Shares in speciality retailer Globe International Limited (ASX: GLB) have shot up more than 15% after releasing a trading update last Thursday.
Up until recently, Globe has gone under the radar for many investors. Since revealing impressive trading updates fuelled by COVID-19 spending, Globe’s shares have returned just under 400% in the past 12 months.
GLB share price
What does Globe do?
Originally a skateboard equipment company, Globe has grown to become a multi-branded success story that operates through three main proprietary brands.
FXD Workwear (Function By Design) is its line of workwear and boots with a slightly more fashionable edge, up against competitors such as King Gee and Hard Yakka.
It also owns Impala, which offers a range of high-quality roller skates, inline skates and skateboards. Impala has recently been a key growth driver and has been driven by a surge in the popularity of the sport from the onset of COVID-19.
Trading update
Management noted that there had been some supply chain complications due to delays in key logistics routes. However, many of these sourcing issues were able to be overcome, which has meant that results have now come in ahead of expectations.
Top line growth has continued on its upwards trajectory, with revenue in the second half expected to be double that of the prior corresponding period (pcp). Full-year revenue is expected to be in excess of $250 million, up from $152.8 million in FY20.
Globe is also expecting to see a large jump in profitability due to the strong sales growth. EBIT margins are expected to be in the mid-high teens, compared to 4.8% in FY20.
Globe will next update the market with its FY21 results in August.
Time to buy Globe shares?
One of the reasons why I like Globe is because it operates through a revolving stable of brands that constantly change to suit consumer preferences. Management seems to have a strong track record of creating brands to keep up with these trends.
The best example of this is its Impala brand, which has gone absolutely gangbusters even prior to COVID-19.
High levels of insider ownership is also a positive sign that there’s strong alignment between shareholders. Founders Stephen and Peter Hill both still hold over 12 million shares (~30%) each.
For some more reading on Globe shares, click here to read: Is Globe International (ASX: GLB) the best ASX retailer right now?
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