HLG - Hallenstein Glasson

**pg0220** · 13-02-2019, 04:33 PM

Originally Posted by percy

Three or four "huge" days compared with three or four "poor" days at Christmas/New Year makes all the difference.
Hot days people stay away from shops.Couple of good cool or wet days,and malls do well.
On a good day you can do a usual week's turnover.Any experienced retailer knows you can be well ahead,and then quickly fall well behind.
HLG are not so foolish to promise great outlooks.

I agree with you. Back then when they made the trading update in late 2018, the trading outlook definitely didn't look good with all the margin pressures and reduced consumer confidence and they just were honest with what they were seeing from their position at that time. That actually can be explained by the reduced sales growth rate which was 7% back then but only 3.1% at the end.

I am very interested in how the sales were made i.e. the growth in aus stores and online sales. Store traffic may have been much lower but there may have been a good increase in online sales where they benefited from investments in online platform.

In accounting principles, you should not overestimate your revenue/assets and underestimate costs/liabilities and the same should go for the management? (I am not sure if this prudence concept is still part of GAAP though!)

**percy** · 13-02-2019, 04:40 PM

Only guessing but I think online would still be enjoying great growth.[and very profitable].
From what I hear foot traffic at bricks and mortar retailers,including malls, was down on the previous year.
A book retailer told me he was running up 5% for December,and lost it all three or four days before Christmas and ended up down 5% for December.

**Beagle** · 13-02-2019, 04:44 PM

Whilst the new financial year started well, the outlook for the balance of this season and into the new calendar year remains unpredictable. Australia and New Zealand continue to be increasingly challenging retail markets. Consumers on both sides of the Tasman face ever-increasing pressures and challenges on their discretionary spend, and businesses in both countries are experiencing legislative change as well as challenging exchange rates and cost increase pressures".
HLG directors were extremely conservative with their outlook statement and KMD excessively optimistic.
Conservatism is much better than unwarranted optimism.

**macduffy** · 13-02-2019, 05:02 PM

HLG directors were extremely conservative with their outlook statement and KMD excessively optimistic.
Conservatism is much better than unwarranted optimism.

Yes, and I certainly like it that way! As others have pointed out, retailing is fickle at the best of times and this aint them!

**Beagle** · 13-02-2019, 05:05 PM

Originally Posted by winner69

Beagle me old mate ...the numbers are even better than what they said

Remember Storm

Back out Storms numbers from last year sales were up 5.6% and profit up $2.4m (on $16.0m forecast) or a huge 17%

HLG don’t worry about ‘normalising’ things ...that’s cool eh.

Struggling with your numbers me ol mate.
No problem with your sales growth numbers if we extract storm to show normalised sales growth, all good.
Last year they recorded a half year profit of $15.1m after taking a $1.7m charge against storm write-down, normalised profit $16.8m. Mid point of forecast is $15.95m this year so if we normalise profit by extracting storm loss I get a ~ 5% profit decline.
Where are you getting this profit growth of 17% from mate ?

**winner69** · 13-02-2019, 05:19 PM

Originally Posted by Beagle

Struggling with you numbers me ol mate.
No problem with your sales growth numbers if we extract storm to show normalised sales, all good.
Last year they recorded a half year profit of $15.1m after taking a $1.7m charge against storm write-down, normalised profit $16.8m
Where are you getting this profit growth of 17% from mate ?

Yep, I stuffed up the numbers - was down on the beach ha ha and sun got to me

Segment npat for Storm was a loss of $1.5m so npat last year without Storm was $16.6m (not $13.6m I assumed)

So npat at $16m profit has gone backwards ....on solid increase in sales ....must be a margin problem afterall.

No more doing sums on the beach eh

**Beagle** · 13-02-2019, 05:21 PM

http://nzx-prod-s7fsd7f98s.s3-websit...188/277004.pdf

You get some great photo's down there though mate

So just drilling down into this net profit first half last year was $15.14m. Normalize this for Storm loss of $1.45m after $1.7m provisioning gives normalised profit last year of $16.59m. Mid point of this year's forecast is $15.95m so 3.9% decline. Good solid result considering the quite considerable difference in exchange rates from the 2 periods and the lower business and consumer confidence this time round not to forget the summer of 2017/8 was an absolute cracker and weather in N.Z. in December 2018 this time round was quite patchy.

Conclusion - Management have done a good job in managing the business and its quite resilient to changing economic conditions and waning consumer confidence.

Good solid result. Having now had the time to drill down into this a bit I can see that earlier statements by HLG were not disingenuous, just "conservative" which is always a good thing, under promise and over deliver.