Supply chain disaster will hit margins further30 Nov 2023 09:17
With almost 12 months invetory, they won't be re-ordering from their suppliers for quite a while. This will decimate their supplier base who will re-focus on other customers, leaving DM with a real problem. To re-engage with their suppliers they will have to incentivise them with higher cost prices.
Remember their Cost of Goods inflation is already 6% and eating into DM margins, so that will only increase, and I am guessing significantly. They may well try to firesale to reduce inventory but that also impacts margins and damages the brand.
Management have their head in the sand believing too much in "iconic brand" and not enough in business fundamentals.
So, all in all, not a good story from DM and a takeover target at 70p.