Fair call that......with a tightening of discretionary spend...

First 38 Last

Share
Profile

Follow
wtf48

250 Posts.

1

12/09/17

21:10

Post #: 27169638
Share

Originally posted by Jimmy_C ↑

The results were ok - not great, and not poor.

The big story for mine was the gross margin contraction on the Aus retail side - that is clearly a big deal. It went from 47.7% in 1HFY17 (on $256m of sales), to FY17 of 47.2% on $505m of sales. That implies 2HFY17 gross margin of 46.7% (or a whole 1.0% slip from 1HFY17).

Compare that to FY16: 1HFY16 retail gross margin was 47.5% on $228m of sales, to FY16 of 47.3% on $458m sales, which implies 2HFY16 gross margin of 47.1% (0.4% slip from 1HFY16).

A not insignificant reason for me owning GXL was my view that gross margins would gently tick up over time due to: 1) increased private label penetration, and 2) scale to reduce per unit distribution/logistics costs to leverage the big supply chain investment undertaken from FY13-15.

It's too hard to say at this point whether the 2HFY17 retail gross margin story is temporary (i.e. discounting to win back sales), or more permanent. I'll hold for another half but that is the line i'll be most closely watching. The LFL trends through the first two months (5.0% on retail) of FY18 seem encouraging, but it's no good growing LFL if you just give it back on gross margin.

Expand

Fair call that......with a tightening of discretionary spend starting to trend in the first half, was not surprised at a contraction....having said that, now the seasons are into the warmer months interactive activities with owners n pets etc increase thus their spend focus will switch....why mention this / sounds a bit airy fairy but it is the way management strategically think at times as they stated at last AGM....just some random thoughts... but I do believe that your analysis is sound for sure.

Cheers WTF.

Last edited by wtf48: 12/09/17

GXL Price at posting: $5.50 Sentiment: Buy Disclosure: Held
Upvote

0 Great analysis

Reply

Top Stories

SXG

Southern Cross finds large gold-antimony zone underneath historic Victorian mine

DEL

Delorean unlocks $30M through Tanarra finance facility for bioenergy projects

ADH

Adairs MD and CEO steps down after 17 years in company management

Is the ASX getting its groove back? Here's 5 IPOs in September to watch

TPG

ACCC says no issue with TPG Telecom and Optus Mobile sharing regional networks; spectrum