Auction sales were actually up +31 % in FY - 2017 to $ 437 million, on higher
pelt prices — for comparison, that's similar to FY - 2010.
Therefore, the majority of the company's increase in turnover (& margins) comes from rising
pelt prices.
Weaker economies / currencies in China, Russia, Greece & Turkey, plus the new Chinese import duties, continue to exert a negative influence — but the real culprit here was last year's substantial step - up in Chinese & Western production, based on a cold Chinese winter, higher spring - 2015
pelt prices, a weaker euro & excellent breeding conditions.
This needs to be addressed regardless (recently announced restructuring is obviously insufficient), but the substantial adjustment in
pelt prices will restrict supply & stimulate demand — and longer - term, the fur industry continues to grow, and Saga still strikes me as a genuine cyclical growth stock.
By end FY - 2014, the damage was done — a 56 % & 36 % decline in mink & fox
pelt prices, respectively, delivered a 43 % decline in auction sales & a 29 % fall in net turnover.
Despite the about - face, initially this seemed like a bit of a buyers» strike really... brought on by a mild winter, sticker shock (after
pelt prices doubled in 3 years), higher retail inventories, and signs of slowing Russian & Chinese growth.
Have animal
pelt prices gone down or something?
Not exact matches
It seems to be substantially lower
price per
pelt than, for example, the March auction (~ EUR60 /
pelt).
The consistent increase in the number of
pelts sold over the past couple of years, regardless of auction sales &
price volatility, is also particularly encouraging.
So despite the
price volatility,
pelt volumes have continued to grow (with no signs of abatement in consumer demand)-- I remain convinced Saga's ultimately a cyclical growth stock, and in time we'll see a fresh peak in sales & turnover again (as in 2013 & 2006).
Unfortunately, only in terms of
pelts sold... fox
pelts fell 23 % & mink
prices actually fell 50 % yoy.
Prices finally started perking up a little last September, followed by a December auction which delivered a 47 % jump in sales — mostly due to an increase in
pelts sold.
Pelts can be sold in stores, but the
prices don't seem to match the level of effort required to collect them in the first place.
Many cat species are hunted by poachers, who get high
prices on the black market for tiger parts and snow leopard
pelts.
Fur trapping in the early 19th Century was a perilous task but luxurious
pelts would fetch a handsome
price on the open market so hunters were willing to take to the wilderness to bring them back for the civilized world.