Member Info for danl90

@peeps that’s how the cash is paid out but the bit before that is where I’m covering in my post as how to create the most amount to pay out (sorry I didn’t read your link)

Yeah both are right as tbh it’s a bit of “black box” process. As you mention the pension is a huge liability but someone could say “we will run the stores (good for landlords) and we will take x of the pension or make contributions of x to the pension”

But equally that scenario above might be they want discounted rents on the stores which landlords won’t support (new look seemed to get away with this so I wonder if there is president?). The pension might say “cash today is worth more than x in x years (birds in the bush and all that)

So short answer is it’s really not straight forward. Boo’s offer might be enough to fill the pension and the landlords would rather turn their buildings into something else (a lot are facing up that retail is dead but how many mini golfs does one city centre need! Ha)

I guess the slight annoyance is boo’s big cash payment upfront advantage is slightly reduced as the US PE might do the same. The interesting thing there though is it’s unlikely a PE can just bump pure cash in
1) it blows their returns
2) the fund might have restrictions
So if the PE has to put in cash and then refi then they end up with a highly indebted set of stores which is exactly the position the collapsed group was in

Tbh now I’m just rambling as every new way I think I can equally see pros and cons. My honest feeling is a wouldn't rule boo out

£389m is a huge chunk of change. When hut group announced a £300m acquisition of a beauty business its shares shot up adding more than £300m of value (huge upside of a scalable platform is that all the earnings are insanely accretive)

At boo’s multiple in theory we can pay a huge amount of topshop and still add value.

Someone said £160m online topshop sales (please advise if diff). At 10% ebitda margin that’s £16m to boo bottom line. Boo is at x40 p/e meaning at most we can pay £640m and still create value. That’s also before any growth boo can add to topshop

If you were to build that out at say 20% growth and discount the cash flows (next to 0 discount as we paid cabs that earn 0 in a bank account) the £640m gets BIG

So we could easy be bidding £300m here and it’s value additive to our shares (depending on the revenue number as I said)

@people hey fella

The complexity here which as you’ve mentioned is boo don’t want the stores. Unfortunately the admin is about getting the best result for the creditors and the likelihood is is that the largest creditors are likely to be the landlords for the stores so you can’t view this auction as a “one-off” bid. As someone could bid lower but agree to keep stores open and the landlord might support that bid as it’s better for them medium and longer term

You should be able to get the admin report from companies house which will say who the big creditors are so you can check the above

Unfortunately I agree.

Times saying next is front runner and Boo is now the outside bet

Agree it’s worth a punt. Also I’d email the brokers and say this is their responsibility

Maybe even email Goldman or someone similar. They have the ability to take this to the US and get the value it deserves and their would be a decent pay day for them to do it so they will be aggressive

- declining organic revenues
- brands that aren’t internationally known
- the brands in N Brown we can challenge with Oasis, Coast and Warehouse (just got a brand new factory for these)
- also they recently raised a tonne of cash so investors will want a decent premium on that but I think boo will struggle to pay a premium given that cash is to deliver an online model that N Brown hasn’t proven is deliverable
- Alliance family probably a clash with Kamani?
- N Brown generates a lot of sales by providing credit. While profitable I think given Boo’s growth we should wear this risk. Rather us be cash generative and let Klarna etc wear this risk

Overall looks messy. Better to buy an extra brand and leverage the scalable platform.

Just my view

:)

I think Topshop is accretive and the share price will rise. It will be the acquisition of a brand only so we are unlikely to inherit significant costs with this (a few designers and marketing team - but in theory those cost wash their face with revenue gain)

The additional revenue we generate should come at limited cost as the “scalable platform” means topshop can plug right into this

I saw the JD acquisition and I think that is different as
1) they paid a huge chunk of cash away and investors weren’t told big M&A was planned - boo is diff as we have told investors the cash is only for M&A or growth
2) the deal involved giving away a huge chunk of the combined US business. Investors now don’t fully control JD’s biggest growth market
3) the deal increases the no of stores which leverages up the fixed cost base. This is sort of a personal views but in an online growth world a load more stores to me doesn’t feel attractive right now
4) the price paid for the business they bought was at a strong multiple - boo (was) on a x50 rating so it will be difficult for us not to get something that’s “cheap” relative to us

Just my thoughts but we need a catalyst now!

@people the rns when they bought KM was £27m online sales

Good post but the last lines feels a bit insincere giving you mention the cool £1.26m you're sat on! ha

Only joking people

As mentioned I'm not going to post as much but today went the opposite to expectations so thought I'd share my view

For those who don't like my long messages the short story is "we are on our job" which I think is MK speak for going well and stay with it - I agree! Sorry but that was a great opening line from a £5billion Chairman - such polish that the city loves. Thank god for JL (he was superb!)

So thoughts on today
- growth for me in the USA was a concern (I said this on a post at 9am). It's a sharp fall in the run rate of 80% but do I worry? No, as the answer from management I think nailed this ie election (lots of trump fans with guns walking about so less socialising and continued covid). So I feel ok with this but I think it shows how quick you can lose customers as well as gain them (something I've been beaten for saying)
- I think the market is over punishing the UK growth at 40% it was again above expectations but slower on prior quarter. I don't think anyone has market share concerns but more rather what else can people buy! I think management not bumping up expectations further reflected this and that scared analysts as with c.40% growth all year but only ending the year at top end 38% they are sort of admitting things are turning right down (this was why I was so keen to bang the drum on the recent PLT and boo activewear "drops" being sell outs)
- Margin concern - I don't think analysts are buying it. They have long been suspect of Boo's margins and the summer scandal didn't help. No matter which way the FD cut it today the question was rehashed and asked again. Unfortunately I do agree with the analysts. I think marketing costs need to rise (someone will shoot me if I mention Tik Tok but analyst have clearly noticed) also they were quite keen on competitors (not saying Shein is an issue) so I think you see analysts mind following my thought process ie as this market flattens what happens? Annoyingly this actually makes me think US listing as over there we'd be praised for burning cash to grow scale
- platform and test and repeat - both pivotal to the success story here and it was great to hear JL bang these points over and over (rag will hate me but this is where are value is- if JL said platform less than 100 times I'm shocked) again screams USA. Just say "platform" and there's a fund manager willing to lever up! This is why i think shore hate boo as they see us as a retailer not a tech e-retailer. Also KM success was the 2nd sentence-mentioned few weeks back prove the scalable model and we should be rewarded on future acquisitions on day 1. I feel here JL may have been priming us for news!
- Acquisition would be great. Thought JL answer was great here and they are clearly thinking bigger than topshop (demo, beauty, sportwear & geography)
- A EU warehouse to be sorted asap to sort the brexit drag also ROE growth was good but I'd like to get higher here. US distribution I've said before is way to beat Sh

For me (and rag - its the only point we ever agreed) is that topshop captures the more "middle class" or "vanilla" shopper and bulks out mens range

Also these shoppers likely have deeper pockets

@rag yeah agree it effects all but what they are trying to do is make sure they bake it into their forecast models.

So this am they will have a big excel model which will be based to start on management's forecast (25% medium growth and 10% EBITDA margin). They will then sensitise that model for what they think will happen.

Their fascination here was that if the freight costs are offset by returns get you to 10% - fine. But what is returns normalise to historic level does the 10% turn to 9%? And then that number is the profit side of the P/e rating. Which is the bit i was saying a few weeks back as we are at c.x40 you knock even 1% off it's material to value

The analysts aren't trying to look at today it's more around building out the future (both ups and downs) on excel to decide the valuation

@all true rag but FD is pushing back re the returns benefit. Not sure analysts are buying it though as there have been 2/3 follow up questions from separate analysts on it

Q4 - questions about costs and whether these should be see rolling into H1
- distribution costs are rising (international shipment) but offset by benefit on returns but not fully offset so pleased to say 10% ebitda margin
- some costs will continue but not as bad
- marketing was 8% in H1 but had to spend extra. Think now the level of marketing is new level but factored into guidance

- Brexit
- small cost headwind
- £2-3m headwind (wow asos was £15m) as shipping to europe more expensive
- small issue with duties but very small impact
- can't reclaim VAT on returns atm but will be fixed and the £2 - £3m will reduce

Brand acquisitions seems competitive is this a global trend
- JL - it's about the right brand for our platform (why does JL keep talking about platform!)
- doesn't feel like competition for brands has heated up
- an internatinal acquisition is just as important

Margin drag on acquired brands (new brands make lower margins) is this going?
- yes as they are performing well and growing them will help

Q3 - which brand is firing in US?
- strong across three major brands (boo, plt and NG) but plt stand out
- US market was a bit strange as people stayed indoors (slow down from H1 growth rate)
- black friday was big. but they were expecting it not to be as big in the past
- black friday was a slow start to the week and then BOOM!

Acquisition - will it be territorial or demo
- JL - it's about adding value to our platform and multi- brand platform - Wait, no wholesale!
- beauty and sports
- only one menswear so could add here

Q2 - around competitors catching up and marketing around the world?
- competitive environment mixed but see test and repeat model as key to winning
- casual still higher and party stuff struggling. Vaccine roll out gives confidence
- marketing activity has been stacked across the board and newer brands which are mainly UK but will be launching them o'seas. Bigger brand investment in US and ROE.
- marketing costs were 8% earlier in year but have "stepped up"

KPI drivers
- no data out today but answer mentioned aug-20. Since all KPIs have been strong and progressing

UK3 doesn't replace international warehouse

JL key openers
- growth in all brands
- KM shot lights out and beat what had done online before they bought it (not to blow my horn but I said a few weeks back this would be top of the shop as it proves the business model and equity story)
- test and repeat model is still the driver for success
- growth in all markets
- oasis and warehouse integrated and please with progress to data
- UK growing strong for platform of brands
- Interna strong
- US particularly strong despite covid and us election but opportunity is huge
- GM% 53% is strong despite a lot of promotional activity
- warehouse volumes higher than ever before
- new warehouse - as in RNS
- reviewing options for international warehousing
- agenda for change - ZZZ