Member Info for BrokeNSmoke

'Can someone tell me why he would be buying if he smells blood? because it makes absolutely no sense to be doing that'

SCB - To be fair he has bought a lot of failed business, and had stakes in them when they failed to scoop them up on the cheap predator like.

I suppose the counter arguement here is that if that reality was to play out here, one would assume the SP would be a fraction of what it is now so why buy now.🤷

I don't think they needed to help him. It's not like we released stellar results is it? Weak guidance after years of decay....

It's not unheard of for Fraisers to build up a stake in loss making business and take them over for pennies when they fail....it's either that or he sees value here. Could be either to be honest.

'I don't think many of these posters really hold any shares or they wouldn't be blatantly misleading people.' I have been a holder here for years. Its hardly misleading stating facts.

'Free Cash Flow is expected to be positive i.e. cash flow AFTER capex - clue being in the word "free". So anyone telling you "overall cash flow" is negative is doesn't know what they are talking about.'

The debt we service isn't free though, and for me at least is increasingly becoming a concern?

'"Liquidity appears to be an issue" - erm no, it is not. They have over £200m cash on the balance sheet and while net debt is £100m, this should come down in FY2025 as FCF turns positive.'

You misquoted me, I did said liquidity is becoming an issue. Boo have always had a strong balance sheet and have been cash rich vs now we are in 100m net debt? This is definitely a downgrade in liquidity vs the fundamentals when I bought into this company.

'4 years ago the numbers didn't tell you boohoo were heading for losses, the same os losses today doesn't tell you boohoo isn't heading for big profits in the coming 4 years.'

SCB - I agree with you to a degree here, need to be an optimist to invest long in a business, but I also think it is fair to judge a business based on its current fundamentals. I think Hexam's comments that overall cashflow being negative is a fair one, especially when liquidity appears to becoming an issue here.

Happy - The normal indirect method of analysing cashflow on the cashflow statement is to take net income/(loss) then adjust for:

Operations

Investments

Financing

+/- some other comprehensive income/loss where appropriate.

In that order

FCF is purely the cash from operations and negates the financing and investing parts. It is a handy measure to measure the cashflow of the core business operations but can also obfuscate the full picture. The cash outflow on financing payments are my main concern here.

I am also a qualified accountant and also agree with Hexam's analysis here, although not to be disrespectful but understanding FCF is kind of investing 101.....

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....