Meeting addresses:
http://nzx-prod-s7fsd7f98s.s3-websit...138/385637.pdf
http://nzx-prod-s7fsd7f98s.s3-websit...138/385537.pdf
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Not much talk here on HLG. Looks like all the action is over on Stock talk. Thanks Beagle for your input. I topped up today with about 7000.
Posted this on the retail thread - thought relevant to HLG given Glassons is the powerhouse behind the group.
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I was reviewing a handful of my Australian positions and as part of that did a bit of work on underlying volumes in the Australian retail market. Thought I'd share as Australian retail relevant to a number of NZX listed firms eg Hallenstein Glassons, KMD, MHJ etc.
I find it interesting to look at volumes as opposed to nominal sales as I think it gives a better indication of underlying activity. Found on the Australian Bureau of Statistics a quarterly timeseries of seasonally adjusted volumes by retail segment - perfect. I indexed the values to the beginning of 2000 and calculated the volume trend to the end of 2019 (to avoid contaminating the trend with all the lockdowns, rebounds, QE and other oddities occurring since).
Below are the seasonally adjusted volumes and associated trend the clothing+accessories+shoes segment indexed to the start of 2000, with the consistent growth pattern leading to 0.98 r2 in the trendline - incredibly strong - which tells us the trend definitely means something.
Attachment 14422
Then I dropped in the actual retail volumes to 30 September 2022, and rolled forward the previous trend line without updating it for the actual data from January 2020 to September 2022 to get a sense of how current clothing retail volumes compare to the pre covid trend line. This is below.
Attachment 14423
Clothing retail volumes in the September quarter were up over 21% from their pre covid trend. In all the historic data there hasn't been another data point whose variation above trend was this high.
My review of the October and November seasonally adjusted sales (including inflation) was robust so I'd assume that trend continues and perhaps widens in the December quarter.
So Aussie going gangbusters.
But given that very strong correlation in the volume trend, I can't help but wonder if a reversion to trend (or overshooting to below trend as is often the case) could unfold. I find this quite influential and informs my perspective on the maintainability of Aussie retail volumes, particularly over recent trading periods. High volumes lead to high rebates and lower discounting....falling does the inverse exacerbating the impact on margins together with the fall in sales.
Can't help but wonder if OZ will follow NZ in the retail space, and the last 12 months have been a temporary overperformance in line for a large fall. Or who knows, some may argue the world has changed and the shift to above trend growth is permanent.
All musings, but interesting to ponder, particularly if you are looking to make long term investments with spare dosh or a current holder in the sector. Random perspectives...do your own research...the ABS is a wonderful tool.
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Am on the same page as you NZTX. Australia has a far more conductive economy to long term success in the retail market, in my opinion. All things equal I'd take imputed dividends but all things aren't equal and I'd gladly sacrifice tax efficiency for long term growth in gross dividends and capital value. Geographic diversity I reckon has tangible value as not all economies fire at the same rate and have different drivers.
That said I reckon the RBA has more to go than the RBNZ, and that will eventually be reflected in underlying activity, and eventually SP's.
Likewise, Aussie's advantages in retail should already be reflected in the slope of the trendline relative to NZ's.....but that won't explain their own above trend growth.
https://www.afr.com/chanticleer/this-profit-upgrade-shows-animal-spirits-are-back-20230116-p5ccqz
FM - here's the chart for NZ data.
Same sort of shape .... but looks like the last couple of years not as strong as OZ
Whats the long term growth rates for OZ sales?
would be good to know if hlg was discounting product in the said period. would explain the big jump in volume.
many forecasters are predicting aussie retail saw a last gasp jump end of last yr before the slowdown comes later this yr due to rising rates on mtge's
this is evident in some aus retail company update's already this mth which show some business doing good and others not
(those are industry vols not HLGs)
my gut would tell me hlg wouldn't have been doing much/any excessive discounting during that period (but i stand to be corrected when they report). I dont think there would have been any need to given the level of demand. more likely in other retail segments
Hey FM - NZ industry sales charts
My calc shows that current volumes in NZ are 23% above the trend line
If things revert to that trend line that's a lot sales that won't be had .... over much time period will be interesting
What you say about OZ