RE: So we got carried away5 Mar 2025 07:43
Morning,
I think timing came into things (given the market sell-off this week didn't need much help anyway) and potentially a bit of profit-taking given the share price rocketed from its lows. Also, some may have heard lower AOV and made assumptions.
What I clearly heard was that even in a difficult week HUD is still running at a quarterly rate of 169,000 orders vs. 110,000 in Q4. That is 53% higher. I also listened to Martin's messaging about how good it could have been without the lift problem and the ramp-up in advertising that is coming for all 3 brands in March. So far such advertising has delivered substantial growth
I ran some calculations on the possible AOVs of the 3 brands and noted that Nutricircle was already at a c. 46% new customers in Q4 leading to a c. £33.30 spend per customer. They have been running at c. 50% the last two weeks but they have also expanded their product range.
Boop was at c. 74% new customers in Q4 and still did £37 AOV. TikTok we are told leads to slightly lower spend but at the same time, they've got some large ticket items making the news which should help counter that. I calculated that they have averaged around 3,000 orders a week for the last two weeks. That's a run rate of 39,000 per quarter. This places their new customer rate at a minimum of 68% but likely it's running much higher. Still, as we know Q4 still managed an AOV of £37.
But the biggest brand in terms of sales contribution right now is Discount Dragons. It averaged an AOV of £40 in Q4 (which grew throughout 2024) whilst adding 24.7% new customers. At the 8,000 orders per week run rate reported these last couple of weeks they would be adding a minimum of 28,000 new customers a quarter which is a minimum c. 27% of total sales. However, it is likely slightly higher than this.
I respect the Christmas period for potentially enhancing the AOV but I also recognise that they sold off slow-moving stock at a heavy discount too.
If DD maintains it's £40 AOV then it will produce c. £4.15m in revenues per quarter and help keep the overall group AOV elevated whilst the large number of new customers for the other two brands recycle into returning customers. In comparison, the other two brands at the above AOVs (£33.30 and £37) would contribute c. £3m in sales.
I don't see any downward movement in the Nutricircle AOV but Boop could reduce as TikTok sales begin to dominate. But I also see things like the Sun Newspaper article on the perfumes they are selling + the 390 TikTok perfume sale orders from w/e 21st Feb update at £60 a pop. These are very helpful in helping keep that AOV closer to its Q4 outcome.
What is great is that if these weekly updates continue then we will receive more detail as we go along. What this does is remove the long waits for quarterly updates which was killing interest in the business.
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