Member Info for danl90

I’m just saying turns out all I said wasn’t 85% wrong and nice to see vindication. Although I was an “accountant” who knew nothing every toss up JL and Boo went the route I was saying. It’s turns out there was an equity story all along! :)

It was said when I was raising the scalable platform back in Nov that “the unique platform and offer is its biggest long term flaw” - well looks like we have just bet even bigger on that platform. But anyway we all think the scalable platform is the best thing ever now so all good there

Just to say “The model” isn’t producing in Leicester as I said from my first post the model is test and repeat, own the value chain, distribution, all own sale and hold the data. Cement this platform and then it’s scalable. The brands are just extra revenue it’s the platform that’s scalable and that’s what’s valuable

Look it’s done we all move on. I wasn’t cherry picking sentences before more laying the general themes of discussions and describing what creates value and the accountants were right on all the key strategic decisions. Maybe boo is being run by accountants? Should we should all sell? Or maybe just maybe I do know what I’m talking about on how to create value

@webba the pat on the head thing was in jest

@ihalliwell we have the platform and the tech is integrated. Owning the tech or not is a doubled edged sword. Own IP means huge investment in tech heads and lots of upgrade work. Having a third party help with parts but adapting to us means we can have upgrades faster and often with lower cost. It also brings in a wider perspective (you see an upgrade in a another sectors and “that might work for boo”) - not tech but McClaren did this for GSK toothpaste brought some F1 thinking and hey 20% faster toothpaste production

The value for us is having the whole chain and the tech. Also the ability to pull and drive the data

@rag yeah not trying to cause a row. I just find it mind blowing that now you see all this as genius yet when I was saying this in Nov/ Dec I was a boring accountant and 85% of what I was saying I was wrong and your view was the opposite of all this

I laid out the main points we disagreed on above and JL followed all of mine to the letter. They didn’t go a single one of yours. I just think fairs fair and you should be willing to accept that maybe just maybe I was right all along

The fundamental is the “scalable platform” (wow you used to mock me for this and wanted to go wholesaling!) and now it’s genius

Data - you said our test and repeat was similar to topshop with stores? And yesterday some posts an article of boo further investing in data and now it’s “critical”

Owning the whole supply chain - you would tell me the margins on wholesale etc and that it’s “easy money” and “JL would give his right arm to be like Asos”. I always said no that’s flawed and it’s not part of our equity story. Oh how you mocked me for the equity story!

“Pure play e-tail is narrow and dated” was a quote you said when I said wholesale and a store portfolio was a mistake (I only said 1 flagship store but more as a two figure gesture not a strategy) but I think you posted about 500 and wholesale.

There’s also a few where I’m saying about the scalable platform means we can add in all these brands. I point out Oasis and Warehouse and you’re saying it’s a mistake. Just extra costs. But like I said at the time “that’s the equity story” and look where we are now

As I say, not meaning to start a row but that 85% wrong figure or boring accountant seemed to get more than 85% right in the end (that’s if you think JL knows what he’s doing). Just think fairs fair and after the insults thrown (both ways) we should be men enough to say “yeah you call all these, I was wrong”

And I’ll make you the promise now that if it’s the other way in the future I’ll admit. Heck Asos might get Topshop wholesale and then I’d be wrong on that one (for asos but boo canned it)

@rag am I filtered again?

Come on buddy. We had a good few “discussions” it would be nice for you to give a little nod

I was only saying all this in Nov/ Dec. You said moose “credit where credits due” so I think it’s only fair

Can I have my pat on the head please :)
- data - it’s now “critical” - think you mocked me for this
- scalable platform - everyone’s new buzz word but you weren’t a fan
- being like hut - trade thinks this is great but Asos was more the goal for you?
- no wholesale - dammm straight but this was a “no brainier”
- bh don’t want to be like Asos - dammm straight (I think this was you saying JL would give his right arm to be like Asos or something)

Feel like this would be a great step in building respect on the board. Bring a bit of fair play. We admit when we are right and we admit when we are wrong

Splice is on the platform hype!

You love to see it

Great analysis though fella. As you say all that traffic drives a virtuous circle. Combine that with data, test and repeat and also "partnerships" then this will boom

decent thing having a scalable platform

@rag this isn’t “so it starts” this has always been the business model. Turns out the data proposition that was “rubbish” is now “critical”

Next you’ll be telling us about the scalable platform and driving the KPIs

The 85% of what I say being wrong seems to look a bit over quoted given everything we have seen. Almost like JL was reading what I was writing. He loves our scalable platform

Am I reading this right. These 3 brands generate £500m in sales! Burton is £120m!

I know that’s through stores but even 10% of this is decent base we can grow

Test and repeat those blazers fellas!

Nah we have always done mark down model. Don’t worry about it

If you think it’s all rubbish why not try one of our 12 other brands? :)

@Danny - rag is likely right and asos and boo will not try and give each other a leg up

But in theory from a pure marketplace model perspective, yeah boo would 100% have TS on there. Would drive traffic and even better we'd get a commission on every sale which is free money!

This would be great for boo as - free money, high margin commission (depending how we account for market place but likely management will just a highlight a net commission line separate if they have to account gross) and finally take a % of the sale value from asos will impact their margin and the UK market doesn't like margin pressure. Also the biggest worry with the market place model is "other" people who list on the website let us down ie sell rubbish or don't deliver (literally and figuratively" asos makes good quality and delivers fast so a great partner to be on there (in theory)

getting really carried away and this is the amazon point if the debs marketplace was the only place people ever thought to shop then asos would have to list on Debs but that world will likely never exist as type "as" in the topbar and asos is there (flat market)

"Asos can bolt on TS/TM at flick of a switch, already doing so, we are starting to see orders transferred onto there system" - rag is this a "scalable platform" maybe so!

Exactly Danny. As it's asos management admitting to the tune of £300m in cold hard cash that their business needs to pivot

Reseller is not the way to go long term. Writing on the wall and every now sees it

Boo's model - own the brands
Hut model - stuff you don't own hold no risk/ stock
Combine them? Tasty!

But Asos's biggest issue was that 2/3 of revenue came from third party brands. One day amazon could wake up and go "i'll do clothes - here's $5billion to make it work" and all of a sudden if you had amazon prime why would you use asos? Atm Amazon aren't great and they aren't bothered (they do do $30billion in global clothes sales though)

So Asos with a market cap of £5billion or so is spending a really well placed £300m to pivot it's business more to own brand (interestingly one of the first debates i had on here so it's nice to see asos board or directors also putting into action what i said as well as boo's)

You will see Asos put more power behind all it's own brands as then amazon can't compete

What do we think Asos will do with topshop wholesale?

@people

I get no thanks. I talk rubbish but yeah these are key KPIs for boohoo.

But you see the add here. Send a box of shoes and drop in £10 lippy at 50% GM. The shoes were going anyway so the lippy is pure winnings

- items per basket and £ per order are key value KPI

No one will listen ha

Boohoo is perhaps one of the easier businesses to articulate a value for. the issue is more the struggle to keep investors happy from an ESG perspective and also investors at the moment are skeptical of margin

If you wanted to model what boo could be worth in the next 3 years it's quite easy

Current EBITDA x 25% growth in perpetuity x current multiple = x

You can then decide
- do I think 25% growth rate will continue for 3 years?
- will margin stay same?
- at the end of 10 years will the opportunity for 25% growth still be there or will this is flatter?
- will growth be all through new customer growth or will we be able to grow demand with our customers?
- will competitors cause issues
- etc

Your answers to these questions then make you either more or less bullish or look at the current x30 price and decide that's too much

But just being quick let's say 11p next year and 25% growth over next three years and the growth market is still there. you're talking c.21p earnings a share. So would the shares still be 330p? That's x15! If you think margins will be better the 20p goes higher. If you think growth rate goes up it's higher! If we do more unseen M&A its higher

All part of the value story. It's only about value we are owning shares there are tiny fractions of the company's value

Exactly you're right and that's why there is always a disparity. A broker has quite a tough job as they have to set their price expectation on a single day. They don't have the luxury of "feeling sentiment" in the markets a week later or neither do they have a crystal ball to say the things you have mentioned. Where an investor can balance those things and adapt. You can also take a different view

as i said you may think 25% growth rate is too low so the shares are undervalued however you might think growth will be slower so you'd sell. There is always difference of opinion. There is also different time frames i am not concerned with day trading. Someone might see 5% gain and bank it as it's the beer money for the pub. The point in investing in fundamentals is over time they SHOULD play out. It will just be a path to it

Exactly tesla is driven by it's investors who believe that tesla will be the largest and cheapest producer of electric cars. Fundamentally they can model forward -
cars needed (average house had 1 10 years ago now have 2 maybe 3!),
conversion rates of petrol to electric (this again as you say would be an assumption and actually this is happening faster than expected as ESG and regluation hence why tesla shot up this year - proves the point that its an individuals view on the growth rates etc)
ability if tesla to produice a market leading product - elon musk shows a $25,000 tesla - 1 that's game changing as now almost affordable to all families so the market just got way bigger - if you'd modelled that tesla will stay at $50k and premium then now you had underestimated the market and growth potential you'd see your shares rise
There are a handful of others but i have given enough flavoru here i think

hope that all makes sense

as - it ain't launched
- we haven't proved we can do it

So again this fundamental when we deliver it will drive the share price

If fundamentals aren't true why are some sectors more expensive than others? Why do different companies in the same sector have different startegies - i gave an example about mj gleeson vs berkely a while back

Both build houses but have entiring different "fundamentals" (this is another item i got told i was an idiot for as no such thing as an equity story - although we all cheer when the boo one plays out). If you believe housing is good but high end london is better you'd buy berk. If actually you think housing is good but london market overpriced but cheap northern homes are in high demand you buy mj gleeson.

Although i was told "it's just about profit and equity story is rubbish" well why doesn't berk build cheap homes in the north too? Answer as the equity story of "homes in london is where to be" would be gone. Its a fundamental

@wyndrum so I have done the job Morgan Stanley have done in the past. Its not a "crap shoot" as why would they take home the money they do? What is it you think PE firms look at when they buy a business? Why is a PE firm so firm on driving management to make decisions to grow value? (ignore here the PE firms for the 80's which was load with debt and asset strip as those days are largely gone)

There are clear fundamentals here
- online vs high street - this still has some way to go
- scalable platform - means we can add earnings easily
- data led sales and customer retention - our expectations of future earnings should grow and grow
- ability to x-sell - meaning we can sell more and more so future earning should grow and grow

"All SP valuations are based on a projection of earnings into the future. Its not based on what the company is worth now, today."

Depends - in boo's case yeah you're right the stock market is saying boo's growth is worth overpaying on what level of profit it generates today IF it was bog standard retailer sending stuff to Nordstorm rack

However at present our guidance to teh market is 25% year on year growth.
1) we are currently pumping at 40% so if next year is higher than 25% the market is underestimating. From 40% to 30% that feels reasonable so I see growth to the share price
2) current valuation is based on being a pure online direct to customer fashion retailer. From next year though we will be an online marketplace similar to Hut group (if only people didn't call me silly). This means we can extract commission and leverage our scalable platform immerasurably with limited capex cost. at present the market isn't factoring this in as

@moose that isn’t true. If you rising flags say up or down but then a PE takes it private based then for 0

If your candles say up but then there’s a profit warning?

All depends on your horizon. I’ve made clear I’m happy to hold for 2-3 years the candles have no meaning to me.

Up and down it might go but once the scalable platform executes and the revenue synergies flow. KPIs show improvement then the fundamentals will drag the stock up

After all when a business is IPO how do you think they set the price?

I disagree. Now we are like HUT group. You have a huge “scalable platform” and a “marketplace” which means any brands you buy instantly have a huge audience

HUT acquired 10 or so brands a year

As I’ve said this is the end game now. Any single thing we can acquire and integrate and it’s all accretive at the boo x40 multiple

Make up brand that makes £1m a year. Owners might sell for £8-£10m inside of boohoo that’s instantly worth £40m

Multiple arbitrage gentlemen. It’s god greatest ever invention.

In theory that £300m of cash if we buy stuff at x10 and put into boo at x40 that £300m is worth £1.2billion

This is why, again and again. We could never do wholesale as it would slash the x40 in half and the beautiful god-like world of multiple arbitrage is gone

Now boo needs to hire a Corp Dev team and get looking for brands to bolt in

@TCM you haven’t read my posts. I don’t believe Boo should go on the marketplace so if it doesn’t then no this will no impact on the boo brand as to the consumer it just looks like another brand on the market place.

- it’s more users to the market place
- it’s more users to see the new fancy burtons blazers

Ergo a virtuous circle of organic sales growth which will drive our KPIs (I know many of you think the KPIs are not worthwhile but watch the investor updates and what JL will say next)

- increased customer visits (why would you shop anywhere but debs? Good make up and great brands)
- increased items per basket (make up and clothes and also items for more occasions. More items per basket drives GM% as deliver costs scale)
- increased visits and conversion (bound to be something they like)
- increased spend per purchase (again more stuff bought more GM and drives that top line revenue number)

So all these deals for a £75m drive your KPIs which in turn drive your value and guess what? Get us more data to just feed the whole engine over and over again

This is why scrapping wholesale was vital as it wasn’t the business model and it’s a less valuable business model

I’ve said it before and I’ll say it again.

It’s not about growing profits. It’s about growing value! We own shares and a share is a fraction of the companies valuation

The stock? Nah not an issue. This stuff can push from same supply chain and new. Also TCM you forget our beautiful value driver (which again I was told was rubbish but JL said would be used for the new Debenhams brands - funny how he says what I was told was rubbish) but test and repeat which boohoo via its online data platform can so far better and faster. So no there shouldn’t be a stock issue

Not “great” brands but you can see them all getting a renewed lease of life from boohoo. Burton could be enhanced. At the end of the day with blazers they are unbranded I bet there’s more burton jackets at the races than you think! And the traffic to the debs website should drive sales. Still topman and topshop would have been jewels on the market place but we can reposition burton and DP?