Probably time we talked about that elephant in the room. It was really disappointing to see NSW a few weeks ago think they could beat the delta variant with what amounted too a soft lockdown. Did they really imagine that allowing retailers to stay open wasn;t going to lead to people bored at home going out and getting things like building supplies and hardware and mixing and mingling at their local Bunnings store and that would lead to a good outcome ?
I agree that various variants will dog us for years and we might be playing with lockdowns of one size or another for some time to come but :-
a) HLG has proved very resilient during lockdowns (albeit aided and abetted with Govt assistance which I have no moral problems whatsoever with them taking and keeping)
b) Covid has really boosted their online sales and dragged consumer behavior forward in that regard by at least half a decade and this will have enduring benefits to HLG going forward with their two recently added distribution center's on both sides of the Tasman specifically created to meet strong growth in online sales
c) I would argue on a DCF basis the combination of and and b is close to neutral in terms of the valuation of HLG but accept others will have different views and that's fine.
d) The vaccine rollout should gradually lessen the severity, length and likelihood of future lockdowns going forward.
Looking forward to a company update this month. There remains huge scope for growth with Glassons in Australia in the years ahead but I am expecting the directors to be very cautious about expanding their store footprint in the current environment.