Member Info for danl90

Because of working capital. It’s how businesses work. There was a article on paperchase that 40% of revenue was into Christmas so if Card is similar than up to Nov most of the spare cash alongside the capex for ERP and other IT items will likely mean we aren’t putting cash away in the months up to Nov.

As Card is a cash business then successful trading will mean NWC will turn back to cash quickly but this will be January before it normalises. But then in January the business will be buying for Valentines so again drawing cash into NWC

You can see this in the Card business as the final dividend (when a business typically forecasts peak excess cash) is June

So the honest answer is due to working capital and investment the FCF will unlikely be as you say when these payments start ie of there’s a payment in Nov, Dec, Jan or Feb then cash might be better being in the business

Come March you’d be right and we will be flush (trading all well)

My view is that £70m will be raised. As it’s all needed? No but because it brings the balance sheet down to 1x net debt to EBITDA. This will allow more investors to add Card as the balance sheet has acceptable gearing

There is some good narrative in the going concern note that says the business is forecast to survive on crap trading and I assume no equity raise (as that’s not guaranteed)

Sorry Lorenzo. You can’t just use an average when a business is very seasonal. If anything the business will likely be very pregnant with working capital in November as it readies it’s stock and stores for Christmas. It would be better to work on the assumption that given no large events and then ready for Christmas the business will likely see cash outflow up to November and no income as you have predicted using an average (hence why you don’t do this)

The point re capex is correct but the point being that we can’t do both ie pay the loans and capex without incurring the fine. The board might just decide “let’s pay the fine” and then go all out on the facility but they have also said they want to delverage so therefore the equity raise is needed

Any ideas of decent targets boo could buy in Europe? Would be good to buy something that Debenhams could piggy back onto

JD just bought a EU running/ sports business £7m profit and paid £140m so a 20x P/e

Wow Boo is undervalued so might as well put the cash to work. No more offices to waste money on!

@lorenzo also you're assumption is based on linear trading. This isn't the case the business is weighted strongly towards Christmas. Between now and then there will be cpaex spend on online and the ERP system so unlikely the business is producing high amounts of cash atm

For me this becomes a trade off between growth and setting up for the longer terms vs dilution and paying off debt

The worse case for me is that the business doesn't raise and runs itself silly purely to pay back the banks. In that scenario as equity holders the equity is in effect worthless as we don't get any returns we just exist to serve the banks. Card also can't out the correct resources into online and partnerships and ultimately the business dies

The best scenario is that we raise (hopefully in Sep after a good trading update) and then the bank issue is gone and cash can then go solely to growth

I agree I'd like to see bonds rather than equity but I think equity will be the route or at least part of the mix

@lat that's not right. They have to start paying back amounts in an agreed timetable from Nov-21 to Jul-22 or suffer a £5m penalty

If trading is amazing and management wanted to avoid dilution they could take the view that pay £5m and keep going as we are. £5m would in effect be a very expensive interest cost

It also shows how £70m might not be £70m if trading is better but in my view the raise (or refinance) comes before November as then revenue from Christmas can be put into growth

hedge funds have access to leverage. Often LOTS of it. This fund was borrowing $8 for every $1 it had (or something like that). So you'd only need $500m to sell the whole of boo

"they do not have unlimited funds to keep selling down" - ever heard of Archegos?

I think the oven ready part is showing itself. You see whole brands show up in full range daily. Watch shop (other retailers even plugged in). It was the commercial agreements slowing the launch but my point that it allows instant show of a whole brand instantly is true. And how much does it cost boohoo to have the whole range of regatta on there?

Well you can tell us as you hold boohoo and you are ceo of regatta right?

True a couple of denim brands on there but when you look they are menswear where exclude burton Debs is very weak. Couple of bigger brands I guess needed to make it a worthwhile offer. Hopefully some more M&A on this front but a good international deal would be great. JD have smashed international and boohoo need to do the same. Buy an equal to Debs somewhere - US?

No you’ve picked the right colour there.

Clearly the extra margin from selling regatta via marketplace is forecast to be good for Rag! Ha

I have a new car on the way. But I’ve gone electric. Merc EQC. Consumes a bit of copper so helps my Glencore shares! Ha

No sorry. I’m saying Regatta are planning to lost their products on Debenhams via the marketplace ie customer buys through Debenhams buy Regatta does delivery. So boohoo takes a commission

Rag said no one would do this as they wouldn’t work for less (it’s the other way round the supplier gets more of the sale value) and then he said he was the ceo of regatta and said I’d be mad to think he would offer via marketplace

But regatta is going to sell on Deb via marketplace so I’m wondering why the change of heart from Rag. All good though as Debs is starting to build and Regatta is a good brand

Regatta is heading on to the marketplace in next few weeks. Interesting decision rag as I thought it wasn’t worth it? You still the Ceo?

Got the car yet? Could be a good summer be decent if it arrives soon

An international acquisition would push this on

Something in Europe or South America

I also think boohoo needs to show commitment to the US and look for US distribution

They aren’t doing an equity raise. They have to do a “best efforts” attempt by Jul-22 which is a year away

Plan is probably to show good results in Sep and Christmas and then go with a stronger price

Also by then there will be a bit more cash in the bank from the business organically

Doesn’t work like that. They aren’t betting on a price. They have borrowed someone else’s shares (often ours as HL and others lend them out) and sold them into the market. They profit from buying them back for less and giving you back your shares and pocketing the diff

So they are getting in anywhere south of where they sold someone else’s shares

Be a CEO who is committed and put you hand in your pocket and buy some shares! Not just risk free options!

Bought back in - might be a quick flip as the markets are all over the place

Interesting that Regatta will be on marketplace @rag are you still ceo?

Got my dad a card yesterday asked the guy behind the till how the weekend has been “busier than ever”

Also the google trends analysis looks very promising vs moonpig (their google web traffic is below 2019!)

Obvs some moonpig customers will now be app but app downloads were 320k at Oct 20 so even if double it’s not huge in the whole market

Card website has done well

All Glen's divis are deemed capital distributions as this the tax efficient method in Switzerland

Last year 66 Clinton card shops closed as well as 27 Paperchase stores

Last year Card never had the benefit of those closures (as Card was shut too) and when they happened (paperchase -Feb-21 and Clinton’s Nov-19)

LFL in the run up to store closures in lockdown 2&3 were 17% up on 2019. I know this reflects a “boom” from shoppers returning but I also think shows where, on the big events, these store stranded shoppers will end up going. Yes some will go online but some will have to come to Card Factory

Card was 2.9% down on 2019 since the last reopening but as Darcy said there is a negative Easter impact here and also no big event. I think the proof is now in Father’s Day and those store closures will drive people into Card in a big way

Also I really don’t see how Clinton’s has much ability to continue. Now it’s privately owned by a family (which has bigger issues to worry about) I can’t see them wanting to keep it running to lose £20m a year (although I imagine they see some profit in the American greetings business - but they only own 40% of that now)

Just went through Manchester and both stores were manic! Absolute scenes

Stock is down today as footfall figures are said to be down but I don't think that's the full picture. We know revenue we are down 2.9% since open on 2019

That gives you some view as to where trading is and can stay (if proposition is right ie funnier cards)

Amazing to see bags of stuff filled today it isn't just cards people buy the add-ons fly out too!

This isn't going bust so hold