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Thanks JWB, let's see if it can motor there pretty sharpish :)
Yuri - I think your numbers are iffy so no wonder you are so pessimistic. Distribution costs were only £327m for FY24 and admin (including marketing) was £372m - so both much lower than the numbers you cite and with more savings to come.
The blinkered are out early this morning.
Interesting theory that's kind of debunked immediately when checking the company has made profit every year except when being hit with external inflation and excess shipping costs etc etc etc...
Yuri, do we believe you, or Boohoo's accountants who know the financial position inside out, and their auditors? I think I trust the latter more than you! If they are optimistic, then so am I! They are not alone in having issues since Brexit, and transitioning is painful, but its clear they are now sailing in to calmer waters, so hoist the sails!
There's no rationale for improvement, costs of stales will stay around 50% of revenues (profit margin), distribution costs will be roughly £400m (variable component), admin expenses will stay at around £500m, therefore without £2B of revenues actually materializing - this is toast and current sp is way too high (currently it's priced like it's already happened and there's no risk of it not delivering which is ridiculous since it's based purely on faith, not the facts).
JWB, what's your exit point here, 40p?
Hi Ocean,
The £100m cash outflow you asked about is described and detailed in the report.
The actual cash flow of the operations was broadly break-even. This was £130m worse than last year almost entirely due to the inventories which went down around £100m last year (as they tightened up on this) and up nearly £30m this year (to support the US DC).
So this is the main reason cash flow is so much worse than last year.
The £100m total outflow though doesn’t come from the operations (as I said l, that was breakeven) but from capex (£65m), EBT shares purchased (£15m) and net interest and lease costs (£23m) and a few other small ins and outs. In total these were broadly the same as last year - again pointing to the change in inventory as the main cause of cash deteriorating.
FY2025 will be better because of lower capex and hopefully better operating cash flow (with lower costs and better inventory) but probably not enough to give positive overall cash flow (though just the FCF bit ought to be - as they’ve said).
By the way most of the £50m cost of closure of the DC you mentioned did not impact cash. It was mostly just a write off of the assets held on the balance sheet so just hit profit not cash. The cash cost of the closure was less than £10m.
Fair play JWB looks like you timed your buy in well yesterday.
Im expecting this to improve better than what's forecast for this year in the market... Q1 I think will show more improvements again within the business.
It's already a 1000 staff lighter than last year also
Major European markets traded mixed on Thursday as investors await the Bank of England's latest monetary policy decision. Today, Ferrovial, Telefónica, EDP, Enel, Pirelli, and Salvatore Ferragamo will publish their results.
At 8:01 am CET, the DAX and the FTSE 100 were flat, while the CAC 40 fell 0.20%. A minute later, the pan-European Euro Stoxx 50 inched down 0.30%.
On the currency front, the euro was flat against the dollar at 8:00 am CET, selling for $1.07435. In comparison, the pound lost 0.06% to go for $1.24906 at the same time.
Baha Breaking News (BBN) / JG
The business was making over double the margin on 20% is more sales in the past which created cash for organic growth
In my view the CEO has done well and set trends followed by ASOS, savage cost cutting being the big one
A slight negative net profit would also see the debt facility largely deleted
Classic rights issue stuff debt management and growth.
But yes still need to figure out where the c£100M in cash went in FY24
Hey ocean - I read your post last night and this morning... My thoughts on a few lf the points...
"Need to review more closely how cash has been depleted. I see a £50M exceptional cost associated with DC closure but surely it doesnt cost them that to turns the lights out and lock the door."
It looks to me like they have kitchen sinked this year to streamline the business taking all associated costs in an already not good year. (hopefully to start this year with a cleaniish slate)
" Im my view if FY25 pans about give or take on forecast the business will be back on track but still needing to invest/expand. wouldnt surprise me in the slightly if a 2026 rights issue was annouced."
Im not sure there is that much more to invest with all the infrastructure in place, the company have said capex will be smaller as well.
" with impaired margins it would make more sense to do a RI versus take on debt to maintain the business in the medium term."
I think they will probably sell the london office to generate at least 100 million quid.
If they attempt a rights issue they will kiss good buy to large parts of their own bonus plans which are reliant solely on share price.
They have adjusted the bonus incentive scheme a second time which was voted in their favour of, but it was a narrow victory.... If they try a rights issue and a bonus scheme adjustment I feel the scheme adjustment would be a white wash "NO".
John lyttles lives are maxed out imo - no way will he get another chance of a new bonus scheme.
It is fair to say the light is looks closer to the end of the tunnel now compare to 2022
This who want in…. What are you waiting for?
Sector is picking momentum and the e-tailors are re-building their empires to a new elastic / slim fit model.
Reality is we may have to wait 6/12 months from now to see a sp re-rate here and in Asos but the good news is…. You will all be smiling except the nuances here.
Boohoo (BOO) is using 2024 as a ‘fix-up’ year but it won’t get interesting until the second half, says Liberum.
Analyst Wayne Brown retained his ‘hold’ recommendation and target price of 32p on the online fast fashion retailer, which traded sideways at 35.2p after its preliminary results yesterday.
The group has ‘taken full-year 2024 as a fix-up year and this is reflected through the prelim results’, said Brown.
It has shifted its strategy to core brands that have created ‘noise in revenues’ and despite the tough trading there are ‘green shoots appearing’, with improvement in earnings margins reflecting ‘work done on admin and distribution costs’.
Although losses at Boohoo ballooned to £160m – 70% more than last year – and sales were down double-digits, the poor numbers were expected and guidance was unchanged for full-year 2025.
Brown noted that the guidance is ‘positive for free cashflow’ in 2025 and Boohoo ‘remains steadfast in hitting the 6%-8% medium-term [pre-tax profit] margin target’.
‘The shares look attractive trading at only 1.3 times price to book, and while we believe the group could soon turn the corner back into revenue growth, the timing of this remains uncertain so we remain “hold” but the second half of this year looks much more interesting,’ Brown said.
https://citywire.com/funds-insider/news/expert-view-puretech-norcros-wetherspoon-boohoo-direct-line/a2442045?page=4
Im my view if FY25 pans about give or take on forecast the business will be back on track but still needing to invest/expand. wouldnt surprise me in the slightly if a 2026 rights issue was annouced.
with impaired margins it would make more sense to do a RI versus take on debt to maintain the business in the medium term.
hmmm
Grade A chicken nork
Why?
Where's the money going??
If they hadn't trimmed some fat, what would the loss have been??
Loss leaders are not working, can't do that on every item you sell?
I like your positivity Toffers but this isn’t going to 75p any time soon. Not trying to spoil your party, just being real. We might make 40p or just over but we won’t see 75p until after CMD later this year, if then.
Fifteen hours and counting for the man child
It's beyond sad
Shorts, you're all in trouble, the bottom was hit today, it will be up from here. Every move up must be frightening for you all, but you had your chance to flee this morning and didn't take it. The only way is UP now, todays news will have been digested, and many will see that it's not as bad as first thought. If analysts are giving it a buy rating and looking at 75p, then upwards we will go and that 75p won't be far away, in fact, I'd say it's pretty much in touching distance. Let's see what tomorrow brings, but we sure don't need the nappy brigade here tomorrow.
Updated results projecting FCF througout FY25 also imply a loss during this period.
Need to review more closely how cash has been depleted. I see a £50M exceptional cost associated with DC closure but surely it doesnt cost them that to turns the lights out and lock the door.
Where did the cash go, thats my question.
As at today Barclays adjusted their profit forecasts, previously the marked FY24 as a return to profit.
Now, Barclays forecast FY25 to be a minor net loss returning to profit by FY26
Frankly, thats quite a wide variance. suggesting og guess work at best.
Doubly so, reviewing most broker views is a great timewaster for those looking for a laugh.
With this being said I think Boohoo will return to profit in this time frame.
It is interesting to read that the £100M reinvented into 'price' hasnt added up to much, and for me this is cause for review as to how elastic the sales model is.
Its also pause for considerations that a whooping c£130M of cost has been crowbarred out of the business whilst still depleting c£100M cash reserves. This implies a greater cost issue.
Has anyone got clarity on precisely where this c£100M of costs accrued from?
DTN
Move that decimal point and I have sold some for a not dissimilar value
£ 3.78 Doug, shocker, but there will be worse off
Can make a €9.04 and a €9.07 for RYA.
Clever clogs doug thought they go bankrupt in 2022, fool.
Price up = happy DT.
Not far off my b/e, whereas you are miles away
£3.78 anyone? "no brainer buy"