Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
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Ā£3m for the av.com domain. WOW. Hope they are going to start splitting out the results of this acquisition separately from now on so we can all sit back in the knowledge it was money well spent and is paying its way.
Https://www.gear4musicplc.com/media/1314/gear4music-ar23.pdf
Call me old fashioned but I can't find the 2023 accounts on the website even though they say they are there today.
I think it is very difficult for them to get customer loyalty, or to upsell a customer or to get a customer to buy add-ons. And I think they are already doing what they can.
Online shopping is so much less hassle than bricks and mortar shopping making it much easier to shop around. So if they manage to suggest to you that the product you are buying (x) goes well with something else (y) all you need to do is open another tab and find who is selling product y the cheapest and buy it from them. No need to buy x and y from the same retailer. No need to walk a mile to see how much someone else is selling it for, its just a few clicks away.
An online retailer doesnāt get to talk to the customer face to face so they are very difficult to influence, very difficult to affect the sales lifetime value. Almost everything is dominated by price (if you and your competitors are competent in customer delivery).
They bought av.com as their āplatform supports multiple verticalsā. They have said very little about it but Progressive Research think its off to a slow start. Almost whatever area they more into they will be up against others with developed online retail platforms so will find it no easier that musical instrument retail.
Bar cutting costs I donāt know how they produce profit for shareholders. This kind of online retail isnāt as profitable as it was a few years ago when most of your competitors had physical shops to support. So I donāt think the shares are currently undervalued.
Has anyone got any views on the figure they give for sales lifetime value of Ā£302. Looks low to me compared to other retail sector. Could this be an opportunity?
Ā£20m or so market cap looks like a bargain in the medium/long term given their property asset base, customer data, and software platform.
Year end presentation also says their "platform supports multiple verticals" - so maybe we will see them diversify further into other markets to get that sales lifetime value up a bit.
The latest long term incentive plan and grant of options (announced 24/07/23) shows just how far below expectations of a few years ago the company is performing.
The 2023 scheme for management replaces the 2018 and 2021 schemes. The 2018 target for the share price at the end of FY2026 was Ā£35, amended to Ā£17 in October 2020. Itās now Ā£3.
In 2021 the target fully diluted EPS for FY25 was 61p. The current forecast from Progressive Research is 9.3p.
The fundamental structure of the markets they are in hasnāt changed much in the last five years.
Even Ā£3 seems challenging. Their online musical instruments retail business would seem to be mature with the website developed and the own brand stocking model being in place but itās not making profit.
Until at least 22 June they had Liontrust Investment Partners buying shares effectively supporting a Ā£1 per share price. Without that support this still looks overvalued. In FY23 sales of Ā£150m generated no profit for shareholders. Where is the profit going to come from? Can they carve out large costs and still sustain the business? A mature business that cannot generate profit in normal trading years has little value.
G4M launched their own brand of mid-range instruments today. The market has taken the news very well. Profit margin should be better on your own gear and if the kit is good it will build brand loyalty.
Fair analysis KillerJoe.
A big part of my reasoning for buying G4M was that the stock was totally bombed-out, yet the company generated sufficient cash to reduce net debt by 40% (from Ā£24.2m to Ā£14.5m) in the last 12 months.
Who knows, but today's very welcome share price rise has taken my investment to break-even.
I remain a (fairly happy) holder.
In a retail market where the drift from bricks and mortar to online seems to be largely complete and the online retailers all have access to the same brands (which they can list without actually stocking) it will be very difficult for any retailer to differentiate itself. So, unless one can get into a monopolistic position, we shouldnāt really expect much profit. But making nothing on Ā£150m sales seems a particularly poor performance especially when there are no real exceptional items.
They talk about having to increase stock early in the period due to shipping delays. In an inflationary environment buying early should increase reported margin. That they have said they have had to discount some to shift it suggests that they havenāt just accelerated buying strong selling lines but have taken risks on a significant amount of lines without strong sales history and got their fingers burnt. Poor buying?
Unless we can find out the results of their main competitors for the same period we canāt tell if online musical instruments retail has become a low profit game or if G4M are just not particularly good at it.
The fall of Ā£1.2M to Ā£1.6M in EBITDA is on estimates given only 11 weeks ago. As they have a March year end all of that reduction should relate to trading from 19 Jan (last update) to 31 March. With no other reason given other than market conditions they must have had a very weak 11 weeks.
EBITDA Ā£1.2m to Ā£1.6m down on expectations. With net profit expectation having been Ā£1m they would appear to be trading at a loss.
Sales up 3% yoy at a time of inflation of at least 6% (for manufactured goods) in their markets so a drop in sales volume. No end in sight to reduced consumer confidence. Quite possible in line with their competitors.
Pinning some growth hopes on AV.com but that is a market that already has established bricks and clicks players some of whom are trading online successfully through their own websites and Amazon marketplace and ebay and are properly financed and know their trade. G4M don't have the finances for a price war so growth at av.com likely to be slow.
Net debt down and manageable but could be thin gruel for shareholders for some time.
Profit warning - down only 6% - mmm....
I canāt buy Ā£5000 worth of shares, no live price on HL.
Joe , i agree with you but if G4M have sales of Ā£150M and hardly any profits how can the high street survive ? surly they will all need to raise prices in order to survive otherwise what the point to have a business if you are selling at loss
The problems are that the musical instruments and AV retail markets in western Europe are very settled with all the big players doing a competent job. There is no reason for G4Mās market share to change much one way or the other. Even the UKās main bricks and mortar retailer in the sector (PMT) has returned to its pre Covid sales level so there is no evidence of online retailers increasing their market share rapidly. AV.com is a slow burn at best as there are other established online players in the sector. They talk about own brand but at the cheap end there is loads of China factory direct stuff on Amazon, in the mid-market there are established worldwide brand names, the more specialist product requires top online and magazine reviews to sell (very difficult to get consistently with OEM and ODM product) and the high end is a hobbyists market that wonāt buy own brand. So AV.com has no competitive advantage.
Net debt, while manageable, Is too high to allow other ventures. So it maybe a quiet couple of years from G4M while they pay down debt.
No reason for the market to change its valuation.
Is the offer for UBG @ 150% premium the start of companies looking at ridiculously undervalued retail / ecommerce businesses. This business just feels like its worth a lot more than the current value
52 week low , there should be update this month
Panic?
Definitely something brewing
Topped out as Axa must be close to out, 83 so far lowest to buy ,
Not if one feels forthcoming updates could be unfavourable or that a better return could be had elsewhere, for example.
Holding halved from around 10% to around 5%.
Bit weird to sell down here...
About time itās gone NT to buy so hopefully this was the bottom
Patience will pay here, they are trying to show tiny sells at 88 to put people off