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Sam/ DTN,
Why do you think a 570m-ish company valuation? Note that the trademark cost within NBV of intangibles is going to be roughly about £70m and is likely to be vastly under-valued being at cost compared to market value.
As Ben says no known desire for any of this so this is purely conjecture, but I would state 70-80pish
I think its more than just how it relates the current SP, it is also what you think the value of the assets, both tangible and intangible are actually worth and how much of a premium would be paid to acquire the business. I cant see anyone looking to acquire the business for the business model if I am honest, but an acquisition for the IP and and the distribution network could be a tempting buy.
For the record I used to think this was about the £1+ mark but have downgraded this due to the falling revenue and the failing business model.
BDF - I take your point and do see the arguement you are making but THG have made past profits. I suppose this helps your arguement if anything, but they were profitable until the headlines came along, similar to Boo. I agree on the brand staple but disagree on the strategic vision. Personally I also think they have some strengths we don't, but no business is going to be a true like for like comparison.
Kara
'Why would you buy these shares until there is a positive update from the company; I've been sitting on zero growth for two years - investors will think that there money is deployed elsewhere until the tide turns.'
I suppose the old argument is that because you believe there is an optimistic future and want to get in before the positive news and subsequent higher entry price. Otherwise I agree. I posted a while back that one of the biggest dangers here is that it could be a value trap, one which I appear to have fallen for. I don't believe they are going bust and the balance sheet is still decent, so value trap is by far the most likely bad outcome from holding here. All comes down to speculation really, which the market thinks is going to be negative by the looks of it.
The only reason I have held here over the last few years albeit some trimming at 40p and rebuying at 33p is that BOO have some decent strengths that just aren't being leveraged at the moment. I'm sure some competitors would kill to own the portfolio of brands they do coupled with a decent balance sheet and potential growth in US with the distribution centre.
Personally, I am going to see what the results bring before deciding to continue to hold or move on.
Sam - not all of us are underwater here. 60p would be not far off a 100% return for those who bought in low 30s and would be very welcome and thus an attractive prospect to investing at these levels, if you think 60p is achievable that is.
don't most retailers do this though. we have all bought in a sale, looked at the rrp and thought 'that's a load of *******s'
SCB - I appreciate the response. There are parallels here as i don't think many of us have confidence in the current management team especially our CEO and we are facing disruption from super cheap competitors. I think you have also proved my point as over the last 6-7 years of Debenhams life the share price steadily declined into oblivion. If you had identified early on that the business wasn't handling the disruption well and that management weren't up to the task then you would of been significantly richer then waiting and seeing what happened.
'No real entrepreneur or investor judges the viability of a new business by looking at 1 or 2 years of numbers, let alone a business that has 15 years of near flawless performance until it was hit with post pandemic problems....'
You could say that about any business that has faced disruption... Saying that all was rosy prior to a disruption even is meaningless. Imagine being an investor in Debenhams a few years into the disruption caused by fast fashion and being of the mindset that we have had a good history so all will be fine....
Not trying to have a go SCB just that I think that mindset is flawed
Paddy - tend to agree. We were all expecting the worst, so a not great but not horrible result is better than expected.
Debt is still a worry though, but I assume we wont see any major repayments here until the NA sale.
'Not wanting to raise the old intangibles chestnut again but the price:book is looking a bit crazy here now!'
I think you have to consider that old chestnut if talking about NBV to MCAP though, since it is such a huge wedge of the balance sheet and makes the financial position quite weak. Remember the last impairment wiped a big £260m off the balance sheet just like that; yes I know it can be reversed depending upon the CGU performance and expected economic benefit potential, still a concern for me though.
Not trying to be a Debbie downer as I am also overweight here. Hoping for the best whilst expecting the worst!
Million or two*
No idea what my brain did there.....its been a long week!
Anecdotal but I have worked at some medium to large organisations and the redundancy was statutory, especially if you aren't management tier and the reason for the redundancies is closing operations. Generalising here but whilst morale always takes a hit regardless due to worry for the future, the ones who are safe tend to think along the lines of being glad they still have a job.
I think you are probably right about the headlines but Boo already had a bad reputation and I doubt enhancing redundancy would change that image so I am not sure if its worth it. I think an extra million are too are probably needed considering the increasing negative FCF on last update. Times are tight in BOO land!
Why? Most redundancies outside of voluntary/acquisition related or mid-upper management just end up with statutory redundancy? Its not as if we are in a profitable position and any enhanced would make a net profit worse. Moreover, I think there is a fair chance that there is a high staff turnover there and there will be a sizable cohort with under 2 years of service which wont get anything.
Surely, this is the end game of the mass articles complaining about Boo working practises whilst turning a blind eye to Chinese competitors. The old adage of if you cant beat them then join them doesn't apply when double standards are being applied. Automation or offshoring operations to a cheap labour market is really the only cards we could play if we still want to differentiate ourselves as low price fast fashion. I am not saying I would have wanted to work there and I empathise with those losing their jobs, but this needed to happen.
That typo on one of the sub titles is quite sloppy isn't it 'Booho’s underperformance is continuing'.
'Last couple of weeks rise seems to have been a fools rally. Nothing changed at S4 to warrant that rise.'
Except you know the news that S4 historically declined an offer for several times the current Mcap....
BOOM is the noise made when Israel hit the Iranian embassy and caused all our stocks to drop on renewed war escalation fears. We could have great results but the macro will hinder this regardless methinks.
A good breakdown Hexam and I agree
My only addition here would be that I think that the IP that Boohoo own would probably be worth more (at an arms length transaction) than the value of intangibles. I had a quick look at last year and the NBV of trademarks was at £78m. We will likely have another 11m or so amortisation in the most recent financial period so £67m close at a guess for the upcoming numbers. Pure speculation but I would suspect that Boo would get many multiples of this for their IP.
What are your thoughts when it comes to intangibles? I am interested because the Brand/IP wealth is one of the only things that has kept me invested here. Cheers.
I mean that's the only reason they will list in London over NYC; that being if the US authorities stop it from happening, or the amount of information they would need to disclose becomes an deal breaker.
I think if they aren't able to IPO in the US then it will IPO on the LSE and we will get the usual hot air from the gov about how it is such a great win for the UK and LSE, while the quietly ignoring the fallout of all the UK stocks that have been demolished over the last few years.
Finally, let's be fair. The poor practises of Shein have been widely known for ages now. It's always an out of sight, out of mind mentality with non-western working practises. I can't see this changing any time soon and it's likely folly to think this will change however much we would like it to.
Reardon - was that definitely the correct link?
Was I supposed to get a generic inspirational quote?
Sam - Agreed, I cant see Hunt on his knees begging for Shein to IPO on LSE whilst simultaneously upsetting them.
I think if Shein don't IPO on LSE then we have a fair chance of this being legislated, otherwise, fat chance.
Poker
I get you mate, I just don't think Cosmen will particularly care about other shareholders to be honest, but probably will the lenders. I do 100% agree that these things are a major distraction and could negatively impact the business should an offer by made but not followed through for whatever reason.
This is why I caveated my opinion with, if Cosmen are wanting to fully acquire.