ticket on what I imagine are relatively modest online average purchase values. I also imagine a large % of their workforce is customer facing in the stores (and classified as selling costs) - note there was a large increase in the wage bill, and it is likely the prior period included higher wage subsidies which will muddy the waters.
The image below has 2020 and 2021 broken into 1H and 2H with further columns looking at the changes expressed in $ and % and a final pair of columns that try to assign the change in 2H profitability over 1H based on volume and other. This assumes COGS are 100% variable and S&D costs are 50% variable.
What sticks out for me is:
- The fall in profitability in 2H versus 1H is fundamentally a top line issue (ie lower revenues) - this accounts for -$7.9m NPBT reduction versus 1H
- Using 1H COGS as the base for volume, there were COGS savings of $3m based on the change in top line revenues, and an extra unexplained fall in COGS of $5.7m (could be mix, FX, less discounts etc)
- BUT, these savings were offset by non-volume related increases in selling costs of $6.1m
You may need to click on the image to get a larger view:
Attachment 13018
And a view on their wages bill adjusted for Government subsidies to give the underlying picture. This says to me the selling expense issue is not related to underlying wages.
Attachment 13019
Good stuff Ferg.
Does say that wages actually paid to staff hasn’t increased that much
But highlights that last year governments paid $10m of those wages in F20 (reduced wage expense and in HLG case essentially offset lost margin because of lockdown which helped maintain F20 profits at F19 levels)
This year F21 subsidies much less so wage expense a lot more - up $11m to $59m which better reflects the actual wage base….but doesn’t look good in the P&L
Could say that lockdowns didn’t really affect F20 profits that much but this year F21 saw them reap the benefits of the huge pent up demand with sales up 22%
good stuff winner and ferg.
Id imagine those selling and distribution costs are not going to improve anytime soon. i will be following the cost of containers and port congestion issues/delays for early signs of an improvement but we do now have the other issue of the energy crunch developing in a number of countries which will have impacts on the business potentially going forward ie may further increase these costs and impact supplies.
the energy crunch if becomes serious will impact all retailers by the way
Jeez the soft side of Beagle - hope you are not losing your hard nosed attitude of expecting a company to maximise shareholder returns (ie maximising profits before anything else)
Yes it has been he most challenging times ever experienced in the many decades life of the company but as Briscoe and WHS in NZ and fellow rag trader in Australia Premier has shown covid and lock downs have been great for retailers - pent up demand and all that has seen unprecedented sales growth and expanded margins all leading to huge increases in profit (in some cases doubling them)
HLG did OK but not as well as others. This possibly has been a missed opportunity to reap even greater rewards
Their result deserves to be picked over by shareholders. I hope management has done the same
My report card - Solid result but could have done a lot better C+
Hallenstein Glasson, which warned lockdowns would dent its profit this year, said on Thursday it had received $2.1m in jobkeeper payments from the Australian government over the last year, but no payments from New Zealand.
https://www.stuff.co.nz/business/ind...m-wage-subsidy
wow they didnt take the nz subsidies , seen the light
Happened to me as well previously (with some other stock). When checking with the broker they said they have some "orderly market" responsibility - i.e. if your order is likely to pull market up or down they wait some time with placing it and see whether volumes increase before they place it.