The Hour Glass

[heifien91]

While I won't say I am 100% sure, however this was the reasoning I came up with for their lumpy changes in working capital. Firstly, it could be due to a growth stock like THG, when they open a new shop, they would have to increase their amount of inventory, resulting in the rise in inventory under changes in working capital. Secondly, watch manufacturers do not produce watches at regular intervals? Correct me if I'm wrong, however, I find these luxury watch manufacturers times the market when releasing batches of watches into the market. Hence, this is the reasons I came up with for the high number for the inventory this recent quarter.

(vested)

not so good in my opinions:
1) inventories went up by SGD 30.5 mln, a very high number considering a challenging luxury watch environment. What's the reason behind this? is this for the non-watch related businesses?
2) as a result working capital investment was SGD 40.8 mln, almost a record high
3) as a result net cash dropped 43%
4) as a result days of inventory outstanding jumped to 204 days from just 184 days last year.

ability to be profitable is one thing, ability to manage working capital and still generate reasonable cash flow under challenging environment is another thing. I think the later one is more crucial at this moment.