HLG - Hallenstein Glasson

[winner69]

Fair observations Winner but I note this performance is still very solid and against a backdrop of the currency and consumer confidence at multi year lows.
This underscores the resiliency of the business. When business conditions return to more normal levels...

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Current business conditions for clothing/footwear retailers is currently pretty robust, maybe even above average

Stats NZ say growth (v pcp) in the last 4 quarters has been 1.1% (sep18 qtr), 4.5%, 5.9% and June19 qtr at 5.0%. That essentially covers the HLG financial year

Seems pretty healthy to me ....one could even say the last 2 quarters the market has been very good in NZ for retailers like Glassons and Hallensteins.

I note that HLG NZ sales didnt grow at those sort of rates ....hmm, losing market share?

sales didn’t incYou’ve got to stop reading those bank economic reports

[Beagle]

Wont' be able to read Tony Alexander's ones any more....one of the more level headed ones out there and more balanced than some of the unusual views often coming from some of them. Time will tell Winner. I am happy to hold and believe the dividend is sustainable at this level.

[winner69]

Market has been and still is pretty favourable for HLG NZ stores ...no sign of consumers cutting back on spending

Early part of chart and 2008/2011 were weak economic conditions and sales a bit flat for retailers ....other times including now pretty good ...even if they continue to remain challenging (ha ha)

[winner69]

Wont' be able to read Tony Alexander's ones any more....one of the more level headed ones out there and more balanced than some of the unusual views often coming from some of them. Time will tell Winner. I am happy to hold and believe the dividend is sustainable at this level.

Even now gross margin remains above historical average ....thats pretty good eh

Hallensteins Management are worse than me at talking down prospects

The only word they never use is 'cyclical'

[Beagle]

You're doing well if your goal is to try and talk it down and buy more at a lower level

[winner69]

Glassons AU seem to take all the kudos and get punters super excited, especially with the strong sales growth. In F19 sales were up $11m on previous year but they made stuff all extra profit.

selling more stuff generated $6.9m of Gross Margin but higher cost of sales had a negative impact of $1,6m meaning that overall Gross Margin was up $5.3m but it cost them an extra $5.1m in expenses/overheads.

So the incremental npbt from all that sales growth was a miserable $0.2m

Jeez, wonder what’ll happen if the market turns down and the impact of the lower $ finally hits?

[Beagle]

They're on a strong growth path in Australia that requires investment. I would imagine they have spent considerable resources scoping out new sites and investing in brand building over there.
This year we will see the full annualised effect of the capex they invested during FY19 and we get to see a glimpse of how that might play out with sales YTD for FY20 up 7.2% when apparel sales in N.Z. in August 2019 were up 4.5%. (I'm not aware of apparel sales data for Australia for August 2019) but a group increase in sales of 7.2% suggests to me the directors and managements well considered plans are working out well.

You're not going to talk me out of mine Winner but you're doing a great job of trying to talk it down to $5.50 again which would be a BUY in my book as opposed to a HOLD at $6.

[RTM]

They're on a strong growth path in Australia that requires investment. I would imagine they have spent considerable resources scoping out new sites and investing in brand building over there.
This year we will see the full annualised effect of the capex they invested during FY19 and we get to see a glimpse of how that might play out with sales YTD for FY20 up 7.2% when apparel sales in N.Z. in August 2019 were up 4.5%. (I'm not aware of apparel sales data for Australia for August 2019) but a group increase in sales of 7.2% suggests to me the directors and managements well considered plans are working out well.

You're not going to talk me out of mine Winner but you're doing a great job of trying to talk it down to $5.50 again which would be a BUY in my book as opposed to a HOLD at $6.

I'm on record as saying I don't hold retail stocks. Include property in that.
But clearly HLG holders have done well....So far. And I have missed out.
Just make sure it is a suitable % of your portfolio. If I were to dabble...I would not bet more than 2%.

[Beagle]

Barked nice and loud and clearly about this one in August 2016 at $2.70 and some of my mates are very pleased they listened against a "storm" of negativity that the tsunami of overseas retailers arriving were going to destroy the NZ retail scene for HLG. Very comfortable indeed with my 5.7% portfolio allocation.
The yield at $2.70 was 15% gross so its been rewarding in more ways than one ! The irony is I only ever bought it for the yield and never dreamed it would more than double in price in three years. 10.3% Gross yield at $5.95 for this extremely well managed company makes it a good hold with interest rates at 100 year lows.

[winner69]

Market been kind to HLG last few years ...even the last few months

Recession seems inevitable now ...not that good ...that’ll test their resilience

https://www.anz.co.nz/content/dam/an...k-20190930.pdf