With many, many thanks to the CEO’s from Zephyr Energy, Power Metal Resources, Scirocco Energy and SpectrumX who entertained and informed us at last night’s investor event. To see their video presentations view here.
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Take that one up with Buffet Kal although I assume you mean the dot com boom at new year 1999. 6.930points although the last time I looked it was at 7032 points on Friday so technically you are incorrect not to mention total divi returns but that is nit picking and the old Warren boy was right there is no time frame.Although even with indices buy low sell high as you know nothing stays high forever.
“ALDI, LIDL, Primark”
All these companies you are obsessed with are discounters …. They are no frills businesses offering no quality to their product. They aim to sell as much as possible to the less well off in society. They wouldn’t be able to successfully run a digital strategy because it would erode their tight margins too much.
You’re not comparing apples with apples. It’s like comparing Ryanair or easyJet with a middle of the road airline. They are not competing for the same quality of customer.
“ they always come back but as for shares many don’t .”
Ftse 100 hasn’t come back in 22 yrs
But each to their own
Good you quoted, like him I go for businesses that have gone through a few economic cycles
Boohoo has gone through no down trend in consumer spend yet
It’s when tide turn we know who was swimming naked
I think that is much the same as PP1 but as I have said before if you die you could leave family a lot less and I don’t have the patience although I trade short term a lot I prefer the big indices for anything long term as old Buffet says they always come back but as for shares many don’t .
“ nother one for Kal there looks to be an incoming death cross early next week on Abf this happened to boo in June in the 3.20’s look where it is now ,may not happen of course but if it does could turn into a small waterfall or a Niagra the way the markets are at the momen”
As I said before I don’t get hung up on share prices, Mr Market creates lots of surprises. As long as customers keep queuing up at Primark I don’t care about the share price.
I,ve had 50% top tick to bottom tick drops plenty of times in my career. The last one was 17th March 2020 PFD was 17.84p, it si now 112p. At the time customers were queuing up at supermarkets at 05:00am to hover up any PFD products they could lay their hands on, but share price was loosing me equivalent to a detached house in the south east. An year later the same amount of shares were worth 6 detached houses in the south east. If I was a gambler like most on this forum then I could have set a stop loss and sold out but in the long term fundamentals always win, the customers queuing up in supermarkets was infinitely more important fundamental indicating the future direction of the share price, short term Mr market does throw surprises though
Another one for Kal there looks to be an incoming death cross early next week on Abf this happened to boo in June in the 3.20’s look where it is now ,may not happen of course but if it does could turn into a small waterfall or a Niagra the way the markets are at the moment also it is now sell on all time frames.As for boo still struggling with one attack after another what happened to innocent until proven guilty ? The bottom may still not have been hit yet and now in uncharted territory IMO .
"The reason companies move online is because that’s where the sales are"
You are wrong ALDI, LIDL, Primark are not online and they have gained more customers than omni channel players who have managed to just detroy their margins due to their multi channel presence.
Longer term the Big 4 can only be a target for asset stripping excercise like debenhams, it's all due to short term tactics and no long term strategy. You see that with the interested in ASDA and MRW lately.
I see Amazon through it's physical shops with great potential, as it provides them low cost rentals currently on offer, low business rates coming and low cost last mile which they are unable to do using pure online groceries.
ALDI and LIDL will continue taking share, they were previously not take share from some expensive parts of London now they will. BTW ALDI and LIDL do a lot of apparel as well, even Pepco(poundland fashion shop) had started doing a lot of business during the lockdown. Now pepco will be trebling stores in Europe.
A recent example is LIDL opening up in one of the poshest parts of the South East in a town called Marlow.
The middle classes are an ever diminishing category in the Western economies due to central bank policy of making rich richer and poor poorer. Align yourself to luxury or discount centers in your portfolio as this trend will not stop, it was there before internet and will continue after pandemic
Discount retail will be there flourishing even in a recession.
In the previous two recessions 2009 and 2001 Primark sales had actually gone up.
Hi Kellu - I agree with you actually re the larger kingfisher group tbf.
They’ve had to do a lot of work on the procurement side to bring their cost of sale down because until the pandemic the diy side was struggling.
I think their whole global corp buys from 100 key suppliers which in terms of purchasing power is great but doesn’t offer much choice to the customer.
Screwfix is the jewel in the crown.
The reason companies move online is because that’s where the sales are. Bricks and mortar are expensive.
The idea that taking on all the overhead is somehow better for margins is quite frankly laughable.
I like screwfix, their digital strategy, their business model, their implementation, their IT tech stack.
What I don't like is the bigger group i.e. Kingfisher plc, so unfortunately I cannot recommend investing in their share.
Again you don't have any answer the phonemenon I am pointing out to which is physical less profitable customer subsidising click and collect customer and then just make a general comment about companies doing well out of omnichannel.
You don't share any metrics from the examples you have presented. come out with the details and then we can detail.
general broad brush comments like "Look at Next " don't really help please come out with metrics, data details and then we can debate.
" Look at Next"
Have you looked at Next in detail? Their margins have been decreasing, their last report was 28% up on two years ago in the quarter which half the quarter had lockdown which means they will be flat in the next quarter compared to two years ago?don't always look at share price of Next, I don't care about share prices, I only look at sales, metrics retail densities etc.
The share price will finally catch up with Next over the long term.
Regarding Screwfix, it has a better digital strategy than most, but again due to the nature of their business they don't suffer from physical less profitable customer subsidising click and collect customer, as vast majority of there business is click and collect, they are setup for click and collect fundamentally.
I also like the fact that their IT stack is just one application from backend to frontend.
But again they are predominantly single channel click and collect
Omni channel being offerred by clothing retailers like Zara, H&M, Next et al will reduce their margins over the long term.
Have a look at the last 10 yrs financial results of H&M and you will see that in margins, ROCE etc, it's going to get worse slowly.
90% of IT/Digital projects in most companies are just "Boondoggles"
Plenty of companies operate omnichannel successfully. Look at Next or screwfix for two just off the top of my head. Physical stores restrict the amount of lines you can carry, as there is a finite amount if space.
That’s why if you’re a man with a 34-38 inch waste going to physical shops is pointless as they will rarely have your size as the stock will be sold out. We can carry four times as many lines online as instore.
Just to elaborate on the problem of the Cloud adoption practice of multi channel retailers.
You will find that balance sheets have lease liabilities on physical assets used by the business.
However, you will not find any reference to lease liabilities on cloud digital assets, these are very expensive assets but the companies carry on business without any account of these liabilities.
These digital asset liabilities are extremely risk for omni channel operator
They subsidise the less profitable "click and collect" customer at the cost of more profitable physical store customer, which further accelerates the adoption of "click and collect" channel which indirectly builds the digital liabilities of the company even more, which are not accounted for and the cycle repeats itself into a death spiral.
I have seen evidence of that to certain extent in overleveraged debenhams and to a smaller extent in topshop
Both were omni channel, both increased customers in online channel before their demise.
Omni channel is no silver bullet infact it worsens the financial metrics like ROCE, KPI like retail sales density etc.
You might have spent "t five year developing an omni-channel offering" but I sincerely doubt you have considered the long term implications of this as above. Most people like myself, just do their job but I doubt they understand the implications long term on balancesheet, ROCE, retail sales densities etc.
“” who has spent the last five year developing an omni-channel offering. Online is by far our fasted growing channel. Some stores are basically now hubs for click and collect sales””
When did I say Omni channel is a good strategy it’s even worse than the boohoo type pure play online. Omni channel just means operational costs are even higher as the brand now has two land lords a physical one (negotiable) digital landlords who are monopolies (non negotiable).
The situation is further exasperated by the fact the more profitable physical only Customer subsidises the click and collect customer. In H&M physical customers complain about waiting for online customers to return their stuff
The subsidising of click and collect customer further encourages less profitable online behaviour
On the balance sheets of multi channel retailers there are long term lease liabilities of physical landlords but no long term lease liabilities of digital landlords
It’s a recipe for disaster especially with multi channel operators adopting the cloud
Kellu - primark sells cheap clothes to folk without much cash - or people who want cheap work gear. Not too bad for kids and baby clothes either.
Boohoo is one brand in the portfolio. We’re now serving multiple segments. Primark needs the high density because they are selling unfashionable low quality low margin junk.
With every new generation of shoppers the desire to buy goods from physical stores erodes and the expectation to purchase their favourite brands increases, dramatically I would say. This will not reverse.
And I say that working for a company with a large bricks and mortar presence, albeit not in retail, who has spent the last five year developing an omni-channel offering. Online is by far our fasted growing channel. Some stores are basically now hubs for click and collect sales.
"If the customer has used BH before they will have a good idea about fit and quality."
Please don't joke "fit and quality" and "boohoo" are worlds apart. People found a novelty business to try out a few times, it's now done, they will move on to Shein try it out, finish that and then something else about. Short term business with short term investors, they get what they sow.
Half board to Primark Birmingham 21st November, you might want to take if you are done with you gambling on your desk.
"a single item of cheap clothes"
Such comments can only come from online traders or gamblers who actually don't go to the shops
Go to Primark and find me how many people buy a single item of cheap cloth. It's retail sales density is more than 5 times Marks and spencers and 2-3 times(depending upon country) that of TK Maxx which is again a high volume off price retailers. You just cannot match Primark volumes, you won't find very many one item shoppers in Primark. Travel agents sell Primark tours to the biggest Primark in the world in Birmingham. They are destination stores. Parents during summer holidays give children £20 pocket money to go to Primark to shop instead of paying holiday club.
"What will you do if, but more likely when, primark is spun off from ABF?"
The weston family is majority shareholder and they won't be letting any activist in. They don't have shorters, activists, no debt and each and every business is the most efficient in the world at what it does. YOu just cannot compete, there is nobody who dares enter high streets trying to compete with Primark. While they had gone to Spain in 2005 and 10 years later became bigger retailer than Zara beating them in their home turf.
Primark is not like Boohoo/online business model where a new operator crops up everyday to compete.
Shein is just one example but there are hundreds of others over the last couple of year.s
Then double the cost when you decide you don't want that item anymore or one of the items you stupidly bought as you didn't want to try it on etc. and have to go back to the shop (travel and parking again) to return the item. We could get into all the opportunity cost of time wasted by an individual.
your premise Kall, seems to be that it is cheaper to go B&M than online for the company to sell its goods.
That's fine in as far as it goes, but what does the customer want?
Say you live 5 miles from Primark (as that's your thing), £2 fuel, plus £3 parking to buy some or a single item of cheap clothes. Because the clothes are cheap expectation of quality and fit is low. Time spent? 2 hours from start to finish for £10 of goods increased by 50% to £15 with fuel and parking.
Then we could factor in the weather. what if it is freezing or raining or perhaps very hot and you would rather be in the park or garden rather stuck in Saturday shopping traffic? Per haps you wanted to buy the item sooner but only have the weekend to get to the shops, and you have better things to do than give up half a day nearly just to buy a top?
Cost is important to both the retailer and purchaser as is convenience, as is value, whether real or perceived. Its not quite as black and white as you constantly [odt that Primark fantastic boo (and everybody else )rubbish.
If you truly believe what you post (and I m personally not convinced), then having such a limited portfolio is a very, very high risk strategy indeed.
(What will you do if, but more likely when, primark is spun off from ABF?)
If the customer has used BH before they will have a good idea about fit and quality.
" I am afraid you are an 'on-line' denier!!! I can just imagine you spouting, a few years ago, 'Amazon ....crazy."
You don't even know why Amazon did what it did. Jeff Bezo's words were internet-sheminternet, he does care about online or physical what matters is customer and what they want. The customers want cheap clothes in case of Jeff Bezo/Books in 1999 the cost of warehousing space was 30cents while retail space was $7, now the tables have reversed. The cost of retail space is record low and cost of warehouses are record high and that is why you see Jeff Bezos opening stores now.
Just though I would share this research I did a few months ago.
I was looking at a shop to buy for investment in darlington at auction site allsop
Lot 100 - 54 Northgate, Darlington, County Durham, DL1 1PR - link below
at £220,000.00 Subject to Contract.
This shop was leased to Shoezone in 2000 for 70,000 GBP 20 years later it was leased to Shoezone for 25,000 GBP for a shorter more flexible lease with lockdown clauses with lower the rent to half during lockdown.
70k rent reduced to 25k over 20 years means including inflation the rent is down to 10k from 70k.
Shoezone's average lease length is 2 years so as it releases it's estate, and if the same/similar trend is followed, it's lease liabilities are expected to much much much lower than before.
Also interested to read in the latest contracts signed that in the event of the lockdown shoezone will only be paying landlord 50% of the rent. So the risk is much reduced going forwards.
Amazing Kalumama...................!!!! Only person I have come across that can put positive 'spin' on such bad news from the high street. The high street has been in demise for a number of years now......because of publics change in attitude to buying on line. How can you say that on-line will suffer in the long term when on-line sales has grown exponentially for so many years now. I am afraid you are an 'on-line' denier!!! I can just imagine you spouting, a few years ago, 'Amazon ....crazy....it will never take off.....why would anybody buy shares in such an out-fit beats me'...........from nothing to one of the biggest companies in the world in a decade or so!!! I, like many on here, know the risks of being a Boohoo share holder but I am fully confident in them over coming all of the negatives eventually.....They will continue to expand under Kamani's leadership, so I have no worries about the current SP!!
"Shopping Malls turning into ghost towns!!"
Mate this is positive news, the more the noise the more likely the government is going to make business rates lower to the advantage of physical stores and disadvantage of online operators. Amazon realises this via 100-200 staff hired who are former policy makers, advisers, lobbyists. They will soon lower business rates and Amazon will be all over shopping centers untill then Amazon just has plans for 12 shops in greater london and has hired Tony Hogget chief operating officer of tesco to take care of their shops in the future and expand the shops estate.
The article states:
"The Daily Mail's long-running Save Our High Streets campaign calls for a level playing field between traditional shops and their newer online rivals."
Most news planted in Daily is directly/indirectly paid for by PR departments of companies.
Daily mail journalists need food to eat and house to live.
Shopping Malls turning into ghost towns!!