Concerns are not entirely unreasonable, however headwinds like the currency have had a major impact that management has been required to address by attacking overhead costs, expanding sales.
3% GMargin reduction, mostly due to currency, stock clearances and impacted by the warm winter discounting in the second half, which would have been larger if not partly mitigated by buying gains and duty impost reductions, effectively wiped out $25m of EBITDA that would otherwise have been there; $25m EBITDA reduction is a huge amount to deal with and retention would have doubled statutory ebitda otherwise.
Base investment case remains; at $35m ebitda (even allowing for nil Rivers contribution, which is overly conservative, for the years beyond FY17), where debt will be fully repaid by 30 June 2017, you are looking at a stock trading on 3 times ebitda.
The corner store sells for more and it can't claim ownership of one of the highest digital sales penetration rates for a traditional clothing merchandiser in Australia.
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