HLG - Hallenstein Glasson

[Beagle]

NZ businesses combined have not grown market share for years ...been about 5% share from Stats NZ retail data .... but they do keep up with how well or bad the overall market is doing ... generally tied to how well the economy is doing

And

Correct but that's not the whole story by any means. The growth of Glassons in Australia in recent years has been very impressive and's its a very large market with a shrinking number of competitors.

[winner69]

Correct but that's not the whole story by any means. The growth of Glassons in Australia in recent years has been very impressive and's its a very large market with a shrinking number of competitors.

Glassons AU a bit of a puzzle in my mind - jury is still out

Di did wonders in F17 and F18 taking sales from $41m to $78m

Since then annual sales growth has been 14% in F19 and 8% in F20 - hardly 'impressive' considering the hype

But what worries me is that they have not converted sales growth into very much profit the last 2 years - sales are up $18.1m from F18 but profit up a miserable $1.3m - declining margins and higher expenses

But then F21 on fire - sales probably up 15% so no worries

[Waltzing]

MR B has made the point and on a small market NZX this is clearly a high performance stock by any measure. Investing should always be for a good time horizon with some stocks for trading (your formula) and some for long term holds. This sits somewhere in between but has show with history to be edging to the later. If it repeats the story of the GFC it will be heroic!

Profit does seem to come in seasons amd then drying up until the next change of image like birds of paradise in a David Attenborough doco.

Or as Mr B alludes the pull of social interaction. Prehaps we should be looking at this stock from the lens of social science and not economic demand and supply.

[Beagle]

Fair comment mate but 8% growth during a Covid crisis is pretty good. Maybe they have been discounting to get market penetration ?
Time will tell but I am quite comfortable with their prospects. Been very rewarding for a share I only ever bought for the yield at $2.70 in late 2016. Been some huge dividend feeds along the way and I am quite confident that will continue.

[jimdog31]

Why I love Beagles view on stocks is because its from a birds eye view, with a bean counter and investors perspective.

For a different perspective - Im a retailer (and an ex bean counter) with a number of stores around NZ (and a website that contributes 30 % to turnover) i can give some perspective on why I think HLG is nailing it.

1. Overseas travel $ being allocated elsewhere. This is huge, so many customers are spending money on retail therapy that they would have spent on an overseas trip.

2. Buy now pay later emergence as a payment method. Especially in HLGs case, this is having a massive growth impact on FMCG. The growth here is not done.

3. Websites that incorporate 2. as payment methods are experiencing massive transactional growth and increased IPS (items per sale)

4. GST law changes as already mentioned. This has really started to impact positively on NZ retailers witha good ecommerce setup. We are creating sticky customer relationships

5. Low interest rates are meaning home owners have more free cashflow for discretionary spend.

6. Cost rationalisation brought on by Covid. Its caused the entire retail sector to get ruthless on costs, advertising, staffing, rent negotiations. similarly it happened in 09, and then slowly unwound with increased confidence over the last few years. I spent 5 weeks of lockdown scaling everything i could back.

I can’t actually see any headwinds for HLG other than more lockdowns but I think that only compounds the effect a few factors above.

This stock is only going one way.

Just my take, but for the next 12 months as a Retailer, im the most bullish Ive ever been on the sector.

Disc: I bought more at $6 too, and its 25% of my holdings

[Beagle]

Thank you very much for your thoughts and valuable insights from the retail coalface jimdog31. Great post. Very well said and some very useful insights there, much appreciated.

(This is a great example of why I love and am quite frankly, addicted to this forum. Everyone doing their very best to share their best insights from their own experience and perspective and contributing to the greater knowledge of this investment community).

There should be a button for adding double reputation points, some posts definitely deserve it !

[Waltzing]

an ex ACA that buys or run 6 franchise stores in retail. Someone try to pick what retail would an accountant move into. And why would you buy another retail stock if your own retail also returns % else you want even more exposure and your own retail sales are not dented by lockdown or was dented by lockdown and you need returns to cover lockdown dent.

Fashion retail is image. Lets see that birds of paradise.

[macduffy]

Yes, thanks for an insightful post, jimdog. Good to hear from someone with actual current experience of retailing!

[jimdog31]

an ex ACA that buys or run 6 franchise stores in retail. Someone try to pick what retail would an accountant move into. And why would you buy another retail stock if your own retail also returns % else you want even more exposure and your own retail sales are not dented by lockdown or was dented by lockdown and you need returns to cover lockdown dent.

Fashion retail is image. Lets see that birds of paradise.

I treat my business income and investment portfolio seperately, so I dont mind if I have some exposure to retail in it as its mutually exclusive. I’m in retail but a different sub category, not fashion.

Covid was the best thing thats happened to retail in NZ. If you listen to Rod Dukes interview awhile back I mirror exactly his sentiment, alot of posters on the forum were taken aback by his positivity but I had a smile on my face listening to him. Sales havent been dented overall, but have accelerated YOY And I know for a fact other retailers across many sub categories are saying that too.

A couple more adds to my post that i think should have been 7. and 8. and an add to 3.

3. With most overseas websites not having BNPL as an option this has been hugely beneficial to Nz ecommerce.

7. Support local. This was and is a big help coming out of lockdown, especially with web sales. I think this will continue for some time but will eventually decline as things return to normal. Most Nz retailers will have gained new ecommerce customers and seen a big increase in web sales so will put more and more focus here. HLG is ahead of that game and will look to capitalise. NZ retailers have been taking a hiding from overseas ecommerce operators for the last 5 years. They have paid no GST, no income tax , AND most importantly are not subject to NZ consumer law, ie CGA, Fair trading act. Its been pretty hard to compete with overseas sites who advertise bogus discounts and are not subject to NZ consumer law. This support local impact has been a welcome, overdue relief.

8. Commercial property relationships. Something that became evident with lockdowns was how much Landlords needed tenants. With returns from TDs and bonds so abysmal , I think Landlords have become a little more realistic with the returns they are looking to make from their properties, many that I know of have become more flexible around rent reviews, CPI increases or even rent reductions going forward. So again, costs have got better. Now in HLG’s case I imagine the majority of their landlords are KPG, stride etc. They too need glassons and hallensteins for foot traffic so Id imagine behind closed doors their will be ongoing relief if necessary, or rent reviews being delayed or waived.

[percy]

Always pleasing hearing from a retailer doing well.Well done.
Perhaps others like yourself, will take advantage of the abundance of retail opportunities available in ChCh, which has a growing number of empty shops.
All the Malls.Westfield Riccarton,Northlands,The Palms,South City,Eastgate,Barrington,and offcourse City Mall have plenty of space to lease.