Good question but even this is not clearly understood. Personally, I think our definition of discretionary and non discretionary is not as black and white as it would have been 10-20-30 years ago.
If you consider 30% of Australians own their home outright and another 30% rent with a certain % actively choosing to do so then if they have funds available they if it’s part of their present sustainable lifestyle will still spend.
For example if I want to buy a Harley it may be that a majority of buyers come from that 30% who own their home so they have funds available to do so. Or if I am now working from home then buying candles may be seen as a necessity to create the office environment I want. Additionally someone with increasing home loan repayments may decrease their spending on takeaway dinners. So the categorisation of what is discretionary is not black and white across the whole community.
The critical question for BST is cost control to ensure they can continue to price their products attractively. They obviously will know the price point they need to stay within to ensure their products remain attractive to their target audience. Yes some loses could be off-set by new customers now being more price savvy and moving into this price point for clothes but they have to make sure they don’t destroy their primary shopping demographic.
At this stage they seem to be doing a good job at remaining very profitable whilst passing on higher costs (increase in revenue) which at this stage is offsetting reduction in overall like for like sales. To me this suggests they have brand power.
However, its a fine line and we can see what happened to Dominoes this morning when you don’t get that balance right.
I wouldn’t be surprised to see both long term holders and short term traders benefitting from holding a stake in BST.
Of course this is just my two thoughts.
BST Price at posting:
$1.87 Sentiment: Hold Disclosure: Not Held
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