Looks like the budget should give a much needed boost to retailers in H1 fiscal 2020 (regardless of who wins). I was also going back through PGR's H1 results and it is very difficult to tell to what extent the deteriorating performance of the retail segment is due to declining GPM or increasing investment/CODB/weaker coverage of fixed costs. Although I suspect its weighted towards declining GPM, its actually difficult to determine this from the disclosures. I would also note that retail sales were only down about 2% after excluding closed (and presumably unprofitable) stores. Also, I note that groupwide employee costs, marketing and selling costs all increased materially year on year (mostly designworks I assume) so at the very least, mgt are continuing to invest in the business, which should bode well for longer term revenue and earnings, and position them well for any Budget driven spending kick in 2020. Hopefully this all means that H1 fiscal 2019 will prove to be the earnings low point for the company.
PGR Price at posting:
24.0¢ Sentiment: Buy Disclosure: Held
