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.
Currently doing due dilligence on a site just out of northlands.
ChCh amazes me. Its our best performing region, attributable IMO to mortgage to salary affordability, plus the golden years of insurance money flowing in. Malls don’t seem to be as attractive for prospective tenants comparative to Auckland , TGA and Waikato. The quakes have definitely changed the retail landscape for both Wellington and Chch
Currently doing due dilligence on a site just out of northlands.
ChCh amazes me. Its our best performing region, attributable IMO to mortgage to salary affordability, plus the golden years of insurance money flowing in. Malls don’t seem to be as attractive for prospective tenants comparative to Auckland , TGA and Waikato. The quakes have definitely changed the retail landscape for both Wellington and Chch
If the site is in Langdons Road which includes Briscoes and KMart, and other very strong retailers. it is a great site.
[depending on your business].
I have not mentioned Hornby, as it is years since I have been out there.
Optometrist told me people who couldn’t travel overseas this year are getting really expensive glasses ...and he also said that his audiologist mate was busy as supplying the top end expensive hearing aids
So spending goes on ....and they hopefully buying some new clothes as well.
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
As a matter of interest do traffic counts / footfall mean much these days when assessing sites or has virus impacts made them less meaningful.
Curious as retired now and been out of retail management for a few years
Depending on the sub-category of retail , yes.
Fashion - footfall is a must, generally speaking it's more of an impulse buy. I can't think of many specialist fashion retailers that do well that aren't in the malls. That's why there are so many empty high street shops across the country, which will only get worse with Covid changes (ie remote working - Plenty of articles in paper about this) When you think of Warehouse, Kmart etc they act as a mini mall in their own right, youre there for something else and no matter where you walk in those stores, clothes racks never leave your sight.
Niche/specialist retail - traffic counts/visibility/parking are what counts. We definitely are a destination shop, Parking makes a massive difference. Some of my best performing shops are the ones in which when a customer walks in the door there can be no doubt that the customers have walked in the doors for a reason!
In my field what I actually spend more time analyzing when looking at potential sites is population demographics, Median incomes, Age demographics etc. I have been surprised (both good and bad) after the fact, but for the most part the demographics have not let me down yet.
Now more than ever if you can do either footfall or destination retail well + a good local website (many brands are still making the mistake in NZ of trying to rebadge their overseas site) you will do well in retail.
Coming back to why I think HLG is doing so well, check out https://www.similarweb.com/. Search them compared to their competitors and you'll see in both NZ & Aussie they are strong comparatively and will only get stronger.
Interestingly some brands you would have assumed would have picked up on this still haven't moved to keep up. H & M springs to mind.
there is a european company that does this for retailers but there is of course a cost.
Many thanks for the post and very very insightful as i imagine many of us invest with a certain element of risk awaiting some guidance from the companies.
We cant sit outside a store and count traffic or its not a great solution and on line mean we await statistic on retail and or guidance updates.
Fashion is not buying food distribution or other basic services and you can always buy from the op shop or Sally Army Shop.
Two outstanding posts for those keen to review why some of us are invested in HLG:
Originally Posted by Beagle
Investors should stick to the fundamental's and make their own assessment on HLG based on its merits.
I re-summarize my investment thesis below.
1. The company has demonstrated tremendous resiliency during Covid. This is deeply impressive and was a real surprise to me.
2. It is now clear they have demonstrated real brand power with the Glassons brand with extremely strong growth in online sales.
3. I think the advantage of selling 30% online will be both sticky and will confer a very meaningful advantage going forward. I doubt this is currently being valued by the market. (Online is the holy grail of retail and these guys are very smart with their digital platforms and marketing).
4. Much more favorable exchange rates and lower logistical costs this year,.
5. FY21 year to date sales up 11% compared to last year before anyone had even heard of Covid, frankly I find that remarkable
6. I expect in FY21 HLG will comfortably exceed last years profit, I see 50 cps as a fairly safe forecast with the risk to the upside.
7. That's a forward PE of just 12, (which is a no growth PE so the market is not pricing HLG correctly in my view).
8. With interest rates at 100 year lows, I think a forward PE of 12 is too cheap and this deserves at least the same PE as Briscoes (14.3) which suggests at least $7.15 is fair value
9. Their very strong cash position, ~ $50m as at balance date which is deeply impressive for a company of this size, and with no debt means HLG are well capable of paying all earnings or the vast majority of them out as dividends going forward. This is also supported by an apparent lack of need for any meaningful capex in the current environment with their focus on online sales and having recently completed new distribution center's in both N.Z. and Australia
10. 50 cents fully imputed per annum or very close to that appears sustainable for the foreseeable future given the growth of Glassons.
(whether they do pay the full 50 cents out or not, we can take considerable comfort from Tim Glasson's 20% stake that he has the owners eye, (as Percy calls it) on HLG and whatever they decide it will be in the best interests of shareholders.
11. If they pay all the eps out the shares are on a net basis, (look through the next dividend), HLG are on a 12% gross yield. I think this phenomenal.
12. No debt, excellent stock turn, strongly growing brand with Glassons and potential to turn around Hallensteins to where it used to be.
Better to invest on fundamental's than rumors and that's what I am doing when I'm buying at $6 because at a net price of $5.76, (adding back the dividend receivable shortly), I believe there is deep value remaining with HLG.
Remiss if I didn't mention risks. Yes, absolutely there is a risk of another Covid breakout but they have demonstrated tremendous resiliency with coping with this to date and one must also consider the opposite, that a vaccine might be available next year and then its onward and upward. One also needs to keep in mind there's risks with all stocks.
When I compare the above fundamental's with other opportunities on the NZX I think there's a compelling case for a decent portfolio allocation to HLG primarily as a yield stock but there's growth there too so to my mind this is a classic GARP stock, (Growth at a reasonable price).
GARP stocks are a rare thing in this market.
Originally Posted by 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
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Originally Posted by winner69
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