Breville Group Limited

ASX:BRG

Breville Group Limited

ASX:BRG
TradeAdd trade order Follow Unfollow Set Price Alert
$35.51 (-0.6%)
Last close price
#200
Rank
2
Held by
17
Followers
TradeAdd trade order Follow Unfollow Set Price Alert
Reports (3) My Report Forum Investors
Forum Topics BRG BRG Bear Case

Pinned straw:
edgescape
Added a month ago

I thought Breville might be a good one to consider to take advantage of the US dollar appreciation as a result of Trump victory in addition to the usual suspects James Hardie, ASX listed biotechs (you know who) with US operations and Computershare

Alas it was not to be

66c30bbcece293a05a65c8005cb5827e832536.png

PWH moment for BRG?

Need to strike Breville off my list at least in the short term for now till we see how this "transition project" progresses.

I'm still looking at a couple of small caps including a NZ listed biotech that is forecasting 200m USD but has had a history of disappointment (which I hold)
mikebrisy
Added a month ago

@edgescape interesting that they started moving 120V products (I.e. US bound) out of China 2 years ago and claim to be “80-20 on this by end ‘25” (fiscal or calendar?) I’m not sure what “ first incremental SKU live by March” means. Does it mean they paused the re-sourcing and are now restarting?

Jim clearly has been applying lessons from Trump 1.0 and the pandemic. (Their pandemic inventory management was so good, I use it as a case example in my supply chain management MBA classes!)

Or course, it is important to understand that these goods are already subject to 7.5% to 25% tariffs under section 301, which the Biden administration hiked earlier this year even further.

Anyway, possible way to play this is that if on day 1, Trump signs an Executive Order for 60% tariffs, the the combined effects of 1) existing tariffs, 2) inventory build, and 3) re-sourcing could substantially mute the impacts for $BRG.

An inventory builds means they just extend the June to November production ramp by a few months, so it’s actually totally in their control.

Such a build will hit cash flow and working capital, but together with re-sourcing to jurisdictions with only 10-20% tariffs could set them up really strong for the end-2025 retail peak.

So, it sounds like Jim Clayton might be ahead of this one, and a SP over-reaction to tariff headlines early in the new year could offer an opportunity.

So, I will be following this one very closely.

20
thetjs
Added a month ago

Mike,

can you give us the cliff notes version on why their inventory management approach was that good?

Working in the construction sector. Inventory and supply management were nightmares during that time!

14
UlladullaDave
Added a month ago

“80-20 on this by end ‘25” (fiscal or calendar?) I’m not sure what “ first incremental SKU live by March” means. Does it mean they paused the re-sourcing and are now restarting?

I read it as the first non-China manufactured 120v product will be live by March with 80% of made outside of China by the end of calendar 2025.

14
mikebrisy
Added a month ago

@UlladullaDave that's what I thought, which means it has taken them 2 years to date to start moving production to non-Chinese locations.

At first, I thought that was quite a long time, but then again perhaps not. They have to select the vendors, inspect the factories, have discussions on transfer of designs, tool up new factories, re-arrange the upstream supply chains, negotiate contracts, do pre-production tests etc.

So maybe the whole process does indeed take a couple of years.

I know lots of firms more generally have been using the lessons of the pandemic to diversify beyond China. Countries like Vietnam, Thailand, Malaysia, India and Mexico have been beneficiaries.

You can see the net effect of all this in the changes in FDI in China. Trump will give this even more impetus now.

15
edgescape
Added a month ago

@mikebrisy Obviously you are more up to date being a current investor

Just goes to show how behind I am with the Breville story and need to do more reading.

10
RhinoInvestor
Added a month ago

Just a quick anecdote … I own a Lelit espresso machine with built in grinder that is currently not working and waiting for spare parts (which were 8-9 weeks away when I first took the machine to the coffee shop and still seem to be at least the same time away 5 to 6 weeks later). For context it is one of the lower models (I think around $1200).

There seems to be no ETA on when the parts might become available and the coffee machine place said they have a bunch of machines from Lelit waiting on parts and that the Lelit supply chain has gone to shit since they were acquired by Breville in 2022 (https://www.afr.com/companies/retail/breville-snaps-up-italian-specialty-coffee-group-20220311-p5a3s0)

Clearly Breville is not the exemplar in inventory and supply chain management that I need them to be right now but judging from this thread looks like they might have bigger issues than just spare parts. Perhaps they also have some work to do on better working out how they manage the spectrum of “higher end” appliances people are going to get serviced and repaired vs cheap Chinese stuff people are just going to replace.

DISC: Not held (anecdote only and really hoping I can resolve this soon as I’m not enjoying the dish water drip filter stuff my wife drinks)

19
mikebrisy
Added a month ago

@edgescape I sold down most of my RL $BRG in Sept. after results at c. $35. I still hold 0.75% position only.

My sell down was on valuation, but I think high freight, and an inventory build for US, and shifts in production might create adverse comps. next year. Or perhaps even the anticipation of them might create opportunity. One to watch, as I really like this business.

14