Trading Which retailers will survive?

Discussion in 'Share Investing Strategies, Theories & Education' started by Jmillar, 25th Mar, 2020.

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  1. Jmillar

    Jmillar Well-Known Member

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    Hi all,

    I'm an absolute noob when it comes to shares, so feel free to school me. I'm in the commercial property game and know how much retail has been getting smashed for years. After seeing Mosaic Brands closed their stores today I looked at their share price which currently sits at $0.23. In January it was trading at around $2 so it's been smashed by circa 90%. Given retail has been doing it tough for years, I would think that the previous value of around $2 takes this into account and was a fair price for the stock.

    Clearly retail will be hit for weeks or months, but once things return to normal, retail will come back. Maybe not to the same level, as people will figure out how easy it is to shop online etc, but I certainly wouldn't think it will be hit by 90% in the long run.

    Hopefully I haven't made any crazy assumptions yet??

    So the question is... Will they survive weeks, months until things go back to normal?

    Note: I've used Mosaic Brands as an example as it was the first one I looked at. But keen to understand if people agree with my logic re retail in general. And more importantly, which retailers are geared up to survive this and might be a good medium term investment??

    Side question - do you think Myer will survive?
     
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  2. Scott No Mates

    Scott No Mates Well-Known Member

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    The AUD has tanked so imports are going to cost alot more even going direct. Postage & handling will also add to the burden, so will GST.
     
  3. The Y-man

    The Y-man Moderator Staff Member

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    Coles, Woolies, Aldi, IGA, Costco are making a killing!

    The Y-man
     
  4. The Y-man

    The Y-man Moderator Staff Member

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    For my own financial sake, I hope Myer, DJs survive, and for H&M and Uniqlo to keep growing....

    The Y-man
     
  5. geoffw

    geoffw Moderator Staff Member

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    Sure they are. But there will be something of a sugar hit. People have stocked up a lot, but when they start to use the supplies at home, their sales may well drop in comparison to pre Covid-19. In the long term, sales will probably be up (some people will have bought ridiculous levels of some items and cannot return them), but nowhere near the current levels.
     
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  6. Simon Hampel

    Simon Hampel Founder Staff Member

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    Tech and office supply companies are getting absolutely hammered by the public trying to set up their home offices.

    The small company I use (Scorptec - 5 outlets in Mel and Syd) is having difficulty keeping up with demand.

    There was a line up of cars trying to get into the local OfficeWorks carpark the other day.

    Harvey Norman seems incredibly busy too. I believe they've sold out of freezers as well :rolleyes:

    I imagine that JB HiFi has been pretty busy as well - but I haven't been in a store recently.

    This demand will likely ease off once everyone is set up for their home office - although there is likely to be a continuing demand as people need to replace items or upgrade as time progresses.
     
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  7. The Falcon

    The Falcon Well-Known Member

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    In addition to consumer staples retail, Bunnings and KMart also very solid. The low end discretionary in the form of ****** fashion brands were struggling before Covid19. Good night Irene for them. REITs in general have a poor outlook in general imho, office and retail doesn’t look good. large DC /Industrial property looks a lot better.
     
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  8. Scott No Mates

    Scott No Mates Well-Known Member

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    I better read some of those quarterly reports from JLL, CBRE & Colliers that see clogging up my inbox. :oops:
     
  9. Patrico1966

    Patrico1966 Well-Known Member

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    Where I am in Tasmania at the moment,fridge freezers are selling like hotcakes. Retailer sold 20 in the week and 7 in one day . None left in the regional city and that includes Hardly Normal. And for some reason the sale of potatoes has gone through the roof, very large orders at farm gates.
     
  10. twobobsworth

    twobobsworth Well-Known Member

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    Bursons Auto Parts
     
  11. geoffw

    geoffw Moderator Staff Member

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    Potatoes have gone underground.
     
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  12. The Y-man

    The Y-man Moderator Staff Member

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    I can't figure out where people are keeping the huge amount of perishables like meat though....

    ...okay, now I know where they are keeping the perishables..... o_O

    The Y-man
     
  13. CheckMate

    CheckMate Well-Known Member

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  14. iloveqld

    iloveqld Well-Known Member

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    Ebay, Gumtree and Facebook market will grow after all of these purchases :D
     
  15. Patrico1966

    Patrico1966 Well-Known Member

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    Vegies gardens are all the rage now but they do take time to grow and might be ready when the virus has passed its worst stage.
     
  16. Omnidragon

    Omnidragon Well-Known Member

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    Will all survive by doing capital raisings.

    So probably who needs the deepest capital raising.

    Retailers have been double screwed by Scomo basically because they haven’t been ordered to shut. That means they can’t “stand down” their employees - meaning if they voluntarily shut, they have to keep paying salaries.

    That’s why last night Naomi Milgrom came it and cracked it and SolLew is now just outright refusing to pay rents.
     
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  17. RS Gumby

    RS Gumby Well-Known Member

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    My wife works for Stevie Lew and she's been stood down, has to use LSL or annual leave if she wants to get paid
     
  18. Jmillar

    Jmillar Well-Known Member

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    Do you think (most) fashion retailers and people like Myer will survive? Will they be able to raise capital? Are any of them better-placed than others to do this?

    My (uneducated) opinion:
    - Government can't let them all fail - retail was already getting smashed but this would kill it overnight which would hurt too many people (REITs, private investors, banks, loss of employment etc)
    - If Myer folded this would leave a lot of big holes in shopping centres that would be almost impossible to fill again

    Clearly those with eCommerce presence will continue to do OK (JB Hifi etc)
     
  19. Trainee

    Trainee Well-Known Member

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    Do you have one example where the government has helped a specific retailer?

    the government generally avoids helping any company directly. Especially where the market is fragmented. So its increasing unemployment benefits rather than, say buying shares in retailers or directly lending them money.

    also focus on analysis that helps with investment decision. Concluding that the government wont let retailers all go under doesnt help with investing at all.
     
  20. Scott No Mates

    Scott No Mates Well-Known Member

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    Heaters are flying out the door in Cairns, there must be a cold snap.