WITH LUMPY COMES BUMPY
We knew the long-awaited Ellies update would be bad. The company had a bumper previous financial year boosted by one-off projects. The first half of this year had seen profits down and that was not likely to reverse in the second half of the year. But HEPS down 65%-75% is more than what everybody was expect- ing. In fact, a rough calculation suggests the electronics retailer may have had a loss-making second half to the year. The reality here is that Ellies has revenue (and hence profit) that is lumpy, and while I am sure management is trying to resolve this issue, it is unlikely to go away any time soon. Investors need to be prepared for a bumpy ride.