Retail Sector, the unforgiving yet growth-driven space - JBH, WOW, WES, KMD, KGN and SUL

  • Dec 18, 2019 AEDT
  • Team Kalkine
Retail Sector, the unforgiving yet growth-driven space - JBH, WOW, WES, KMD, KGN and SUL
According to the National Retail Association (NRA), Australians are poised to spend $14 billion in the seven days to Christmas. It was said that the consumers would start shopping for Christmas early as compared to the previous years. The final week to Christmas is the busiest one for the retailers with spending expected to clock $2 billion per day. It was also noted that omnichannel retailers could outperform conventional retailers. Overall, it was said that the domestic retail industry is anticipated to witness around $50 billion in sales during the holiday period, indicating around 3% increase from $48.6 billion in the last season. Let’s discuss six leading retailers in ANZ: JB Hi-Fi Limited (ASX: JBH) Consumer electronics retailer, JBH is trading around its 52-week high range presently. According to ASX, the annual dividend yield is 3.68 per cent as on 18 December 2019. JBH operates under two bands – JB Hi-Fi and The Good Guys. JB Hi-Fi is a technology retailer in the consumer electronics space with an offering for young tech-savvy customer base. The Good Guys is a home appliance and consumer electronic retailer with offering for Gen X and home-making families. Its omni-channel retailing is underpinned by scale, low cost operating model, quality store locations, and supplier partnerships. According to JBH, it employs around 12.5k staff across ANZ (FY19 end). On 18 December 2019, JBH was trading at $38.680, up by 0.155% (at AEDT 2:41 PM). Woolworths Group Limited (ASX: WOW) On 16 December 2019, the group convened Restructure Scheme Meeting (EGM 2019) and 2019 Annual General Meeting. Woolworth’s Chairman stated that the group is seeking to approve proposed internal restructuring in the group that would pave the way to combining its drink’s business and ALH Group. It was said that the proposal to create a separate entity for drink business and ALH Group would allow emphasising on evolving customer needs while opening up additional opportunities for growth. The restructuring was approved by the shareholders in the meeting, and now the group would be seeking approval from a Federal Court. It is anticipated that the internal restructuring would be completed by early February 2020. Overview (Source: WOW EGM Presentation) In 2019 AGM, the CEO stated that the group had made a promising start to FY 20 with group sales from continuing operating rising 7.1% in the first quarter over the previous corresponding period. It was said that the group is focused on delivering the best possible experience to customers amid the Christmas season and in FY 20. On 18 December 2019, WOW was trading at $37.855, up by 0.839% (at AEDT 2:44 PM). Wesfarmers Limited (ASX: WES) In November 2019, the group had convened its 2019 Annual General Meeting, and all resolutions were carried out. Notably, the remuneration report recorded ‘against’ votes of 21.45 per cent. Regarding recent trading and outlook, it was said that the majority of the retail business has witnessed an improvement in sales growth in sequential basis. In recent months, the residential property prices have picked up coupled with tax and interest rate cuts. Weather conditions and successful implementation of the Christmas period would impact the sales performance of the year. The group expects that the business would face cost headwinds, and these headwinds would be offset by productivity and sales growth benefits. However, it would impact earnings growth in the near term. Overall, the group remains optimistic regarding the outlook, and it is confident that the pipeline of investments would deliver the shareholder value. On 18 December 2019, WES was trading at $42.250, up by 1.125% (at AEDT 2:47 PM). Kathmandu Holdings Limited (ASX: KMD) In November 2019, the retailer convened its 2019 Annual General Meeting. Mr David Kirk, Chairman of KMD, stated that FY 2019 was a strong year for the company. In FY 2019, the retailer delivered strong sales growth, specifically through online sales and Oboz. These results, combined with a disciplined approach to operating expenses, allowed the business to deliver record profits. In doing so, the group delivered the fourth consecutive year of sales and profit growth. During the last four years, the group also transformed an Australasian retailer to a global multi-channel business. Since FY 2019 was completed, the group completed the acquisition of Rip Curl and raised capital. In Outlook, it was noted that trading is consistent with expectations, and newly acquired business is positioned for the summer season, while integration remains on track. And, the first half results depend on the Christmas trading period. On 18 December 2019, KMD was trading at $3.18, up by 1.923% (at AEDT. 2:49 PM) Ltd (ASX: KGN) In November 2019, the group convened its 2019 Annual General Meeting. In Chairman’s address, it was said the company has demonstrated the execution of clear strategy backed a resilient team and offering for customers in the previous year. In FY 2019, KGN’ gross sales of $551.8 million, up 12.0 per cent over the previous year. EBITDA for the period was $30.1 million and NPAT for the period was $17.2 million, an increase of 21.9 per cent over the previous year. The Board declared FY2019 total dividends (fully franked) of 14.3 cents per share. For October trading, the retailer achieved one more month of strong y-o-y growth in gross sales and gross profit based on unaudited financials. The focus of the business remains on efficiency with low a cost of doing business. In October, the gross sales depicted the growth of 18% and gross profit improved by 22% while October costs were down compared to the costs in last October (previous year). By the end of October, active customers increased by 13 per cent on a y-o-y basis. In the initial four months of the financial year, the metrics are looking strong, and the most important trading season was ahead in November and December. On 18 December 2019, KGN was trading at $7.24, up by 0.416% (at AEDT 2:51 PM). Super Retail Group Limited (ASX: SUL) Recently, the group has notified that its registered address has been changed to Super Retail Group Limited, 6 Coulthards Avenue, Strathpine QLD 4501, Australia. In its Investor Day Presentation, the group has highlighted its major brands; we would focus on these brands and people heading these brands. Supercheap Auto is headed by Mr Benjamin Ward. He is an experienced retail executive with over 20 years of industry experience across Australia, UK, US and Europe. Previously, he was associated with ALDI Supermarkets based in Germany. Rebel is under the management of Mr Gary Williams. Previously, he served as COO for Alceon Retail Group, and he holds experience across the USA, UK, Asia Pacific and South Africa. Macpac is directed by Mr Alex Brandon. He was appointed to this role in July 2012 and continues to serve in this role, following the acquisition of Macpac by Super Retail Group. BCF is headed by Mr Paul Bradshaw and he joined the group last month. He is equipped with over thirty years of experience in the retail sector in domestic markets as well as international markets. On 18 December 2019, SUL was trading at $10.25, up 2.092% (at AEDT 2:55 PM).


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