Greencross Limited Vs Amazon

  • Sep 13, 2018 AEST
  • Team Kalkine
Greencross Limited Vs Amazon

Greencross Limited (ASX: GXL), the largest pet care business in Australia might witness none other than Amazon entering the space. The stock has gone into downward spiral and made fresh 52 weeks low after the news broke out. As the largest online retailer ramps up its effort to sell pet supplies, Greencross stands to lose the maximum. The Pet supplies company otherwise saw a major chunk of its overall profit coming from the Australian business in FY18. It contributed $74.4 Mn of the company’s $97.6 Mn underlying EBITDA. In online space also, Greencross recorded 70% rise in sales to $20 Mn during FY18 suggesting that the company is on the track of becoming a major online player as well. The company posted 7% increase in revenue at $878.7 Mn compared to $817.5 Mn in FY2017. However, the positive topline could not trickle down to the bottomline numbers with statutory Earnings per share recorded 52% lower at 17.5 compared to the previous year. In FY18, the company opened 8 retail stores and 26 grooming salons. Greencross stated that 43% of their stores are now equipped with the grooming salons. 

However, the latest development in the space has added to the vows of the stock which already took a hit after being ousted from the S&P/ASX 200 Index, effective at the Open on September 24,2018. Greencross however would not be alone in getting impacted by the entry of Amazon as other major players such as Woolworths Group Ltd (ASX: WOW) and Wesfarmers Ltd.’s (ASX: WES) Coles might also face the heat, witnessing their growth hurt by a couple of points.

Lately, it was announced that Macquarie Group Limited has ceased to be the substantial holder in Greencross Limited. While the company aims at growing the network by 3 to 5 stores and 10 to 15 in-store clinics combined with the strategic acquisitions in FY19, Amazon may have a standout with the expansion in the pet supplies space impacting the price range.

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