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Dan is now irrelevant. We are at 16p. Stop with the marketplace, powerhouse, no refund, don’t pay supplier nonsense.

Strike a deal.

Let’s talk valuation;

1) we know net debt is £83m. Let’s assume Boo builds inventory, as expected, without screwing over suppliers on 60 day payable terms, then this can easily rise to £100m through seasonality.

2) let’s assume there is another £20m to right size business (finger in air). This means business is cash flow neutral going forward.

We are now at £120m net debt.

Let’s assume business is broken in two:

1) debs KM and labels plus debt.

This goes as a JV to Frasers. Kamani cancel shares.

2) youth brands ex debt goes to Kamani. Frasers cancels shares. We get shares.

I feel a deal is here. I’m no longer convinced Kamanis are delivering on credible plan.

The UK small-cap discount bin is no place for Boo to be shopping around. It is in said bin with RevB. Sort your own balance sheet out. If you’re speaking to loan sharks, then pay down debt!

Four options*

The magical fifth option is a credible plan. I discounted that.

I personally would walk away from RevB. Maybe if creditors were happy to take 50-60p in the £, but otherwise no.

It seems Boo still needs liquidity for WC. Purportedly it has three options:

1) “Expensive, left-field lenders” source Telegraph

2) Frasers

3) TPG (it sounds like they asset stripped Debs then it went bust)

4) Rights issue at deepest depressed share price because mgmt can’t communicate effectively to shareholders.

That’s how you steal a business!

I am concern that the equity value is being depressed, for a potential rights issue.

* i) youth brands

I would note on valuation that this is starting to price in failure.

So the question is, what would this be worth as two business with no debt. If that is more than £80-90m (current net debt), then that’s your intrinsic equity value.

Personally, I think KM could probably get most of that!

I don’t have time to do valuation, but my two point bull case:

1) the business can be split in two: i) brands; and ii) Debs, KM and Labels. The former is a fast fashion, value focused etailer focused on 20 somethings. This is controlled by Kamanis. The latter is partnered with Frasers and is a prestige and heritage omni channel offering. Smaller shareholders get shares in both.

2) debt is paid down and business right sized. Mgmt focus on profitable growth and positive cash flow. Youth brands is capital light, and can convert its billion revenue into FCF. Carved out Debs Group has firepower to harness the potential of its brands with a return to high street.

I think an element of poor shareholder engagement is the lack of confidence in putting forward and investment thesis. Only two years back, mgmt told of over covid inventory overhang, automation, and US distribution centre. Unfortunately, we were let down.

When Dan says marketplace, AI, capital light, and Debs being the UK powerhouse of online department store, we now say “show me”.

My two cents:

1) a fund manager told me when learning that there was only 2-3 points to an investment thesis. The second part of an equity research report is justifying the target price.

Therefore, if you are bullish or bearish, give us three reasons then justify your target share price.

2) it is a common strategy for short sellers to write those presentations for a 3-6month trade. I’ve seen several. Shadowfall is most likely no longer short.

As with many retailers, debt and too much capacity can be the biggest threat to its survival. There are many retailers, Debs included, who would have been viable if it wasn’t for balance sheet issues.

Boo has one advantage in that it is relatively capital light. It does seem to be in a death spiral at the moment with poor customer service and falling sales/cash flow.

It needs to right size business and do a rights issue. Split the business in two. Partner with bricks and mortar.

Aggressive action to finally sort out structural issues.

What was topic of interview?

Net debt is £82.7m (assuming it doesnt acquire RevB). It is probably a little higher now as it needs to build inventory. It could sort this out with a rights issue. Not going bust.

If they were to split the business in two and acquire RevB, then that would be the ideal time to announce a rights issue. Any rights issue would most likely be oversubscribed and possibly underwritten by Frasers.

Rightsizing the business and paying off debt - sort out the structural issues.

I think much like the Arcadia brands, I think Debs needs a retailer with a bit of fire power behind it.

Kamanis should cut a deal with Frasers and focus on Youth Brands.

Split the company in two:

Youth Brands

Debs, Labels and KM - possibly even RevB

Frasers takes majority control of one, Kamani's take majority control of the other.

I found it interesting that IR told you Kach that it was working at pace.

I think it is becoming clear that this multi-brand strategy is not working. Business needs to be split.

Deb's insta page and Planet Debs at Bestival is very focused on beauty.

I doubt Kamani's could pull off a LBO for entire group, but with TPG and Frasers in the mix, and the balance sheet debt being paid down, there is potential for a multi-faceted deal. Im not sure youth brands, KM, and Debenhams are necessarily a complimentary fit. What if RevB was also included?

They did say in the beginning of this business review that they needed to pay down debt to give them optionality.

This is painful….and seemingly self inflicted.

This mgmt team are clearly not up to the task.