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With the amount of cash on hand it does make sense to purchase the building outright. Also if the cash is just going to sit there uninvested and keep growing and growing they should really be looking towards a dividend.
I’m not someone who is overly fussed by dividends but I think it would make sense if the alternative it to buy property.
Paul Scott was a Finance Director of a UK Fashion Company before leaving to become a personal investor and write for the likes of the Small Cap Value Report on Stockopedia.
Here is what he has to say about Boohoo Group's Property Acquisitions:-
In my view this share is the ultimate coffee can share - it's my biggest personal portfolio holding, and I intend holding forever.
It's already more than 10-bagged from the lows a few years ago, and I think the almost infinitely scalable business model, combined with incredibly hard-working and ambitious management with plenty of skin in the game, should be a winning formula for investors.
Could it 10-bag again from here, to make a >100 bagger in total?
Yes, I think so, taking a say 10-15 year view.
Mudis - I would imagine if Boohoo wish to sell it, it will be sold to the highest bidder.
Boohoo Management are extremely savvy when it comes to buying acquisitions from administration, when buying property and no doubt when selling property in the future.
Yea, will sell it to Kamani property group.
Mudis - buying freehold means lower risk for Boohoo. Boohoo can always sell the office and lease it back at some time in the future if they wish to raise cash.
Boohoo need to embed the new brands before buying any further brands.
This is what I like about Boohoo, they take their time to do things properly and never overextend themselves. For me, this is the sign of a great business.
One point i'd like to make on this is that the Fashion Industry is London centric, BH Group have only managed to get the calibre of people they have by keeping these Brands in London, Philip Green allegedly went purple when his best buyers and heads of kept leaving to go to Asos he is said to have even rang up Nick Robertson and screamed down the phone at him to stop. Anyway point is they have a major competitor with some extremely experienced talent just down the Road in GLC on Mornington Crescent, BH have deep pockets and the lure of a nice s****y office (Asos by no means shabby btw !!!) in the heart of a vibrant Soho with all it's Indie, Shops, Bars and Restaurants (which the rag trade loves!!!) it will be quite a pull for anyone who gets a phone call, they could do worse than to also drag the Cheshire set down to the smoke as well, thinking about it forget Soho, drag em to Essex's beating heart Romford.
Could of easily rented office space and invested that money in to growth. To me it shows company got no better ideas where to put money.
Mudis - it's not wasted, it's a great investment. This is the time to buy commercial property in London when it's cheap.
Boohoo need to attract creative talent in London to work on the brands they have acquired.
Boohoo have 15 brands now, Boohoo, BoohooMan, Prettylittlething, Nasty Gal, MissPap, Karen Millen, Coast, Oasis, Warehouse, Wallis, Burton, Dorothy Perkins, Debenhams, Maine New England and Mantaray.
I believe Karen Millen, Coast, Oasis, Warehouse, Wallis, Burton, Dorothy Perkins, Debenhams, Maine New England and Mantaray will all be based at this office building in London.
Read my posts below from Paul Scott.
Paul Scott continued:-
In my view this share is the ultimate coffee can share - it's my biggest personal portfolio holding, and I intend holding forever. It's already more than 10-bagged from the lows a few years ago, and I think the almost infinitely scalable business model, combined with incredibly hard-working and ambitious management with plenty of skin in the game, should be a winning formula for investors. Could it 10-bag again from here, to make a >100 bagger in total? Yes, I think so, taking a say 10-15 year view.
Paul Scott was a Finance Director of a UK Fashion Company before leaving to become a personal investor and write for the likes of the Small Cap Value Report on Stockopedia.
Here is what he has to say about Boohoo Group's Property Acquisitions:-
This looks interesting. BOO has bought an office block in Soho -
The Evening Standard gives more details on the Soho office deal -
• 10 Great Pulteney Street
• 46,000 sq.ft.
I’ve googled it, and the building BOO has bought (freehold - I've just confirmed this with the company) is currently called Nokia House. It’s within walking distance of the main garment area (which is a little further north, clustered around Great Titchfield Street). Soho is a much more interesting place to work though, full of interesting bars & restaurants, so with flexible working being offered as well, then I think BOO will have no trouble attracting the best creative talent to work in this new Soho office.
This comes hot on the heels of a “transformative” deal to acquire a large “state of the art” 1.2 m warehouse in Daventry, which was completed in 2019 for former owner, Arcadia group (since gone bust, and broken up). This warehouse deal enables BOO to increase capacity to £4bn of sales, more than double forecast £1.7bn revenues for FY 02/2021.
My opinion - these property deals demonstrate how serious BOO is about major expansion, not just organic, but also from all the new brands acquired. The former Arcadia brands, and Debenhams, already had significant online sales. With BOO group expertise, and a total focus on online only, I think we could see a major increase in revenues & profits, looking forwards say 2 years, once the new brands have been assimilated.
It’s very exciting, and the current forward PER of 32 really doesn’t reflect the massive expansion in the pipeline from all these new brands (it’s now 15 brands in total), in my opinion.
Hopefully ESG concerns might be a distant memory in a year or two, although never underestimate the power of the press to keep regurgitating the same story! I think anyone likely to sell on ESG concerns, is almost certainly out by now. Once they see the growth, and the higher standards being implemented on ESG, then maybe some of those sellers will be buying back in at a later date, and a higher price? ESG funds should engage with companies where there are concerns, not just walk away - how is that meant to help things improve?
There’s nothing particularly bad about the garment sector. People need clothes, they gradually turn into fluff on a tumble dryer's filter, so need to be replaced. Young people in particular want the latest looks, and why shouldn’t they? BOO garments are not the cheapest on the market, and are not designed to be worn once, that's a fallacy. I do think the group needs a better PR team, as so many of the hostile press articles are based on flawed opinions - e.g. if you watch the parliamentary committee which questioned BOO management, this