Member Info for FED1

It’s a negative CF from Ops item? Meaning cash flow out?

SCB,

I get what you're saying: KM, Youth Brands, & Labels revenue numbers are manipulated to make Deb's marketplace look good. Debs growth is fake.

Maybe.

There is a saying, the cash flow statement never lies:

Cash From Ops:

1H FY26*: -£14.6m

1h Fy25: -£24m

FCF (CF from Ops less Capex)

1H FY 26: -£22.1m*

1H FY 25: - £38.9m

*This includes an one off lease de-recognition of -£35.4m meaning they paid off a landlord to terminate lease early (one off). Otherwise, FCF positive?

Ultimately, it's about the cash flow. Not how they recognise revenues by divisions.

https://otp.tools.investis.com/clients/uk/boohoo/rns1/regulatory-story.aspx?cid=798&newsid=2010282

How did the Barclay's analyst come up with an 11p valuation?

(£153.7m market cap + £111.1m net debt = £264.8m Enterprise Value).

This is 5.2x forward EV/EBITDA and takes into account no disposals or that trailing EBITDA growth guidance is double digits?

Throwing the baby out with the bathwater.

I noticed that SCB.

I think they have done some big-bath accounting.

I have seen this before in retail when they turn from growth (positive LfL) to a sustained downturn. They get rid off excess inventory, promotional offers, loss-making customers, loss-making product lines. It's a reset. The revenues were always misleading. It's about margin, not LfL. You reset hard, and then focus on profitable sales growth.

KM is still a desirable brand.

I note that Dan mentioned KM licensing and DebenhamsPay as bullet points in investment thesis.

I sense KM is an attractive licensing opportunity. Fits in with capital lite, no inventory, business model.

Very Group retail revenues are not too dissimilar to Debenhams Group. It was recently value at £2.5bn essentially for its finance arm by one of the world's largest private equity groups (Carlyle Group).

https://uk.fashionnetwork.com/news/Investment-group-carlyle-takes-control-of-very-group-from-barclay-family,1781186.html

It seems the day traders have changed tact (credit to them) and have turned this from a dog to a meme-stock. Sell side analysts are sheep whose recommendations follow the share price momentum.

There are two parts to thesis: 1) optionality through a corporate action; and 2) Deb's market place.

Bears disregard the first element as speculative and ramping. However, the numbers seem clear to me.

An interesting hypothetical question is what would a capital lite business do with potentially £150m in net cash? (assuming PLT disposal, Burnley sale and stabilised FCF).

I suspect they want to buy back Fraser's shares.

Burnley is like money-in-the-bank. It's massive. They have two years to realise value. The CFO, with his wooden delivery, seemed to have a wry smile. I am confident they will meet 1x net debt to EBITDA in FY27.

https://www.logisticsmatters.co.uk/news/boohoo-to-close-national-distribution-centre-in-burnley/

Sum-of-the-Parts:

Debs/Boo/KM: 7x EBITDA* (£50m) = £350m or 25.0p a share (1397.4m shares)

PLT Disposal: £200m or 14.3p

Burnley Freehold less Closure Costs: £70m or 5.0p

less Net Debt = -£111.1m or -8.0p

SOTP Valn = 36.3p

*7x is conservative to reflect Boo / KM revenue decline. EBITDA appears to have stabilised and projected to grow double digits.

To be fair Hexam, the guidance for net debt is to be less than 1x EBITDA by February 2028 which is below £50/60m. This is not done through FCF. This suggests to me that they have potentially struck a deal regarding Burnley freehold.

If PLT is speculated to be worth £200m (not my words) then that’s probably fine is 14p a share without Burnley. I recall you posting that you thought PLT was a valuable asset. Yes it isn’t sold and Shein bid is probably optimistic. Didn’t Hargreaves Lansdown say they were disappointed at potential disposal of PLT given its social media following and profit potential.

A PLT disposal is what the industry would call a kicker to the thesis.

1) The de facto UK/European Head of Shein has left UK for a new role in Shein where she is based in Dubai. Either suggests UK is not important or there is leadership change in Europe/UK.

https://www.cityam.com/sheins-former-head-of-europe-relocates-from-london-to-dubai/

2) Starmer is set to approve China mega embassy in December. MI5 relaxed about security risk. China govt had been annoyed at delay.

3) Reeves provides deminimus certainty until 2029.

4) several market participants believe that Shein only filed Hong Kong listing papers in order to pressure UK govt for rubber stamp.

5) the joint corporate broker for Boo today releases note speculating that PLT is worth £200m and Shein would be interested party.

Regarding the new share incentive scheme, I note the floor price is 35p which is approximately the share price that Dan took over.

I am fine with new arrangement as it is not rewarding him for the halving in share price. A high watermark is still in place.

The Fy28 Net Debt guidance obviously includes a disposal. You dont go down £50m in net debt due to FCF. The CFO would also want to keep a buffer to beat expectations. I suspect the FY28 debt guidance includes a Burnley disposal, but not a PLT disposal. To bake this into guidance, it suggests that at least one of those scenarios are already pencilled in.

Someone asked what was a reasonable valuation.

Based on the following assumptions:

1) Debs Group gets to net cash balance sheet with disposal of Burnley and PLT;

2) Debs EBITDA reaches £50m (excluding PLT).

3) Debs has 1,397.4m shares (excluding dilution)

4) A Google search on EV/EBITDA multiples for UK companies indicates average of 6.4x for e-commerce and 10.56x for apparel retailers (8.5x midpoint).

5) Fair value at 8.5x EV/EBITDA is £425m market cap or 30.4p a share (87% upside).

Debt to be less than £50m in February 2028 with the potential to meet target earlier if it sells Burnley or PLT.

Apologies - not sure why my full post is not publishing:

Debt to end FY27 (Feb-2027) at

The guidance is

£45m adjusted EBITDA in FY26 (end February 2026

Double digit EBITDA growth in FY27 (at least £50m)

Debt to end FY27 (Feb-2027) at

The guidance is

£45m adjusted EBITDA in FY26 (end February 2026

Double digit EBITDA growth in FY27 (at least £50m)

Debt to end FY27 (Feb-2027) at

I read a comment on LinkedIn from an ex-employee at Burnley that two of the units had already been sold.

It’s a massive site. Is a net cash balance sheet in 1yr realistic and FCF positive?

There are conflicting posts regarding implementation of scrapping deminimus.

Is it 2029 or 2026?