H & M would be a credible threat. They sell great stuff and being a worldwide company, they'd have pretty good purchasing power. They have a slightly more upmarket impression but for similar prices to HLG.
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H & M would be a credible threat. They sell great stuff and being a worldwide company, they'd have pretty good purchasing power. They have a slightly more upmarket impression but for similar prices to HLG.
Roger you remind me of the investment manager in Peter Lynch's book "One up on Wall Street" always looking at the numbers and a company's historical performance rather than asking the actual shoppers where they want to shop. Read that article I posted, fast fashion retailers are killing off companies just like HLG where they open.
H & M, Uniqlo and Forever 21 already have flagship stores in Australia competing with HLG's 30 Glassons stores. In March, I visited H & M in the old GPO in Melbourne. Stunning location, packed with customers and stylish clothes with shorts from $AUD5. How can you compete with that?
HLG have a bit of time, good management and capital available so maybe they can reinvent themselves or partner with one of the big boys like Barkers did with Top Shop but don't just assume it will happen!
Next you'll be telling me Jetstar and China Eastern airlines are going to kill off Air N.Z. LOL.
Apparently one of the reasons Forever21 customers keep going back, is because the clothes only last two or three washes.
http://www.newyorker.com/business/cu...ing-forever-21
I can't say my bare HLG valuation is not compelling. But look back a line and you will see the dividends amount to 105% of earnings over the period. If you reduce the payout over five years to $1.50 (the actual earnings) then eps is 30c.Quote:
Payout ratio (5yr average): (70.5 +87.0)/ 150.1 = 105% (Not sustainable?)
Average Annual payout (5yr average): 31.5cps
If we consider a yield of 6.5% over today's business cycle being 'fair', then my valuation for HLG is:
31.5/ 0.065 = $4.85
30 / 0.065 = $4.62
Granted that still looks attractive compared to the $3.50 market price. But our dollar is falling harder than expected. And I have observed that HLG tends to sell at 'price points'. So a $20 T shirt will still be a $20 T shirt, independent of what the actual supply cost was. How long before our consumer is reeducated to buy their T shirts for summer at the $25 price point? And how much profit will HLG lose before this happens?
Meanwhile on the Skellerup thread I am predicting very similar returns to what is available buying HLG, by buying SKL at $1.30. However NZ manufacturers should be getting a tailwind from the lower dollar. And the economies of the new factory, due to be completed in Christchurch within twelve months, should add to the tailwinds.
Buffett said you don't have to swing at every pitch. Good luck with your HLG batting Roger. I think you will do well. But I am hoping I will do slightly better swinging on the Skellerup pitch.
SNOOPY
I guess if you have a rock solid clean and tidy balance sheet with no debt you can pay out just over 100% of earnings because there's some depreciation in there or they've extracted more efficiencies from improved stock turn and lower inventory level's. Very rare set of financials I've ever reviewed that are cleaner / tidier and more easily understood than this company.
One of the many good things about having a wise old mother that's still alive is even when she's not around I can still readily recall some of her favourite wise sayings, two of which readily spring to mind:-
"you get what you pay for"
"the bitter taste of poor quality lingers long after the thrill of a bargain"You're on too it mate.
Snoopy mate. Poor old Skellerup should have had this tailwind and that tailwind for a very long time now and yet their performance over the long run hasn't been that inspiring has it !! Quality of management top notch ?...but because you have a good beagle's nose I will have another look.
Jaa don't think they need to reinvent at all doing just fine as is!