@UlladullaDave such a great data-driven question! It does seem incredible.

Perhaps for some lines they've structured the supply chain so title transfers direct from supplier to their partners, so it never sits on their balance sheet? Perhaps also, as you say, some is on consignment. My guess a mix of both. Unless all 200,000 SKUs are not truly "in stock", and some are in the catalogue, but "to order" only. But if that's true then their investor communications are misleading, which I'd prefer to think not.

Definitely need to remember that one for the next Strawman Meeting!

Maths: $15m inventory/ 200,000 skus = $75 / SKU average.

Or maybe there are a large number of very, very low value SKUs skewing the stats? (e.g. Zenith M6 Hot Dipped Galvanised Washer $0.12 ... from the Bunnings site!)

I think GMROI is so high at $SGI because of the partner network.

The inventory spends the lion's share of the time on the partners' balance sheets, so $SGI have higher inventory turns and lower inventory/sales because they are a distributor with a relatively low proportion of total volumes ending up in their own stores.

So they have this edge over $MXI, $SNL and $BAP ,.... just picking on the vehicles category, because it has several listed companies.

Cheers @mikebrisy

That definitely helps explain GMROI and the low inventory level. If they can move a lot of the inventory investment on to their partners it is going to make incremental ROIC at scale blow those other guys out of the water. Not saying they will get there, just that the structure is quite interesting. You don't often find distribution businesses with that sort of "float" for want of a better word.

This claim of "non-discretionary" vs discretionary products is actually what I was pointing to in my initial question.

Point about the consignment - sounds a bit like dropshipping.

It's good how they list the number of B2B and retail customers on their website though.

It's interesting that everyone is now including MXI as a comparison. I only raised it because the change in management seems to be working.

@mikebrisy and @UlladullaDave, good questions re SKUs and inventory levels. Similar to Mike's explanation of GMROI, my guess is that the partner network of independent stores holds many of the SKUs, but that inventory doesn't show on Stealth's books. In their latest investor presentation the reference to >200k products in stock sits on a slide discussing their distribution network which includes their own stores as well as the independent stores they supply in the ISG group.

Sounds pretty reasonable criteria.

For me it would be reassuring if they had a general idea of group performance rather than specific items as that would be too much.

But it is probably a picky question from me given I don't have much knowledge of how these businesses work.

@edgescape, it may not be at the detail you're after (it won't tell you which adhesive or work boots are the most popular, or which sells more than the other), but there's some breakdown of product segments in their annual report: https://stealthgi.com/wp-content/uploads/2023/08/2600895.pdf.

Page 17 shows revenue breakdowns across product category, division, end market and region. Eg, selling industrial products (maintenance, repair, materials, construction equipment, tools) to the mining industry in WA is still their biggest source of revenue.

Page 53 shows the revenues, costs, and captial across B2B and B2C segments. B2B is about 10x B2C revenue, but it's interesting that the financials are very similar both segments (operating profit, assets, liabilities).

And a stat I find really interesting is the growth of their "services" revenue. See p 54. Over 70% growth from $5.8m to $10.3m in the last year. I asked Mike what this was at a recent investor briefing and it is related again to the independent store network. This is the revenue gained by Stealth facilitating bulk purchasing between significant suppliers and independent stores. Mike sees another $60m in growth here in the next 2 or 3 years. This is a big part of the strategy to hit their $200m revenue by FY25. I'm not assuming the $60m will be realised, but this is a big strategic focus for them.