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11-04-2020, 12:14 AM
#4231
Originally Posted by nztx
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...
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11-04-2020, 12:18 AM
#4232
Originally Posted by clearasmud
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
Last edited by nztx; 11-04-2020 at 12:21 AM.
Reason: add more
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11-04-2020, 08:44 AM
#4233
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%
Last edited by bull....; 11-04-2020 at 09:22 AM.
one step ahead of the herd
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11-04-2020, 12:23 PM
#4234
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.
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12-04-2020, 03:23 PM
#4235
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/...f=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.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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12-04-2020, 04:42 PM
#4236
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.
Last edited by James108; 12-04-2020 at 04:43 PM.
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12-04-2020, 05:37 PM
#4237
Member
Originally Posted by 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.
Probably because google knows you have been looking in this thread.
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12-04-2020, 05:40 PM
#4238
Originally Posted by lissica
Probably because google knows you have been looking in this thread.
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12-04-2020, 07:36 PM
#4239
Originally Posted by 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.
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.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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12-04-2020, 09:53 PM
#4240
Originally Posted by Beagle
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.
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Never try to teach a pig to sing. It wastes your time and annoys the pig.
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