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    David Wells

    Research Analyst at Hanson Wells Partners

    David Wells's questions to HG Holdings (STLY) leadership

    David Wells's questions to HG Holdings (STLY) leadership • Q2 2015

    Question

    David Wells of Hanson Wells Partners asked about the outlook for top-line growth, specifically whether the traditional business could return to growth or if it would depend on the new youth line. He also questioned the sustainability of the current high gross margin levels.

    Answer

    President and CEO Glenn Prillaman expressed confidence that all product lines, including the traditional adult business, can return to growth by regaining lost market share. He anticipates total company growth this year. He also affirmed that the mid-20s gross margin percentage is a sustainable level that the company can leverage with future sales growth.

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    David Wells's questions to HG Holdings (STLY) leadership • Q1 2015

    Question

    David Wells of Hanson Wells Partners questioned the sudden negative shift from the optimistic outlook given in late February, sought reasons for confidence in the H2 forecast, and asked for the rationale behind prioritizing debt paydown over share buybacks.

    Answer

    CEO Glenn Prillaman attributed the Q1 miss to a sharp drop in order rates and unforeseen freight costs from port congestion that materialized after the prior call. He cited cost structure adjustments and the new youth line as reasons for H2 confidence. PFO Anita Wimmer explained that paying down insurance loans is a tax-efficient move as the company cannot currently benefit from the interest deduction, noting the funds remain accessible.

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