Ann: FY16 Investor Presentation-SFH.AX, page-7

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s_sood15

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25/08/16

14:18

Post #: 18680118
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Originally posted by Nano_Land ↑

I agree with you natnicnak - tough luck for your namesake BTW

I have been a believer (but have sold out of frustration) on the basis of:

Great gross margin business with strong leverage to like sales growth
Target a "less competitive" space than main stream apparel.
Shift to direct sourcing only improves margins and stock differentiation.
Excess franking credits and customer database not being valued.

La Senza and more recently Rivers have hidden the recovery of core business for above reasons, now earning $35m.
No more needs to be said on Rivers…..but management sound confident of profit this year.

I can't help think Rivers has also impacted gross margin over the last few years, and there must be upside into FY'17.
I can accept weather & currency as other impacts to GP% this half.
2H'16 gross margin was disappointing - lowest since FY'07 by my calculations - undoing all the good work of recent years.

My bet is that GP% moves back to ~57% from the 55.5% this year, and sustainable EBITDA for this business is $40m-$45m as a result.
That puts the group on 2.2x EV/EBITDA with strong cash flow.

It has been a disappointing 5-years and Gary P is lucky to still have a job, but maybe just maybe FY'17 is the year!!
Wait for the AGM where management tend to at least give a feel for trading, and if Rivers has stopped the bleeding - Buy.

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I have high hopes for this stock .. so will wait.

SFH Price at posting: 56.5¢ Sentiment: Buy Disclosure: Held
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Ann: FY16 Investor Presentation-SFH.AX, page-7

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