BGR - Briscoes Valuation

[Waltzing]

nice . why would you not have some.

Div has really gone skyward.

[winner69]

nice . why would you not have some.

Hopefully Rod will 'turn around' the sales decline that has occurred over the last 3 quarters ..... annualsales down 5% since April last

Look forward to his next sales update

[Waltzing]

margin was up winner(n) and sure people bought up while locked down pushing up sales higher than normal.

if they keep this DIV up they have out performed.

Dont see sales increasing at the same vol as in the big stay home.

If this is the new normal for them then its a BUY and HOLD again!!!

of course who did not have some already.

WHS was a sell but this was not.

Essentially its a whopping special DIV!

and a lot of people are STILL in the HUT!

its still WFH (work from home).

[Muse]

Hopefully Rod will 'turn around' the sales decline that has occurred over the last 3 quarters ..... annualsales down 5% since April last

Look forward to his next sales update

Methinks the market is assuming that that this year will be about the 73m .... and nowhere near the touted $85m

w69 what the bloody hell happened - I thought you said in January this was going to do 73m ? and today we get the actual result of $87.9m (my pick in january was $87m) ?
that is a rare blemish on your otherwise pristine strike rate
(sorry mate couldn't help myself

[percy]

Another incredible result driven by their outstanding performance of [ Estar driven ] online sales.21.47% of total sales.

Highlights for the full year ended 30 January 2022:
• Total sales $744.4 million, +6.08%
• Gross profit $340.6 million, +10.92%
• Gross profit margin 45.76% vs 43.76% last year
• Online sales growth, +21.01%
• Online sales as mix of total Group sales, 21.47%
• Net profit after tax (NPAT) $87.9 million, +20.10%
• Final Dividend 15.5 cps
• Total Dividend for the year 27.0 cps,+20.0% (excluding the special dividend paid in December 2020).

[Rawz]

Are BGP at peak margins? (i dont know).

One of the reasons I sold majority of MHJ holding was because margins were nearing long term peak. Must revert back to the mean at some stage

[Sideshow Bob]

Are BGP at peak margins? (i dont know).

One of the reasons I sold majority of MHJ holding was because margins were nearing long term peak. Must revert back to the mean at some stage

Probably more the question is whether margins are sustainable??

I don't know the answer to that either....

[Muse]

Are BGP at peak margins? (i dont know).

One of the reasons I sold majority of MHJ holding was because margins were nearing long term peak. Must revert back to the mean at some stage

probably near or at I'd say

BGR are still implementing their change in procurement, logistics and pricing programme which they have been conducting with KPMG so most of their margin enhancement has been from operational enhancements rather than macro factors (aside from currency). But I'd say the bulk of that is done or has been implemented.

Then we have the weaker dollar which will full through once hedges run off & are replaced. And we have input inflation.

Briscoes have changed their promotional strategy which has resulted in stronger pricing offsetting (or more than offsetting) input inflation. Given they sell mainly branded goods they should be able to keep pricing up with inflation.

Below the GP line inflation remains on their fixed labour costs. But it's the eroding discretionary wages and the impact on the consumer demand that worries me with briscoes. On other retailers I worry about that but also their margin performance which has been woeful compared to briscoes.

Probably a high watermark for briscoes for a few years. Most other retailers had their high watermark in FY21 ex MHJ.

[percy]

probably near or at I'd say

BGR are still implementing their change in procurement, logistics and pricing programme which they have been conducting with KPMG so most of their margin enhancement has been from operational enhancements rather than macro factors (aside from currency). But I'd say the bulk of that is done or has been implemented.

Then we have the weaker dollar which will full through once hedges run off & are replaced. And we have input inflation.

Briscoes have changed their promotional strategy which has resulted in stronger pricing offsetting (or more than offsetting) input inflation. Given they sell mainly branded goods they should be able to keep pricing up with inflation.

Below the GP line inflation remains on their fixed labour costs. But it's the eroding discretionary wages and the impact on the consumer demand that worries me with briscoes. On other retailers I worry about that but also their margin performance which has been woeful compared to briscoes.

Probably a high watermark for briscoes for a few years. Most other retailers had their high watermark in FY21 ex MHJ.

Think online..............They have that sorted.
Funny that while online sales are increasing so is their margin.
Correlation.?.....Must be ..

[Muse]

Think online..............They have that sorted.
Funny that while online sales are increasing so is their margin.
Correlation.?.....Must be ..

correlation? yes. causation? dunno.
but they do have their online sorted that's for sure. estar has been a magnificent platform for them.

it's interesting to think about the margin impact a growing mix of online sales

for the generic retailer they still largely retain the fixed costs associated with the store network. albeit if online cannibalises existing customers (rather than attracting incremental customers) they might be able to operate with a FTE or two less staff.

and if it is existing customers who know the product the customer acquisition costs (CAC - google ads, insta/FB ads, etc) will be very low.

the incremental costs are probably fulfillment and higher level of returns. Returns are terrible for retail - high touch to process, a surprising number of goods get damaged in the restocking, etc. Not so bad for hardgoods but horrific costs for apparel - a number of retail companies actually have very high discard rates for apparel which increases their COGS and kills GP.

for ecommerce growth through new customers the CAC cost is more significant. and CAC costs for retail are rising through the roof particularly in australia. all retailers are rushing online and all bidding up adword costs at the same time. paid search as a proportion of total search has risen steeply over the last 18 months. It's not possible to get industry aggregates but there are a few ASX listed bellweathers I follow where you can work them out. RBL has seen its CAC costs rise at a 20.5% CAGR the last 3 years, and TPW 22.4% last 2 years.

Data privacy laws in Australia are also changing with some big changes to yet to come which will make online advertising less effective and ultimately more expensive. This isn't so much an issue for briscoes but it's a huge issue for glassons in australia. One could say the correlation between HLG's online growth and eroding margins has more levels of causation - but it could also be due to them being sloppy on procurement and AIRFREIGHTING 30 buck garments around.