Sectors: Consumer Goods
Unlike News Corp kitchen appliance company BRG did actually breakdown to levels not seen since 2020, even after the board recently reconfirmed FY22 guidance although they could be too optimistic around supply chain issues. While we believe the company can deliver double digit growth over the next few years a large part of this is already factored into the share price hence at this stage we’re comfortable sticking on the sidelines.
TGT US -25%: The big US retailer announced higher costs and weakening demand in an earnings update overnight that prompted a 25% drop in the shares which flowed through to weakness in our retail sector today. Their CEO Brian Cornell said that profit will amount to only about 6% of sales this year, 2 percentage points below the previous forecast, with the company’s first-quarter adjusted profit missing…
Target Corporation is a general merchandise retailer selling products to its guests through its stores and digital channels. The Company serves guests at nearly 2,000 stores and at Target.com. It offers to its customers, referred to as guests, everyday essentials and fashionable, differentiated merchandise at discounted prices. The majority of its stores offer a wide assortment of general merchandise and food. Its merchandise categories include apparel and accessories, beauty and household essentials, food and beverage, hardlines, and home furnishings and decor. Most of its stores larger than 170,000 square feet offer a variety of general merchandise and a full line of food items comparable to traditional supermarkets. Its digital channels include a wide merchandise and food assortment, including many items found in its stores, along with a complementary assortment sold by the Company and third parties. Its brands include A New Day, Ava & Viv, Cloud Island, Favorite Day, and others.
As interest rates rise and consumer confidence wanes its always worth keeping our finger on the pulse on the retail sector which will give us a decent read on how things are looking within Australia. The uncertainty towards rising interest rates and to a lesser extent an election is a tough backdrop for discretionary spending and that’s exactly what we’ve seen of late with HVN making fresh 2022 lows last week, at this stage we see no reason…
Our view towards HVN is very similar to JBH although there’s been no pop to fresh highs in 2022, it did try to rally in February after delivering its half-year results – EBITDA was down 3.3% while revenue fell 6.2% to $4.91bn. The latest 20c fully franked dividend puts the stock on a forecasted 7.1% yield over the next 12-months, certainly worth watching into weakness as a yield play but a move back towards $4.50 wouldn’t surprise short term.
Yesterday saw JBH fall close to 5% following a slightly disappointing 3rd quarter updater and no earnings guidance for FY22. This is one company that could start to feel the impact of both a slowing housing market and supply chain disruptions building in China. When we look at the chart yet again we see a stock that’s threatening to fail after “popping” to fresh highs with JBH now more than 12% below its March high, the stocks not expensive here but on balance we’re happy to watch from the sidelines for now.
JBH -4.77%: Knocked lower following a 3Q update while they didn’t provide FY22 sales and earnings guidance, saying that there was too much uncertainty. Goldmans made some comments today that I thought were relevant with a slowing housing cycle and increasing supply-chain issues in Shanghai and Shenzhen ports creating challenges for JBH. Overall, JBH reported Australia comparable sales y/y up +11.1% while N.Z. comparable…
Auto parts business Bapcor presented at the Macquarie Investor Conference yesterday with shares weaker on the day. The presentation came with no surprises which, in our view, should be more positive for the stock. They maintained guidance, and have done so now since the AGM in October despite a change in CEO. It also shows the business has returned to growth in the second half given the slow start to the year. Sales are up 3% for the 9 months to March, in line with consensus estimates.
On ~11x earnings and expected to yield 6.84% fully franked over the coming 12 months it’s hard to be too negative on Harvey Norman, however, whenever I go into my local HVN to buy an overpriced printer cartridge from a graduate of Sunshine Tafe, it doesn’t fill me with confidence. HVN has a very high correlation to housing given its product mix which means 2022 will be a very good year for it, however, the outlook for FY23…
The Woolworths old bottle shop and liquor company contains the likes of Dan Murphy’s and BWS, if you think the increasing world issues will drive us all to drink then EDV maybe a stock for you! However it’s been a fairly tough few weeks for the share price after it delivered a solid interim result in February which saw NPAT up 15.6% to $311m, people clearly haven’t stopped drinking because…
