HLG - Hallenstein Glasson

[Raz]

As predicted. Forecast all this coming week for Auckland is mid 20's (Goldilocks summer temperature for hounds who don't enjoy getting too hot). No worries for HLG summer clothing sales.

Went to the tennis..talk about suck weather, the temp is not the only issue with the weather mate.

[winner69]

As predicted. Forecast all this coming week for Auckland is mid 20's (Goldilocks summer temperature for hounds who don't enjoy getting too hot). No worries for HLG summer clothing sales.

Yep mid 20's is forecast HLG profit this year - I reckon $23m/$24m which is just under 40 cents a share.

[JeremyALD]

Went to the tennis..talk about suck weather, the temp is not the only issue with the weather mate.

One thing I've found interesting is Barkers has run it's sale continually since Boxing Day. They have had significant discounts on all clothing. I've never seen Barkers run a storewide sale for this long. I know they cater for slightly different markets, but it makes me wonder if they're struggling a bit.

Weather wise apparently it's been average as so far and very windy, but who knows we'll probably see a good summer Feb to April. As Roger says, historically it's pretty late in NZ.

When will we get the next update from Hallensteins. Late Jan is it?

[macduffy]

Went to the tennis..talk about suck weather, the temp is not the only issue with the weather mate.

Now you're starting to sound like that Ms Williams!

[JeremyALD]

So I was doing some research last night and had a good read of the Annual Report and ASM. I'm trying to make my own assumptions for NPAT in FY17 if things trend in a similar way for the rest of the year. I appreciate this is a long way out, but thought it would be fun to create some assumptions based on what we've heard so far.

My observations were below:

Hallensteins

Still a very competitive environment and unlikely to see sales growth in FY17. Flat so far this year. They may get a bit more margin from products this year, but competition is resulting in some margin cutting.

My guess is NPAT will be slightly up this year due to a better winter trading period and improved margins due to exchange rates ect. I predict NPAT at 9 million, up from 8.5 million in FY16.

Storm

Sales are actually behind so far this year, but they have opened a new store in Queenstown which should lift revenue and sales.

Guessing NPAT will be flat at .8 million, but for good measure and the new store will round up to 1 million.

Glassons Australia

Here's where the big turnaround will be and where I project long term will come from. In recent announcements, Hallensteins is confident the store will return to profit in FY17. Sales are up over 10% and the stores are seeing a good turnaround.

Guess is NPAT will be between 1 and 2 million, up from a loss of 1.9 million in FY16. I think results will further improve in FY18 which is great for the Group.

Glassons New Zealand

Improved margin is expected to be witnessed in FY17 and sales are up so far. Glassons NZ is always a solid performer and this year should be no different.

Based on the above sales increase estimating NPAT of 6 million up from 5.5 million in FY17.

Overall

Based on fairly conservative estimates and what the Group has announced I'm predicting NPAT for Hallensteins in FY17 in the range of 16 to 18 million. There will definitely be considerable improvement in the Glassons business, with fairly flat sales across Storm and Hallensteins; however higher margins should also improve their respective NPAT performance.

Performance should be fairly in line with the Groups performance in 2013 and 2015 and I would think all going well should support a SP above $3.50.

[winner69]

Yep mid 20's is forecast HLG profit this year - I reckon $23m/$24m which is just under 40 cents a share.

Sorry Roger I thought in your post you were talking about HLG profit forecast when you mentioned the mid 20's and not the weather.

What happens when one gets euphoric - they only see what they want!

Never mind $23m/$24m FY17 profit it's going to be

[JeremyALD]

Sorry Roger I thought in your post you were talking about HLG profit forecast when you mentioned the mid 20's and not the weather.

What happens when one gets euphoric - they only see what they want!

Never mind $23m/$24m FY17 profit it's going to be

I don't think so. Reading the report I can't see a lot of profit growth coming from Hallenstein Borthers this year, even with a better exchange rate. They have said sales are flat and margins are still under some pressure.

Glassons AU and NZ will both see a very good performance this year, but I think profits in the 20s will have to wait until FY18, UNLESS Glassons AU pulls out a bigger profit than my forecast

[Beagle]

Sorry Roger I thought in your post you were talking about HLG profit forecast when you mentioned the mid 20's and not the weather.

What happens when one gets euphoric - they only see what they want!

Never mind $23m/$24m FY17 profit it's going to be

LOL good one mate.

So I was doing some research last night and had a good read of the Annual Report and ASM. I'm trying to make my own assumptions for NPAT in FY17 if things trend in a similar way for the rest of the year. I appreciate this is a long way out, but thought it would be fun to create some assumptions based on what we've heard so far.

My observations were below:

Hallensteins

Still a very competitive environment and unlikely to see sales growth in FY17. Flat so far this year. They may get a bit more margin from products this year, but competition is resulting in some margin cutting.

My guess is NPAT will be slightly up this year due to a better winter trading period and improved margins due to exchange rates ect. I predict NPAT at 9 million, up from 8.5 million in FY16.

Storm

Sales are actually behind so far this year, but they have opened a new store in Queenstown which should lift revenue and sales.

Guessing NPAT will be flat at .8 million, but for good measure and the new store will round up to 1 million.

Glassons Australia

Here's where the big turnaround will be and where I project long term will come from. In recent announcements, Hallensteins is confident the store will return to profit in FY17. Sales are up over 10% and the stores are seeing a good turnaround.

Guess is NPAT will be between 1 and 2 million, up from a loss of 1.9 million in FY16. I think results will further improve in FY18 which is great for the Group.

Glassons New Zealand

Improved margin is expected to be witnessed in FY17 and sales are up so far. Glassons NZ is always a solid performer and this year should be no different.

Based on the above sales increase estimating NPAT of 6 million up from 5.5 million in FY17.

Overall

Based on fairly conservative estimates and what the Group has announced I'm predicting NPAT for Hallensteins in FY17 in the range of 16 to 18 million. There will definitely be considerable improvement in the Glassons business, with fairly flat sales across Storm and Hallensteins; however higher margins should also improve their respective NPAT performance.

Performance should be fairly in line with the Groups performance in 2013 and 2015 and I would think all going well should support a SP above $3.50.

Good post overall mate but have another look at what the company has said recently about Glassons sales performance in N.Z. in terms of margin and substantial sales growth. For my money you're significantly lower than my expectations for Glassons N.Z. Don't forget e.commerce channels too growing at 24% per annum and now representing 7% of group sales.

[JeremyALD]

LOL good one mate.



Good post overall mate but have another look at what the company has said recently about Glassons sales performance in N.Z. in terms of margin and substantial sales growth. For my money you're significantly lower than my expectations for Glassons N.Z. Don't forget e.commerce channels too growing at 24% per annum and now representing 7% of group sales.

I hope I'm low overall Roger! I think 16 to 18 million is very conservative and just shows that this is undervalued. If they post over 20 million NPAT historically the SP would go well above $4 so I hope you're right

Positively there's a lot of room for growth in AU too. If AU Glassons started posting NPAT similar to NZ, we'd be well into the 20s.

In relation to e-commerce I get a bit confused here. Do they bundle this all into one result for the whole Group, or is it also put into divisional sales? For example if Hallenstein Brothers reports a flat result YOY, but e-commerce is up 7% does that mean that store sales are down and internet sales are up, or are store sales flat and internet sales up?

It's great that e-commerce is growing, but if that's just a transition of existing store sales to online channels it doesn't particularly help if you get my drift.

[winner69]

Jeremy - you said - Performance should be fairly in line with the Groups performance in 2013 and 2015 and I would think all going well should support a SP above $3.50.

So if $16m-$$18m profit (very very conservative) supports $3.50 share price what would $23m/$24m profit support?

Over $5 surely

That's what i'm looking forward to