Metcash
Grocery wholesaler and supermarket operator Metcash has recorded a 30 per cent increase in net profit in the first half, despite a fierce industry price war. The price war was triggered by Coles, which is being revitalised under new owners, but MTS says that did not
prevent it gaining market share and sales.
MTS, which is number three in the food market, recorded a net profit of A$86 million ($97 million) for the half-year ended October. With only third biggest market share, it is quite vulnerable to being squeezed by its big rivals and the food war is being fiercely contested, especially with Coles making an aggressive comeback and Woolworths not giving an inch.
However, MTS is well managed and has faced competition throughout its development.
The share is cheaper on a p/e basis than Woolworths because Woolworths holds the power in the Australian food market and sets the agenda.
Hallenstein Glasson
Clothing retail group Hallenstein Glasson has warned of a profit downgrade for the company's February half-year result despite the fact that it has yet to benefit from Christmas trading, its busiest time.
Sales for the 17 weeks ended November 25 were down 1.6 per cent on the same period last year, reflecting a highly competitive market in both New Zealand and Australia.
It has noticed a widespread tightening of demand in New Zealand, which is a clear response to the rising interest rates.
Hallenstein Glasson is one of our more predictable retailers, with an excellent record for managing risks, whether cyclical or financial.
It also pays a high annual dividend, which is seldom varied, and the dividend yield is high.
However, HLG is in the wrong industry at the wrong time with clothing retailers facing a battle in a cooling economy.
