Member Info for danl90

As soon as boohoo has a credible plan for the US then boohoo is a buy. But until that point you can’t “invest” as it can’t service half of its customers

Need to wait until
- plane sort out (not happening any time soon)
- US distribution is running

Until then no one knows how much worse it will get as you can’t meet demand

Asos did great in US (over exactly same peak period) and the reason? Prompt customer delivery

That’s what is needed. It’s fundamental to fast fashion

So until then this stock is a punt as you can’t have a reasonable clue on what US, EU or RoW performance will be

Elemis revenue is a lot more than some of THG own brands. Also the brand IS the value. As that’s the sticky element people will stick with a product for decades. But they will buy it from the cheapest / most convenient seller

An own brand revenue is worth materially more than retailing. This is why the plan set at the beauty capital markets update was now to go and get more own brands and the whole purpose of the spin off as THG atm is too low rated to compete

This why nutrition is great as customers stick with myprotein as it’s a brand they love

On-Demand isn’t anything special it’s just a service that supports ingenuity. Nothing sexy or special about prinitjng stuff. It’s that with ingenuity that personalised product can be in a customers hand. And personalised products are a way of repricing upwards

JD is a storming business and it’s achieved the utopia of being truely omni channel also its huge in the US now so I wouldn’t say it’s undervalued or overvalued. But they are also buying more “own brands”

I’m not saying anything bad about THG but beauty isn’t a £4bln business. 2x is fair as long as the growth rate is still there otherwise that falls

What would be great to hear is if Cult will be a way to get access to up and coming brands early and M&A on that front (this is what Asos should do for clothes)

Not offer free returns? Absolute madness!

Why would any shop at boohoo when every other brand gives you free returns?

Missguided is a similar trend to PLT and you can get next day delivery for £10 and free returns

Why would I pay for PLT and pay to send it back? Absolute madness

The competition offer that service and as “market leader” we want to offer a poorer service? Insane

The issue is is that boohoo has (had) great sales in the US but didn’t invest the infrastructure now £2.50 a time to fly it back to U.K.

But you have to swallow this as consumers can just go to fashionnova

That’s not right though is it? A 40m stores doesn’t have a wider catchment area than a 20m store

It’s just doesn’t unless it’s like a mega flag ship or in a volume tourist place like Burberrys hq on regent st I bet most shoppers aren’t English but that’s because it’s located in London and burberrys flag that tourists visit.

Because a Swansea branch of shoe is now twice the size doesn’t mean people will go twice as far. As that means twice the inconvenience and twice the public transport costs all for what? Shoes I can get online now at the click of a button?

So you lose stores your online grows but so will online returns as people went to their local shoe store but why travel way out when there’s likely a Hermes or return function in the local town where the shoe used to be

Twice the stores doesn’t mean twice the catchment area. So shoe will have to hope those shoppers buy online and then they will have to get ready for returns

Shoe is a good company but as is clear from the above they are heading into omni channel and the days of customer walking into store to return won’t be happening anymore soon

And returns via post for the customer aren’t free at shoe

Given Card say it’s costing £30m annually to go online and you’re saying a shoe site is £30k - £50k it seem odd they’d ever go online? Better staying what they are good at as the online cost base is going to swell (Card £30m annually and they don’t do returns! They don’t have to really to stock as it’s print on demand)

£2bln this year at 25% growth it’s only 4 years till the £5bln

So a management team who’s “building for the future” one minute sell and leases back a warehouse (6 months), shift everything out to consolidate a site with another (6 months and millions in duplicate costs) and then guess what we need to start thinking about extra capacity again so let’s ship it all back out again

Also consolidating sites doesn’t work either as if one site is 60% full and the other 60% full you can’t fit. You can’t get 120%

So for “strategy” not the best idea

Also as a change management aren’t you supposed to be thinking of proper medium term horizons? And now after 6 months we are back tracking on +£100m of capex?

That’s cash we could have had as shareholders and now management are going to admit “sorry we spent that we didn’t really need the 3 warehouses we bought, despite when we bought them we said they were for the amazing growth and plans which made you spend money on our shares”

With capital markets you need faith that management know what they are doing. Spending £100m on capex and then saying “don’t need it” would lose a lot of faith

Let me guess you work for a management consultancy type place like FTI?

"If we don't need the warehouse capacity we absolutely can lease or sell it"

Afraid not as the model is that they run different brands from each one

You end up in a scenario where the cost of moving and consolidating is high and the disruption wouldn't be good (you see the million in add-backs that it costs just to automate a same site factory)

So in theory but in practicality no. Also that's pretty shocking statement to shareholder

"hey we have all these warehouses as we are aiming for £5bln revenue!" buy our shares!" and then

"ermmm we have sold 30% of the capacity so therefore we can only hit max £3.5bln"

The stock would plummet and that hardly hits the message written right at the front of teh Sep half year of "building for the future" when actually you're just chopping and changing

I know you do marketing but maketing to an investor isn't quick ads and catchy slogans. You said you need £5bln capacity and you've paid for it. You now deliver on it!

"I had a chat with Zeus SHOE's investment relations people they had the following to say,"cost of returns are minimal, as most are returned to the shops and either re-sold or returned to the Dc in Leicester on the empty trucks delivering the stock to store"

Fine but that won't always be a the trend as if so you're only selling to customers who live local to a store so in fact that's rubbish as you're not gaining new customers your just cannibalising store customers

So therefore less reveneu in stores which still pay the same fixed costs

What you want to see is that customers online return online as then you're opening new customers (those not near a shop)

So it's not quite as it seems. The cost of the return is low in your scenaio0r but the cost of the store is more expensive (as less reveneu)

Also it makes bugger difference what the warehouses or London property is “worth” as you need them so you’ll never crystallise the gain

Why sell 30% of capacity? The whole point is we need the capacity to sell clothes

This isn’t a reit

It's not just that. He's a bricks and mortar guy

He's misunderstood the industry and bought more and more UK warehouses (capacity up to £4bln!) when it turns out half the business wants to be serviced locally! So this year if we do £2bln revenue you've massive headroom in that UK capacity as £1bln will move direct to a US hub

That's huge FIXED cost base that will drag on earnings

All bought as JL thought you could go on servicing from the UK to the globe (shown again recently as Japan website launch and serviced from?.........Sheffield!) It's madness

Some will get all angry at this (as this board is like a cult) but Gymshark (US distribution), Asos (US distribution), JD (US distribution), Jack Will (go via Ingenuity for local US distribution)

They all got it c.12 - 48 months ago

Instead JL bought more and more UK distribution and a office! Oh, but that's brilliant as we save £1m in rent (who cares when you can invest £80m and grow revenues by a multiple of that - if you think saving rent is good vs 25% growth you're nuts)

"You are trying hard here to sell THG's usefulness but the bottomline is cardfactory should not be doing online at all, it's not possible to make under 1GBP products profitable online"

Totally agree and as soon as Card said "omni channel" I sold all my stock as you can't be both until you get to huge scale (JD and Next)

But THG could sell £1 cards online profitably as we sell ingenuity which in theory in future means we will have no cost base as the cost base is a revenue generating asset - madness I know

Also salesfore etc is only on element of the stack you need to think about the rest

Also returns for a card isn't a factor

Yeah Shoe probably wouldn't work online it sells to the very poorest in society these people likely don't have access to internet or live in a environment where delivery of a parcel is safe. Shoe doesn't disprove anything it's just differnet

Like selling a boat online wouldn't really work

But on this it just shows what THG could do

Website a tonne of your designers and boom - moonpig

Even if we took half of what Card Factory was doing it would be a win

Should try the boohoo board

It's like a cult

@ford the debt is with Matt personally and not THG so the below

"Repaying loans and clearing debt is a really good move for a private business."

Isn't relevant

Today came out and said they will be adding £30m of annual costs to get their online proposition going!

Just mental but it shows how expensive it is to do online right. And they probably have a far easier logistics element given the finished card goes straight in the post and printed on demand

But why on earth aren’t they using ingenuity?

£30m a year that they don’t have and revenues aren’t there yet. The ego of management teams to not use ingenuity is laughable

Might have sold half for tax reasons?

But he should have been buying since is for sure

Well we both know the quality of investors here

Apparently listed businesses is just a broad brush stroke game

Why on earth do you pay the CFO so much if this is all it takes?

@matty as I explained boohoo can drive growth (promos, new products, marketing, collabs), they also know what that current mix of clothes is and the current search data so they will have a know whats on the horizon and factor that against current trading. This is basic expectation for any PLC board worth it's salt

No one has any input into what ships are doing or even more so the means to impact it. The shipping price is the shipping price

It's dead simple really. One you can drive the other all you can do is hope

Agree omnicron would be a factor but they were able to guide to 12- 14% for the full year so they clearly did something hence why they have a number

The answer is they model forward what they currently see, what promos they have, customer engagement data - all by geography

It's all there or maybe they did do your finger in the air but either way they landed on a number not a feeling

"this ‘expectation’ you are happy to accept…there is no modelling forward within the above statement based on known facts."

Wait you think management expectation is just a feeling? A finger in the air type thing? They will know exactly what has gone out the door minute by minute and therefore can predict what can come back based on current trends. This is exactly how test and repeat works on the other side

This is more in boohoo's control as it's their product, their proposition (ie US delivery is 8 - 10 days) and their ability to drive sales through marketing. They have leavers they can pull

They will now exactly how things are currently playing out and can model forward (this is what a quality plc board does!). They will know the profile of US sales over the quarter (which got worse month on month and JL said continued the trend into the update)

So this expectation is a very sound estimate and they have leavers to drive it and change it

On the supply chain front no one can do anything to change it. The cost of shipping is the cost of shipping. You can expect it to ease all you want but that's all you can do

So yes you can except one and not the other as one is an internal expectation and the other an external and macro factor

"clearly better to stick with a continued level of problem which makes sense given the unpredictability of the winter/COVID/issues" exactly it's a continued level of problem

@matty i never referred to the below. I actually replied to you before to add in the word expects as you didn't include that word and declared that the supply headwinds are unwinding which there is no evidence for

So no I won't agree that supply headwinds are unwinding. Asos might expect that but they have 0 input or ability to dictate it's a global issue. They can't see into shipping patterns or flights etc

But for boohoo they will have sales data up to the minute of what they have sold. They will now the mix of the those items and they will also have data on customer return profile so they can model that forward

If they couldn't they wouldn't be worth their salt

@T4G that is partly true however if you were keeping the same run rate growth as Q2 and Q3 then the 16% would hold or increase. As its an expected and continued slow it is moving downward

On the multiple size orders the CFO said as an answer to a question that this wasn't happening for the vast majority or orders. A one story anecdote is a good data point but the whole business view is different