Reading the above does anyone have any opinions, or is there a hidden meaning I am missing that the investing community seems to have picked up today from the above?
"The retail environment continues to be volatile and highly competitive. As a result, recent trading has been slightly weaker than for the same period last year. We anticipate that this will continue through the first half and that this will see our earnings in FY16 more heavily biased to the second half than in recent years. We expect that the impact of a range of growth programs scheduled early in calendar 2016 will deliver a stronger second half and expect to report a full year net profit after tax for FY2016 in line with FY2015."
Anyway when this was published the stock took a hit. At a PE of 7.61 it doesn't need a heap of growth to justify it as a buy in my view.
In most retail businesses, the first half is the most important because of Xmas trading. Now I don't know if vacuum cleaners are that popular in terms of Xmas gifts, so may be there can be a second half recovery... but GFY doesn't have a real track record as a listed company yet.
GFY is as boring as they come as far as retail businesses are concerned. It's business prospect is probably at the mercy of general population growth, $AUD, online shopping competition etc - most out of the control of management. I just don't see it being a meaningful investment proposition from a top-down view.
Does a fancy store format really attract people to shop for vacuum cleaner? Is it likely that people milling around shopping centre would impulse buy a vacuum cleaner just because they see a new store format? I dunno :dunno:
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In most retail businesses, the first half is the most important because of Xmas trading. Now I don't know if vacuum cleaners are that popular in terms of Xmas gifts, so may be there can be a second half recovery... but GFY doesn't have a real track record as a listed company yet.
Does a fancy store format really attract people to shop for vacuum cleaner? Is it likely that people milling around shopping centre would impulse buy a vacuum cleaner just because they see a new store format? I dunno :dunno:
On a positive note... cash flow is strong in the last 2 years. Question is whether the previous private equity owner made enough investment (in stores, supply chain etc) so free cash flow will remain strong going forward. The boring nature of the business means people like me just brushes it off. If it grows market share, maintains margin and keep capex in check, it can potentially deliver good steady dividends and some capital gains.
Very popular would be my guess!If I was the copywriter I would have gone with "The gift that keeps on sucking".
Vacs seem like the sort of appliance that could be comfortably bought over the internet; out of sight, no one cares what it looks like etc.
I think there was some commentary around this during the IPO but I can't find the source anymore.and coming out of PE, how massaged the numbers were.
but "weighted toward second half" is often management talk for "hoping for a second half recovery".
I think in any business update, the bold part scares most people.
In most retail businesses, the first half is the most important because of Xmas trading. Now I don't know if vacuum cleaners are that popular in terms of Xmas gifts, so may be there can be a second half recovery... but GFY doesn't have a real track record as a listed company yet.
In FY15, PBT was $9.07m. Add back the IPO costs of $5.9m and apply a 30% tax rate, you get NPAT closer to $10.5m. I am not sure the income tax benefits of FY15 is to be repeated in future years. So PE is closer to 9.6x after today. It'd only take a 20% profit fall to make the PE "not a bargain".
"First half sucks, second half might blow too".
Now who wants to have a go at a new headline?
Godfrey's first half far from suck-cess
The static mop industry and the popularity of wooden floors seems to have had a huge impact on their business model.
People just aren't doing the vacuuming anymore.
Godfrey's first half far from suck-cess
A useless business in this day and age. The one here is in a massive building, big empty car park. One day they were advertising a cheap vac on this big sign with a big inflatable man bouncing around in the wind. Went in there and rude/useless staff and they were out of stock. Went over the road and got my cheap vac at the Bunnings. If I was buying an expensive vac I'm sure I'd research it on the internet to find the best deal and I'm sure GFY with their big expensive building wouldn't have the best deal - and if they did, they wouldn't be making any money out of it.
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