Just an observation; Interesting and not surprising to see GXL...

Just an observation;
Interesting and not surprising to see GXL are taking the WOW and Coles approach to improving margins.

I have a very good friend who works for a pet product supplier. A number of their products are sold through GXL. That is Greencross Vets, Petbarn and City Farmers. He very recently received a fairly short email from the company wanting to meet to discuss what his company could offer to improve "GXL's" margins on the sale of their products. No pressure, no threat - Just; what can you do to help us?

If you shop at WOW or Coles and have any powers of observation you will have noticed the range of brands of each product have diminished. I'll use canned fruit as an example. In my local WOW the range is now down to 3 versions of the 'home brand', a couple of SPC offerings and a South African import. I'm guessing the other suppliers who were selling canned fruit through WOW 5-10yrs ago received similar emails.

I am in no way saying that this is an illegal and/or even negative trend/tactic. Just observing. GXL's latest report spoke of increasing 'home brand' offerings.
The buying power is what they are after and what they are getting. Beware smaller operations without the buying power anywhere near the GXL paw print.

Also noticed a TV add last night for Advantix (flee/tick product I think it was) offering 2 for the price of one at Greencross Vets, Petbarn and City Farmers. How many consumers would know that is all the same company?

Not complaining - just observing. After all; I'm a shareholder because I think the model will work.

I'll throw in my 2c worth about the share price. It will be what it will be so the following is just rambling....
There are very few in this space to compare them with but I believe a PE of about 20 is fair value. Increasing earnings, a team that have now proven the model is working and that they are getting plenty of synergies from recent 'mergers' plus proof of cross selling. Still appears to be fat on the bone as far as getting earnings from the current businesses (home brands will also help), buying power and pressure on suppliers. Further loyalty program benefits from clients. I particularly like the pet-wash facilities at stores. My guesstimate is a further 20%-30% increase in EPS in FY16. (The one comsec analyst is going with 24.4% increase to 42.7c/share). Long story short - I think $7 - $7.50 is a fair current price and all things being equal - a 20%-30% increase in the next 12 months.