I’m really happy with the result, especially the dividend of 24 cents per share. I will use the extra 4 cents per shares towards two new pairs of shoes and reinvent the 20 cents per shares towards other potential stock purchases over time.
One good indicator of just how good HLG are at managing the business -
Sold heaps were stuff but increase in inventory is minimal ...fantastic
Pretty amazing that they can get $277m sales out of inventory at cost price of just ~ $20m. KMD stock turn announced recently was under 2, this must be over 4 again surely which is turning stock more frequently that the seasons of the year which is the holy grail of stock turn for apparel retailers.
Other observations from a real quick skim of the financial statements
Cash on hand up from $12.5m to $17.5m that's good. Depreciation is up to $8m per annum now so they can invest that sum annually in capex without it being new capex per se.
Total cost after tax to exit Storm including trading loss for the period to sale and loss of sale of fixtures and fittings appears to be $1.21m, a non repeating item for FY19.
Last edited by Beagle; 28-09-2018 at 10:58 AM.
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
By selling more stuff $22.7m
From Gross Margin improvement $6.0m
reduced by higher expenses $14.7m (more stores, people etc)
Looking forward key is selling more stuff and keeping expenses under control. We cant rely upon an extra boost from higher margins
The bulk of that $6.0m Gross Margin improvment came in the first half of the year (a continuation of the improvment in H217). It appears as if Gross Margin has maxed out at just over 60% .....and of course there is the risk of margin pressure from a weaker NZD. Gross Margin in H2 held up at 60.5% even though that was lower than the 61.5% in H2 9but higher than the 59.7% in H217)
That's how I see it anyway ...key to profitability increases from here is selling heaps more stuff
The
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
Pretty amazing that they can get $277m sales out of inventory at cost price of just ~ $20m. KMD stock turn announced recently was under 2, this must be over 4 again surely which is turning stock more frequently that the seasons of the year which is the holy grail of stock turn for apparel retailers.
Other observations from a real quick skim of the financial statements
Cash on hand up from $12.5m to $17.5m that's good. Depreciation is up to $8m per annum now so they can invest that sum annually in capex without it being new capex per se.
Total cost after tax to exit Storm including trading loss for the period to sale and loss of sale of fixtures and fittings appears to be $1.21m, a non repeating item for FY19.
By far the best listed retailer in NZ for managing margins and stock -- far superior than Briscoes and Kathmandu and The Warehouse not even in the same race
HLG Group performance in making money out of stock is -
GM % 61.3% with 5.1 stock turns in a year
This gives them a GMROI of $8.18
That GMROI means for every $ of stock (average over the year) held they generated $8.18 of Gross Margin (Briscoes do about $3)
In industry lingo a very impressive Turn/Earn Ratio of 3.1 (would be one of the best globally)
Now most retailers have reported 2018 numbers might update my data for comparative purposes
Last edited by winner69; 28-09-2018 at 11:44 AM.
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
Awesome, glad that I bought in a few days ago. Jumped in primarily on an expectation of a good divvy, but what a bonus! Also I saw its growth potentiality with a growth of buy now pay later payment companies - they must have driven HLG's sales growth as well.
Now dividend yield is sitting at 7.46% with the current price of $5.9 and full year divvy 44c, which looks pretty high. Should it push the SP to go even higher?
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