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danl90 #sigh could be long day.
Gymshark is more appropriate a comparator than Asos as it is also it's own brand and not a reseller of other brand.
To be clear from my eyes this reads like Asos do not have own buy, can't see anywhere that you mention Asos has own buy, you are saying that B/H is same as Gymshark in that it develops and sells its own buy product and Asos is a reseller.
I'm merely pointing out that it has both and contrary to your latest mail this far from being a disadvantage it is a massive strength. If B/H Glam Girl/Alpha Male look starts to wane then it has to re invent the wheel, Asos don't they simply buy in a Brand to cover this area (as they did bringing in B/H!!!!!) whilst they rotate their own buy and as they are doing with Luxe and Dark Future, in fact Asos are very sharp at spotting these trends early, they start to see it first through the Brands and then start to bring that look into there own buy, B/H achiles heal is that they do not get this visibility early and when the trend suddenly appears it takes time to react by which time you have lost market share, classic example is Topman/Topshop, which whilst still relevant has had market share taken away. What they going to do when GlamGirl generation moves on, as it 10000% will, ok bring in another brand (again Asos were able to very quickly by actually stocking B/H), like the failed brands they have bought in cheaply, they are cheap for a reason not just because they were retailers who also btw had on line offers. Don't get me wrong i get B/H and PYT but they are the here and now and very relevant but i've see it all before it's on the journey up, at mo Asos has much more longevity. I'm in on B/H in quite a big way as i totally see the upside but for longevity it needs to be a bit more than a one trick pony and bringing in failing old Brands won't fill the gap once the GlamGirl moves on.
@ragtrade. I didn't want to get into semantics either but that happens when people infer things which aren't said. But good to see you agree now :)
I just thought it was worth clearing up your misguided point that Asos was similar as it's largest brands are Asos own but taken as only 33% of the business it appears you fail to see the total picture and fundamentally where these businesses differ (for now)
Asos selling own brand is a distraction better both sell own brands at higher margin. The beauty of brand power is if you want PLT as it's the hottest thing to have you have to buy PLT. Why then stock a warehouse with c.850 brands which potentially take away the higher margin sales?
So as to my earlier point better to look to Gymshark to where this could be in terms of value
danl90 won't get involved in a debate on the semantics of your original mail and the way it reads as tbh it's straying and a bit of a waste of time but from this debate people on here can perhaps see that B/H is total own buy and Asos is a mix of own buy and wholesale Branded buys that they have brought in, the beauty of the latter is that they can drop these brands and bring in fresh as and when they want to ring the changes, this also draws in a different customer base, whic in turn can lead them onto the better margin own buy product , also interesting to note in Asos EY statement that they are going to target B/H with Asos Luxe (Glam Girl) and Dark Future (Alpha Male ) this will be one are to keep a close eye on.
@Ragtrade - yes so they have seen that growth in all those areas and it is only 33% its a third the same business as us. In my initial post I didn't say Asos was exclusively a reseller but when your business is 66% reseller that makes you a reseller. They are trying to catch up to own brand as they have realized the error and risk of reseller
I also didn't say Asos own brands weren't strong (second thing you seem to have dreamt) but that it is not the core business as it is only £1bln of a £3bln business.
Please read more carefully next time and try not to infer
HA! Good point Bruce, (for some reason I have been 1 day ahead of myself all week.....)
love your posts Ragtrade - very informative, thanks!
@danl90 in fairness i'm surprised its so high but you suggested that Asos did not have a strong own buy presence it def does and is not insignificant with margins of course being far better. They are scaling back hard on non performing brands, unlike many they actually buying this stock in , not just allowing it to be on there and fulfilled separately, so exit margin is poor, hence the need to increase own by.
See below, there is loads more on there re this but focus for Asos for coming year is def own buy
From the EY statement
? Positioned to capture the global opportunity despite significant short-term uncertainty through continued development
of the ASOS brands, the ASOS platform and the ASOS customer experience
This year, we have continued to build momentum with our 13 strong family of ASOS brands, a business that delivered
sales of over £1bn in the year. Collusion and ASOS 4505 both delivered great growth this year, supported by how well the
product resonated with customers through lockdown. ASOS 4505 grew 89%, whilst Collusion grew 44% and firmly
established itself as a top 10 brand on site.
ASOS Luxe and Dark Future were launched as we developed further choice for our ‘glam girl’ and ‘alpha male’ customer
segments. Both brands had good success with initial launch ranges, but we have taken the opportunity over the summer
to further develop customer engagement, increasing choice in the range and backing the brands with influencer led
campaigns.
I can see SP £6 within a year
I thought the sun rose in the East. It wont be Friday in USA till tomorrow
but if turnover goes up overall net profit could be greater
@ragtrade £1bln of Asos revenue came from their own brands out of £3.3bln of revenue (FY20 annual report) - that's only 33%. Their operating margin is significantly lower due to the sale of third party brands
"Ben Hunt at Investec points out that the growing prevalence of third-party brands on the Asos website, such as Topshop from next month, will dilute profitability, since they carry lower margins than its own Asos Design range"
https://www.ft.com/content/94b6d062-c580-11e9-a8e9-296ca66511c9
They aren't the same business model. Asos could face competition from Amazon for 60% of their business. We only sell our own brands so as long as the brands stay in demand there is no competition as we control all of our (much higher margin) product
plus I imagine the SP will improve this afternoon as the US wakes up to Black Friday
@ragtrade
MARSTON is a great bet now it's tied up with Carlsberg and no supply issues and was paying a dividend.
Can people really see Boo hitting £6? ??
Thanks ...I have two out of the three.. :)
boohoo Group PLC (LON:BOO), easyJet PLC (LON:EZJ) and Marston’s PLC (LON:MARS) are some of the stocks most likely to double in price once the economy recovers, according to Peel Hunt.
I seem to recall that at its peak sales via Asos were Diddley Squat
@danl90 biggest brand on Asos is Asos.
Yes it started off at conception as one of the first aggregators of many Brand's on line but soon moved on to also offer it's own Brand where margins are far more lucrative. Some of their own buy lines run into to 10,s of thousands across the year, to clarify , that's one line of their own brand selling in excess of 40-50k pieces.
Really need to stop obsessing and worrying with where Boo Hoo manufacture half the stuff about it on here is utter bull, NO1 AND BY FAR THE MOST IMPORTANT AND CRITICAL POINT IS TO MAKE PRODUCT THAT PEOPLE WANT TO BUY AND MAKE THEM BELIEVE IN THE BRAND, the rest really doesn't make any difference, they can source from a mix of anywhere to sort short lead and long lead. Cut and Make cost in India for instance is around £1.00 for a min wage and £1.50 /£2.00 living wage, soooo many other factors, eg duty from India is more than from Bdesh but this could be set to change to 0% , washing facilities in UK are very limited so if Fashion changes to more vintage and laundered then UK will be less viable. Really no need to worry about manufacturing, a year ago perhaps diff but in John Lyttle and Andrew Reaney as i have said again so many times these guys really do know their stuff, they are top of their game, they have more experience in Corporate and Social Responsibility within the trade than the whole of the B/H Old Guard put together and this inc's Kamani himself. Worry about the fundamentals and as i currently see it most angles are covered, Auditor will happen and US will be settled some how, either dropped or pay out.
@London69 - and compare this to Gymshark which received investment from a US PE at c.x33 P/e there is amble headroom in Boohoo's valuation
gymshark is more appropriate a comparator than Asos as it is also it's own brand and not a reseller of other brands. Boohoo should attract a premium to this as it has multi brands and therefore a wider demographic to engage with and stay in touch with across the customer journey ie go to work in a Karen Millen dress, night out in a PLT dress and then edgy Sunday hungover instagram photo in a MissPAP outfit
London69 - excellent post. Thanks for your figures.
My thoughts on the factory were it would be used for packaging and distribution same as Burnley. Ive no idea if the plan is for manufacturing. 60% of that is abroad anyway. Only 40% in UK and i can see that becoming higher in favour of none UK.
Good morning all and my thoughts
Income FY ’20 = £1,235m
Income FY ’21 F/C = £1,630m (based on 32% growth as per latest mgt forecast)
EBITDA FY ’21 F/C = £163m (based on 10% EBITDA margin as per latest mgt forecast)
H1 ’21 Revenue = £817m
Q1 vs Q2; 35% income growth in UK and 20% in the US, Europe and rest of world had zero growth.
EBITDA FY ’21 F/C of £163m seems far too low because mgt are predicting that revenue will be flat in H2 ’21 compared to H1. If I roll forward the growth from Q2 to the rest of the year, we would end up with an income forecast for FY ’21 of £2,071m x 10% = EBITDA of £207m.
Market cap today of £3,690m equates to a P/E of 18 which feels very low for a growth company.
Other qualitative views; 1) I work in finance and we went through an audit tender process last month to move from a top 4 firm to a second tier company to save cost. The whole process took about 3 months. 2) I bought the company because of the genius of Mahmud Kamani and I would sell if were to leave. He would simply set-up a Boohoo mark 2 and this time round he would have significant capital behind him. 3) Personally, I do not think they should proceed with the factory because manufacturing is not a strategic focus and they should continue to outsource but with better governance and oversight.
I did think he was having a conversation with one of his aliases.
Anotherbadday - another town called malice clone? Another reason to use the filter function?
Last paragraph in the mails this is money today-
Boohoo has been one of the big winners from the Covid-19 pandemic, with shoppers turning to online shopping in their droves.
At the end of September, the company revealed pre-tax profits jumped to £68.1million in the six months to 31 August, up from £45.2million a year earlier.