Member Info for danl90

A great summary. I’ll reply while I’m sat (with shoes on!) waiting for gf to get ready for new year

Think the Chairman point will happen regardless. PE (if a single buyer will always have one). MM got away with this in the past as he had a handful of PE’s add over the year so none had their “drop-in” guy. MM must learn that this business needs a split role. Hopefully it happens as it shows his maturity not just as it’s listed or private

Agree on revenue. All you can do is go on guidance unless told different. The point here is any reveal on organic growth. At the Q3 update they told us total contribution from M&A. So any hints of organic over performance would be great. Don’t forget Simon Bowler at Numis slashed to 230p as he think organic growth is single digits

Also I think nutrition was misunderstood. It underperforMed as the world opened up and people went drinking instead of the gym. This has flipped and I hope we see good growth here. Rising prices is a headwind but THG is rising inline and gym bros need protein. It’s still cheaper than steak each meal

EBITDA margin i think will have outperformed over Q4 as the forex headwind unwound. For us this is great

SoftBank and cash burn are linked. As that cash funds the huge capex needed for global expansion

If SoftBank renegotiate I think that will happen. I’m nervous if the SoftBank guy leaves. I think it’s a good deal for all

I’d love to see boohoo sign up. They won’t but they need too!

Spin offs is not my preferred route. I see THG as an aggregator on a platform but given the way SoftBank see it that isn’t happening. Get beauty listed in 2022 will be good

There’s a US listen beauty SPAC valued at 4x revenue! And guess what. Their overseas operations are run by…you guessed it…Ingenuity!

In my view that beauty brand would have been a THG beauty target (as own brand is now focus after Cult) but given low share price THG can’t compete. So therefore spin off is needed

Going private would be shame in my view as in all honesty of ingenuity works it will force a rethink. Matalan is a great deal. I have friends at Ingenuity. They have even said sales of coconut water are off the charts yet this was a case study that The Analyst pointed too as a pointless client (why would anyone buy coconut water online they said) well they do and even on subscription!

Good luck all for 2022

The point is Dan we have many levers to pull regardless of EBITDA.

Like what and how can any be played more than once?

Can’t sell a property twice (can’t sell the London property at all given the embarrassment it would be)
Can’t collect debtors twice (also boohoo is cash upfront so no debtors to collect in a material sense that can be brought forward)
Can’t not pay creditors as boohoo has to keep suppliers in good shape as they already work hard on test and repeat

What are these levers? And as I say what can be pulled again?

On the medium and long term you model cash flow from EBITDA otherwise I guess PE just haven’t got a clue (given this is the measure they use to figure out how to structure debt to maximise returns and the banks lending requesting DD on EBITDA must be idiots too)

Yeah guess that’s right. The entire PE world must just be mad!

I have been. Manchester is scary quite. My gf’s family came over and compared it to their local retail park

No ques to get in any shops even selfridges which is usually a que on boxing and this week. More like a Wednesday night than peak trading

Cheshire oaks we went to as well and that was 70% full? Maybe 80%. Usually you struggle to park but we found a few spots easy. You’d never usually say that

Yeah Kallu as as I said I don’t know how much capex is spent from H1 update. The number hasn’t been given

Also at the Q3 update you weren’t given a balance sheet

I can’t use numbers that don’t exist!

You could go from H1 to YE (which is what was asked) but from my phone atm that’s too hard to do

But in broad strokes the thesis is right. I’d imagine cash to be lower at YE

At Richie you never gave any! You just say “that’s so wrong I can’t even bother”. Want me to dig out the thread?

@wolf, it does ignore working cap and fixed assets and the reason is you can use them only once. If you have a swollen debtor book (you’ve not been collecting in your normal cycle) and you collect it that’s it’s you’re back to a normal level of debtors it’s not there again

If you have a fixed asset and you sell it for cash. It’s gone you can’t sell it again

If you have creditors you choose not to pay to save cash eventually you have to pay them

That’s why when you buy or sell a business you do a normalisation adjustment for these and this level of working cap above or below “normal” is a cash or debt adjust to equity value

The point being it’s cash or debt adjusting as you can play the card once. Also management have told use working capital and stock are all fine so it’s a none starting point as there are no “loaded” levers except sale and leaseback of a property which they bought not even 12 months ago (hardly fits with building long term message)

So for an on-going medium to long term basis you just look at EBITDA - hope that makes sense

I would agree debt is a better way to fund capex but like your working cap point. That’s not happening here and so many here have semi about boohoo’s net cash so do they all sell when the company starts to use debt?

I’m not myopic I’ll take any view but your point on working cap is not correct. You can play the move once and as I say. If you played it around the time of a sale of business it’s an adjustment to equity value (as it’s not normal and can’t be repeated)

The irony of that FT article is it’s wrote by Marshall of Marshall Wace who are the guys short boohoo and Asos

So even when Britain has modern companies he’s short!

Now we said that Richie. All I’ve said is if you think what I wrote is wrong explain why

You never can

Apparently you don’t value this business on a DCF or a p/e basis so I’m waiting for the magical update on how you do it! You still keep coming back here but not sharing your super secret way of doing it

@oliver for a start I’d look at the Q3 position and that’s £70m. Which is concerning as that’s after peak cash generation (boohoo has a positive cash profile as get paid before it pays suppliers)

Assuming trade stays flat, suppliers to pay and stock build into summer then cash will be lower at Feb. It’s unclear from the Q3 update how much of the capex spend is done or isn’t (as it’s not given) so that would be upside or downside to cash

I think people are trying to guess where profit warnings are

Retail is so unknown atm. High street figures are awful but it’s not clear if consumers have spent online or not spent at all

Ingenuity isn’t self sufficient until £400m of ARR!

It’s a way off that atm!

The point of the SoftBank deal is the £1.6billion of extra capital for capex acceleration

If you don’t understand BASIC financial measures such as EBITDA (wolf), P/E ratios (rag) or DCF (Richie)

You’re not investing you’re gambling. Why? As to invest you’re valuing the business on a set horizon and saying is the price today lower or higher than that? You then adjust for upsides and downsides to the plan but these have to them feed back to financials and valuation otherwise you don’t know what you’ve bought

ITS NOT CHEAP JUST BECAUSE ITS USED TO BE £4! Understand that

This from Wolf shows it’s not credible “

Danl90- ‘EBITDA is considered your cash earnings. It’s this number that pays your capex’

Dan - that’s not even close to being true.”

Here’s an article from “valuing businesses for dummies page” - https://www.thebusinessplanshop.com/en/help/glossary/ebitda

Ebitda in simple is revenue less cost of sales less then all your CASH costs (so excludes depreciation as non-cash). This is why it’s a proxy for cash and then it’s the start point for planning your on-going capex spend, tax and funding

Just because someone shares a “positive” view on boohoo doesn’t mean they have a clue. Ask them “why” and “what’s the impact” (I did this for moola it’s no issue). Someone like Richie can’t do as they don’t understand and have to see everything as positive or they have to admit to themselves they are ramping and clueless

EBITDA isn’t used as the start of your cash earnings! Seen it all on here now. So why do companies report it? Why is it what Private Equity use instead of warnings?

You’ll all hate this post. But try it for a day. Ask each other why? Or to explain relative to the share price, earnings or cash

It might open your eyes about who’s worth listening to and who’s just a ramper behind a keyboard

If THG share price wasn’t in a mess and it wasn’t on the path of splitting itself it could be argued boohoo would be a good target

Leave the boohoo team to do the fashion, marketing etc but let THG do the back office, warehouse and tech globally (boo only having these in U.K.)

However as THG splitting up its no reason to do that but selling ingenuity

It was rumoured THG looked at Topshop. Don’t know how hard but they had a nosey

Because they can’t bring it forward as they don’t “have it covered”

Even if they do buy the warehouse they don’t have the tech for it. Recruitment etc

Save the £200m and invest in U.K. automation (5 year pay back is massive!) and let THG do USA

Otherwise boohoo will have a bad Christmas 2022 and 2023 as well

Only thing they are bringing forward is a returns function

@ian b I’m sorry buddy I’m trying to be less condescending but you know there’s costs after revenue?

The figure to use (and it’s in my earlier posts for you) is EBITDA

EBITDA is considered your cash earnings. It’s this number that pays your capex

£2billion revenue at 6-7% EBITDA margin (again from management) is £140m top end

I’ve not against anyone making money. And good for you

I don’t think that’s anything to do at all with my posts. Of course there’s money to be made day trading. Thats not my bag

I value businesses and invest for medium term. Atm though my point is there isn’t a real business case for medium term as
- cash to be consumed by capex (despite however many confused number or vague assumptions keep saying - just do the numbers)
- declining revenues in 50% of business with no plan to fix until FY24 and even then the marketing spend to win back won’t be easy

Until air freight times fall it’s hard to see how this will play out. As soon as they do I’ll be buying

@wolf it’s not my assumption. That’s the boohoo investor presentation from the board. You JL and CFO and mahmud

Every “liking” your comment as though mine is wrong well mine comes from the Board

Quick question who knows the future capex best? Me, Wolf or the CEO and Mahmoud?

It’s obviously answer 3 therefore the capex annually for medium term is £175m

This is what’s mad about this board. Saying anything “bad” and you’re “anywhere near correct” yet the figure came from the CEO! How bonkers is that? I know people wear blinkers with football but come on this has to be a new one!

It’s from the bloke who runs the bloody company!

The analyst call is trading update. The september were half years. They didn’t mention capex annually at the trading update as it was that a “trading” update and guidance hasn’t change since the September update so the guidance is £175m (you can see this as the analyst call was a 30 mins Q&A va September which was a hour and a bit full presentation with a Q&A)

@steel, great it was lower in 2020. Who cares this is about the future and the ceo has told you the figure. I know estimating sales forward on historics is possible but now capex?

Of course boohoo should invest. My point is it’s so much it needs to invest in it can’t do them all (substantiate the point). At Sep update US warehouse was only set for 2023 so even at Sep when the signs of US slow we’re happening they couldn’t bring it to now

Again on the analyst call (Wolf you’ll know as you heard) JL said all they could look to bring forward might be a return feature

Again I’ll be “wrong” but all I’m saying are the words from the Ceo

Wolf again I base on facts

https://www.boohooplc.com/sites/boohoo-corp/files/all-documents/result-centre/2021/boohoo-plc-interim-results-presention-300921.pdf

Management say on page 56 that guidance for capex is £175m (actually I was low)

Boohoo is way behind in automation and therefore this is the capex cost for medium term ANNUALLY

Ok so if not paid cash then how? Debt? Yeah fine but my point here (and you might be one who said it) was how great boohoo was as it had cash on hand. That must be a worry now then?

Also the US warehouse needs to be ASAP. As you’re losing sales and market share. It’s not a leisurely choice

Automation cant wait as it’s started and again rising labour costs it’s needed

Again costs will decrease but as all the talking heads are telling JL it’s not happening materially anytime soon. Don’t forget JL told us in Sep it would be over now so he’s shown he’s largely guessing. Now JL is telling us through 2022

So that’s the point. Model 2022, the confirmed and committed capex, ebitda (using managements margin) and us warehouse and it’s hard to make it work

If you take debt. And you can’t get the US warehouse running till late 2023 (it’s first international and a lot harder - look at the mess Asos went through when it tried it! Also this is why ingenuity exists as even bigger brands just go “no chance, too hard”) so it might not go swimmingly

Plus then tech needed

It’s a tricky 18-24 months. Unless planes flood the skies (which I’d love) but everyone is saying isn’t going to happen (annoyingly)

Capex is £175m annually it’s there in the pres from management. Not my words. Theirs (it’s tech as well as physical stuff btw - only saying as you only listen physical things)

I would LOVE to see THG sign up Boohoo

It’s a perfect story. They are buggered in US and EU. They don’t have the cash or time for the capex

THG has the answer and a win like that would have both stocks flying

Just to say I don’t align with Kallus points

I base mine not on random articles but what we learn from boohoo

@steel (and for others) as said in my other post. I actually think U.K. growth could outperform as “bedroom brands” just can’t afford the higher costs or keep proposition

Good example is “Mars the label” owned by an influencer girl. It’s everywhere on insta. But they pulled next day delivery ages ago and it’s all going out stuff with no returns

It’s a higher price point so girls will hand on as no free return and wear in Q1 but as girls have that outfit “still not worn from Christmas” you can bet that Mars might struggle to shift new lines (which come at very high freight costs)

It’s at this point that they struggle. Orders get smaller. Customers get let down and head back to PLT

Have you done the maths for that? You might want to check them over

Capex pre US warehouse is £150m per annum and boohoo was making £150m - £200m when US was firing

At the new margin level given by management (assume same level of sales - but that’s bullish as we know US and EU sales falling. Can U.K. offset for full 12’months? - Anaya at let’s model flat) the EBITDA falls below the amount to pay for needed and planned capex so where is the cash for US?

Also my point was around the multiple (which drives share price) and therefore not related to cash

Again the capex point isn’t “negative sentiment” before anyone says. Get out a calculator and bash them in. They are numbers they don’t have sentiment

Boohoo is a market leader/ winner in its core demographics (PLT is the best brand vs fashionova/ Shein etc)

But the whole proposition has to be right. The U.K. is the proof. Delivery times are as good as anyone else and therefore convenience equal, consumers choose to shop at Boohoo group

That’s it. Simple as.

As I’m saying the issue is half the business is international now, it’s going to take a long while to get that delivery time right and a LOT of capex and until it gets international firing again you won’t get the multiple expansion which the stock needs to make us all rich(er) than we are

Again these are not negative assumptions they are facts and I link them to share price as you own shares not appreciation tokens

Being an international business drives your multiple! It’s not good enough for you buy in price to just be “smashing it in the U.K.” you need all