Member Info for Hexam

I’m afraid your logic falls down as the double digit EBITDA margin they are targeting is a percentage of revenue (their commission) NOT of GMV. No marketplace I have looked at makes EBITDA as high as 10% GMV.

I think the 5-20% margin that Bfd/T4G cited is the margin of GMV that marketplaces retain for themselves - before any costs. For them to get EBITDA as high as 10% GMV the cut they would have to retain would be absolutely huge - and nobody would use them if they had to give away so much.

…actually I’ve just done some research and that 5-20% does quickly pop up BUT it doesn’t make clear what the profit measure used is nor what the ‘revenue’ figure is.

Digging deeper and looking at some actual marketplaces I haven’t found one yet where net income is more than 5% of GMV so I doubt very much that this is the basis for the article that quotes ‘5-20%’.

So it looks to me that BOO’s targets for Debs are broadly consistent with marketplaces generally with net profits of a few percent of GMV so personally I’d put a valuation on BOO of around 25% GMV and at the very most 50%.

“Just go and do a little research on what online market places actually make Hexam.

It's anywhere between 5-20%”

I’m only going on what BOO have told us themselves in their own medium term outlook and that certainly doesn’t suggest 5-20% - and they are not exactly known for understating their forecasts lately…

Don’t know where you’re getting 10% margin from. Even BOOs own projections are only quoting double digit EBITDA margin for Debs (so probably under 2% GMV margin).

They were are already doing close to £0.5bn GMV in FY 2024 and profit was £5m - not £50m.

I’m not sure how you get a valuation on Debs as much as 1-2x GMV? The GMV numbers are impressive but the profitability is pretty low - less than 2% GMV and seemingly not expected to rise much above that if at all in the medium term.

A 50x plus multiple on earnings seems a bit far fetched even if growth is expected to continue to be strong?

I agree it’s not all their fault - but I think it mostly is. Yes, some of their costs suffered through COVID and more so due to wars etc. but their revenue boomed in the pandemic. They appeared to think they were untouchable and invested heavily in brands, US distribution, glitzy head office etc. But Shein and other competition came along plus a few more economic obstacles. Plenty of businesses are now showing healthy profits again (including in the clothing sector) but BOO continues to worsen and many of their investments have gone bad with huge write-offs.

So yes, they’ve been a bit unlucky but mainly I think they’ve been masters of their own downfall.

“Do you really want this company to recover its rightful share price”.

I would argue that it’s currently at its ‘rightful’ share price following over two years of failure resulting in a business that is making large and growing losses as sales continue to free fall. What I ‘want’ is for the business to turn around and for the share price to recover as the company does (or a takeover bid or something else similar to happen to lift the sp significantly).

I agree it is hard to trust Ashley but after two plus years of pitiful under performance and almost zero communication (they’ve only just seemed to notice we exist) it is even harder for me to have faith in the current BOD especially as they tried to reward themselves with obscene bonuses for their failure.

It matters because if Kamani wins the vote he probably won't do the things you suggest but instead is likely to try and soldier on much as is with his stooges in charge, run the company into the ground and we all end up with nothing.

"Why do posters spend time on all this stuff?"

Odd, as you've posted more than anybody else here today so could ask the same question of you - though it seems you just like to sneer at everybody else to make yourself feel a little bit superior to them.

“What do those backing Frasers say to this paragraph in the letter?”

Studio rejected Frasers advances just as BOO are trying to do now. It was Studio who ran themselves into administration, not Frasers - they just picked up the pieces afterwards. As usual it is just the BOO board trying to spin things. If you read up on the whole situation you’ll see that if anything it is an argument for letting Frasers help support the business rather than turning them away and trying to go it alone.

“Something stinks”

Yes, the company’s performance over the last three years, the BOD’s refusal to accept or acknowledge any responsibility for it (instead trying to reward themselves huge bonuses) and painting Frasers out as being the bad guys by making unreasonable and restrictive demands of them.

The think is CB they don't seem to learn at all. They just move on to the next distressed stock and simply try again. See it on so many boards on this site - it's just tiresome and slightly depressing.

"But if the board gets flooded with morons then I'll probably just leave them to it."

Sadly CB it looks like it already has. Quite shocking how greed takes over and reason goes out the window for so many when a certain type of gambler sees any stock trading at so much lower than it once did before regardless of why. All sorts of spurious reasons are invented as to why it can recover and of course anybody who doubts them must be working for shorters or have some other kind of nefarious intention. The facts are clear to see here for those that can be bothered to look so if I were you I'd just take your own advice and leave them to it. Your research, logic and common sense is wasted upon them. Stupidity deserves what it gets.

Yes, they were once a profitable and virtually debt-free company but that’s history and a history never to be repeated sadly after a series of blunders and some bad luck with timing.

But the point is MA did not have any influence in Studio Retail beyond his shareholding. So why are you blaming him for Studio Retail’s downfall? The company did go into administration and Frasers did pick up the assets cheaply but it was Studio Retail’s management that were the cause of them going into administration not Ashley.

It is a distortion to suggest otherwise and I’m sure investors in Studio Retail, if asked, would know enough about their own company to understand and confirm that Ashley wasn’t the cause.

Yes, there are risks from Frasers but the current BOO management have failed spectacularly over the last couple of years so I’m prepared to take that risk. Others will prefer to stick with Kamani etc. which is their choice - but is should be based on facts not misrepresentation of past events.

I did look at Studio Retail. They rejected Frasers’ advances and then went into administration as they tried to go it alone so hopefully BOO shareholders won’t do the same and instead accept the support/involvement from Frasers.

“Hexam: do you feel that the founding family deserves to loose their company as their karma for near complete shareholder equity depreciation? Is that your wish?”

My wish is simply that the business increases in value and I’ve completely lost confidence in the existing management being able to do that. Ashley also comes with risks but in my opinion there is a better chance of seeing a return with Frasers involved rather than with just the current lot.

It’s not about what the founding family ‘deserves’ but what gives the best chance of future success. Opinions will obviously differ on what this is but personally I’m going with Frasers.

The article makes the connection between Frasers trying to influence Studio Retail and that business going into administration. From what I can make out though Frasers did try to gain influence over Studio Retail (including a rejected takeover bid) but failed and then, without the support they may have been able to give, the business then went into administration. Does that not support the argument for a vote with Frasers rather than against it?

I am also fed up with BOO saying they have a credible plan when they clearly don’t since they have only just started their business review (if they already had a credible plan then they wouldn’t need the review). It’s as if the review is the plan! And would they even have begun a review without Frasers breathing down their necks? Also obviously Frasers can’t come up with a ‘detailed credible plan’ until they can see under the bonnet of the business, something which (unlike BOO) they can’t at the moment.

To add insult to injury they also bang on about high levels of corporate governance and acting in the best interest of all shareholders. This is from an existing board that has squandered hundreds of millions on various vanity projects, carried out questionable deals like PLT and created the bonus fiasco (which Frasers were instrumental in resolving).

So whilst they do raise some valid concerns (like conflicts of interest) on the whole this propaganda article actually increases both my contempt for the existing BOO management and my reasons for supporting Frasers in the vote.

Largely agree Alex especially about a CVA - just silly talk as they are a long way of that at the moment - besides most companies operate with some debt - there is no need to clear all of it.

Having said that even if you exclude all the hits you mention (closing US DC, redundancies etc) they are still loss-making currently. So the first priority is to get back to profits ignoring one-offs and then back to profit including everything.

I think 50p is possible on a brand sale but obviously it depends on the brand(s) and the price they can get.

I agree their are risks with Frasers but tbh I'm not sure the business is salvageable as a whole by anybody so am pinning my hopes on all these shenanigans leading to some sort of bid activity whether it is for parts or all of the business. In other words whatever my view on what the prospects are that doesn't really matter - it's what potential bidders think and are prepared to pay.

I certainly agree with the view that the sum of the parts is worth more than the current whole so hopefully this can be realised if those parts are fought over. The worst scenario for me is that BOO stays in one piece and they simply try to turn it around (whether 'they' be the existing BOD or a Frasers led BOD).