Member Info for BrokeNSmoke

I cant speak to mechanics and would also like to know!

From a why standpoint, I guess if you are not day trading and playing the long game, why not make a bit extra interest.

'Technical analyst who has always been spot on with BOO,now saying 14p'

I respectfully disagree, I looked at his history on BOO and aside from some easy calls like a dip from the settlement, he has been very wrong. Look at the early May post about him expecting it to jump, then it proceeded to tank 30/40%. I understand that even the best analysts (which I don't believe he is) make wrong calls, but saying he has always been spot on is just misinformation.

'Just holding above 30p level.....falling knife.

So if that breaks? Impossible to know. 28p to 25p perhaps. Lows of 18p would not shock. Are things really that bad? The share price is saying yes. But I would be a buyer at some stage as the company has a lot of brands. I doubt this will race up though so I would add slowly and as a punt.

Asos hit £60 during Covid and now just £3. it could be that shoppers are cutting back on this type of fashion. Or back to the High Street. Either way, a lot of bad news is in the price.'

It certainly is a falling knife, but surely there has to be a stage where the market cap looks stupid compared to the company's assets? I'm not stating this wont go lower, but we are already at that point. There certainly seems to be mass fear out there at the moment though.

Hard to get a message in with all the mud flinging going on

Eleva Capital seem very gung ho on the short. I always wonder when its a single shorter driving the increase if they have gotten wind of something

'An inflationary world' - UK yes but wont last forever, personally I see the UK inflation dropping to something more reasonable until like mid-24 . US - have you seen the latest CPI data? 4%, this is completely controllable and will likely be in the low 3s in a month or 2.

The online massive growth phase may be true or may not be true, but that doesn't mean there isn't a market where good margins can be made here.

'Absolutely, they have £5.9m in the bank and a large credit facility of somebody elses cash, with a ticking clock for repayment i understand. They are always going to attempt to portray the RCF as 'theirs', but it isnt, its a borrowing facility nothing more.'

The whole point of what Wolf posted and I agreed with is that, its irrelevant of if this cash is BOOs or not, because the accounting treatment on the balance sheet makes it a fair representation either way. If BOO ends the RCF, yes cash would drop £300m, but also so would current debts by the same amount. The companies net assets would not change, it is a complete non-issue.

Yes wolf is correct here, the revolving credit facility would appear under cash and cash equivalents under IFRS rules as to avoid off balance sheet financing. It's worth noting that within current liabilities there will be an offset for exactly the same amount, so it doesn't affect any liquidity metrics like the acid test since both sides will be inflated by the same amount.

The good news is if you are viewing this cash as not theirs and mentally removing it from the finances then for a like for like comparison you should also remove £300m from current debts, as this is what would happen if the RCF ended.

L5 - By hundreds I assume you mean GBX?

I am slightly more pessimistic that you, but overall optimistic about BOOs future. I currently see this as period of disruption within their business model due to increased competition and trading within a more difficult environment. On a macro level, they have done what I wanted them to do, use the cash and profits generated by their early adopter advantage to hover up IP and expand capabilities ready for the next cyclical retail boom. They are a promising long prospect for this reason.

A big negative point is that they are currently in flux and need to stabilise and thus speculatively feel like a much riskier prospect than an objective look at their financials show, which is imho is undoubtedly suppressing investor confidence.

To be fair to PP1 the hoping and holding comment is a decent comment. Look at the business fundamentals rather than cling to share in hopes it will recover.

I'm with you lot though. BOO is in crisis at the moment, but retail is cyclical and at this SP it is cheap for the wealth of IP. Surely the IP is worth way more than the entire market cap at this point?!

I would suggest that the share is down to the 30s again due to most of the market being down. With the exception of some sectors it appears that there has been a bit of an equity exodus. Sticky inflation, US debt ceiling, further potential hikes by the Fed and the BoE. Take your pick.

That isn't to say Boo doesn't have it challenges right now with its cost cutting and restructuring, and even as an optimist about Boo's future, I can understand the negative speculation. That said I think they have some killer IP and could easily become a powerhouse when the cyclical retail winds shift.

I also tend to disagree, for the reasons Reardon mentioned, plus BOO's acquisitions all seem to be around acquiring IP, and people here can correct me if I am wrong, but ASOS is more of just a digital store front?

I will give you that, that it is not normal for a CFO to step down/ be pushed. We can only speculate here.

We will have the results at the same time to suspension ends, yes? First thing is will be to see if the audited results are confirmed that they give a true and fair reflection of the company's performance and financial health. Providing this is the case then it will be the content of the results themselves. Any bad news on either will tank the stock.

The reason I remain optimistic is due to the narrative from KPMG here : “The principal reason for this is because of the additional procedures required in connection with the first-time audit of the company as an enlarged group following three transformational acquisitions over the past year,”. I personally see a CFO out of his depth rather than anything concerning.

We shall see I guess. Good luck to you all regardless!

My experience as group accountant in dealing with auditors in the past, including KPMG for company sizes circa 20-50m is that auditors will be on site for the audit, will go off happy with everything ticked then wait a few weeks before the sign off/close meeting to bombard you with requests for information critical to sign-off. This generally happens on an easy year where there are no significant changes to the business so I can see how this could happen for a more complex audit without assuming something dishonest going on.

It obviously isn't a great look for the management team with their past history and has added an extra element of risk here that wasn't present beforehand, however, I am optimistic about the results here.

I like to look at the positive of this, with ASOS down and the expectation that this update is going to bad, the market has already priced in terrible earnings. This could still drop more if they are absolutely dreadful, but, there is the flip side that they may not be as bad as expected and may see some bounce since the speculative negativity is already priced in. Shouldn't matter to any going long here, unless there are any liquidity/working capital concerns, which will be what I have primarily looking out for!

Personally, I think the upcoming results and the mass exodus of the directors is what is really driving this SP lower. I think the fine wasn't too bad all things considered and provisioned for previously. My gut feeling is your right here. I stated previously that I think the results won’t be good and they will try to state X cost-cutting measures to try and put an optimistic spin on it all. There is the chance that the market is pricing in too much negativity here. Very much a preparing for the worst but hoping for the best situation.

T4G - Great thanks, I appreciate the information.

I still suspect that the results will be poor and that will be the narrative. We shall see though and hopefully I am proved wrong!

L5, is the results day confirmed? I have been watching for news of a trading update been it has been complete radio silence, which is slightly concerning.

I suspect the earning will be poor, hence all the knee jerking redundancies. I hope I am wrong but I think it will be poor results with the accompanying narrative that they are currently restructuring to cut costs and improve yields and efficiencies to bring the company back on track.

So it appears that lots of directors have been stepping down recently. Both Dorothy Perkins and PLT buying directors stepping down being announced today. Anyone have any thoughts on this?

It is certainly going to be an interesting week with the OPEC announcement last week, which I assume is the prominent factor in todays dip. We also have US CPI data tomorrow which could see some big swings if the consensus data is correct.

SCB - Thanks that makes sense. I had seen a warning about that mid-day yesterday but shares continued to climb post-reveal so I thought it was a less of an issue. Wasn't aware of the further developments today.

L5 - I do hope you are correct!