Retail Australian Community

Over the past year, Nick Scali’s share price has risen by more than 50%, even as earnings per share fell by around 30%. This decline in earnings growth has been a consistent trend over the past five years.

I may be showing my age here, but I feel that a decade or so ago, shopping at JB Hi-Fi was a different experience. There seemed to be a deliberate policy of employing sales staff from alternative subcultures, which gave the stores a unique, edgy vibe.

Business Model Drop-shipping model whereby products are sent directly to customers by suppliers Reduces the need to hold inventory, allowing for a larger product range Complemented by a private label range sourced directly by Temple & Webster from overseas suppliers Catalysts Profitable in FY24 26% increase in revenue year-on-year (yoy) at $500m. Target of $1b+ yearly on track Market share is increasing (2.5% up 31% yoy) Profitability means cashflow generated is used to fund growth External economic Conditions Consumer confidence and disposable income levels will impact demand for discretionary items Rising interest rates or a slowdown in housing dampens demand.

Narrative on Purchase Strong revenue growth supported by expansion into Europe & US, particularly through online channels Increasing size of outdoor clothing & equipment market should buoy the company Purchased at approx $1.42 in 2022 Update on Narrative Retail environment has been challenging over the last few years Kathmandu Brands have seen approx 10% - 15% declines in sales over the last year Sales are continuing to be weak as compared to last year Why has it been challenging? Cost of living pressures make the retail environment challenging, particularly for the types of clothing Kathmandu sells Mostly high priced gear for outdoor activities.

Key Takeaways Rapid global store expansion may strain profitability, as rising operating costs and diminishing returns threaten margins and earnings growth. Overemphasis on physical stores risks missing online opportunities, while market saturation and shifting consumer trends could hinder sustained revenue and margin performance.

Key Takeaways Rapid network expansion, digital integration, and operational consolidation could accelerate growth and margins well beyond current market expectations. Strategic portfolio shifts, supply chain control, and industry consolidation position Bapcor for lasting market share gains and improved profitability.

Key Takeaways Aggressive global store expansion and retailer failures provide significant opportunities for market share gains and revenue outperformance. Sustained high margins, enhanced store experiences, and data-driven merchandising fuel strong brand relevance and higher spending per customer.

Key Takeaways Strong digital and omnichannel investments, combined with operational efficiencies, are likely to drive above-market revenue growth and improve margins over the coming years. Focus on premium products and expanding Canadian market presence positions the company for accelerated sales, especially as luxury becomes more accessible to broader demographics.

Key Takeaways Growth is likely underestimated, as rapid home improvement expansion and regional warehouse localization accelerate market share and gross margin gains. Full AI deployment and demographic shifts may drive operating leverage, cost efficiencies, and revenue growth beyond current forecasts.