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All this is correct and fairly accurate, and it's indeed a mess. The company has a couple of years to turn this around and closing stores, focusing on online, reducing capex, cut dividends and refocusing on their value proposition is the way to go.
They might not survive a very hard UK recession (5-7% GDP) but they will have their turn around chance in every other scenario.
A company that does 2.5 bn in sales is not a joke. Growing the business and the brand to that level is the hardest part. The restructuring is easier. The leases and the capex, and the reducing levels of management even the CVA, that's the easy stuff.
A new company could spend all their market cap (65m) only in marketing and they wouldn't reach 10% of the group's sales, that's why it's undervalued. That's why MA another investor or a fund will find value to do a takeover bid in those levels, that's why an investor would hold. The market has discounted them out too soon.
If someone wants a very high risk, very high reward investment this is it, plain and simple. You won't get a potential 5x return multiple in marks and Spencer, Asos or whatever anytime soon. Here you can get it in a couple of year's time at these prices (assuming no one buys it out, then it can be sooner).
For someone who is risk adverse, this isn't the proper investment there are far more financially stable companies out there.
No one knows, the market does what it does.
Most probably when the SP stays between 4-7 p -which is a bankruptcy market cap- for a couple of months and people see that it doesn't go bankrupt, or if there is a major catalyst event that will push the share price up (Takeover bid, reasonable trading results, store closures and capex reductions etc)
It's funny that even interserve which is doing dept to equity swap, so it's proven bankrupt is going up today.
Don't try to find logic in the markets. They are driven by fear and greed. We are in the extreme fear phase, I don't think that the stock is manipulated in anyway, it's just that investors never, hold, they usually panic sell (fear of losing the investment) or panic buy (fear of missing out)
The Magellan mutual fund run by David Lynch was one of the most successful funds of all time, averaging about 27% return for 12 years in the row. However an astounding 70% of it's investors lost money because all they where doing is buying when the markets where bubbly and selling when the markets where crashing.
It's simple. If you believe the company will turn around hold and sell when you are happy with your return. If you don't believe in the company, sell it and find another company to hold. Listen to no one, not even me we are all talking heads. IF you listen to others you can't hold, so by definition you will fail no matter what happens.
link please?
They posted trading update on September and full end year results in December, with next trading update being on January. They also replied to media speculation when everyone was talking about a CVA.
They made their strategy public and transparent on their website. What exactly do you expect them to do, make an RNS announcement every time a forum troll calls they will go bust in 2 months? What shareholders need them to do is roll their sleeves up and do the turnaround
They can't control the market, they know that the stock will be volatile.
It's not that hard to understand him. He wants to control both and merge them so that he can get a bigger part of this market. It makes sense and now it's the best time to do it because Debenham's market cap is peanuts.
Funny you mention it , but I run a company and I pay the rent quarterly, so I do realize when rents are paid.
I also realize that in order to be insolvent you need to have lost all your cash, unable to generate new cash, and out of borrowing headroom.
For Debenhams neither of these is true, so just admit that the comment about not paying rent was silly, unless you think they will lose hundreds of million in Q4, which is supposed to be the best quarter for retailers.
What might kill it in 2019 is a no deal brexit leading to a 5% recession, but who knows how many retailers will survive something like that and in what form. Every other scenario they probably survive till about 2021 when their 200m bond expires as described in their viability analysis.
The comments about not surviving Chrismas are not justified. It's definitely not going well for them, and the rest of the sector. If this trend continues they will go bust, but that won't happen in 3-6 months.
anyway investor phychology is always the same.
- Stock new highs = they will cure cancer
- Stock all time low = the world ends tomorrow
They don't intend to use the credit facility anymore that's why they are cutting dividends and reducing capex. They will still be cash flow positive without using assuming the situation doesn't deteriorate more, if needed they still have headroom.
If you don't want "cretins posting rubbish," refrain from ******ed comments like "they won't make Christmas rent, like you are talking about your village pub.
sales mns 10.5bn - mcap 4bn
sales debs 2.2bn - mcap 65m
https://ir.debenhams.com/static-files/32bcca3d-8332-4a15-bfbe-08398fc595f1
Page 94 cash flow statement.
125m operating cash flow and 38,9 milllion net cash in the end of the year, and that includes 35m in dividends paid that won't be paid in 2019.
in 2017 net cash flow was 19.7 million
so you are incorrect in all three statements.
Their cashflow is pretty strong, 200m of their 320m debts is bonds expiring on 2021, their margins are indeed very thing but they are working on savings of 160m next 2 years.
Maybe they won't survive but it will take years to get there. Share price and company financials are not related. The SP can go to 1p and it doesn't affect their survival. They are as probable to survive now as they where when the stock was at 50p a year ago.
In general I was happy to see that she was concerned for long term 3-5 years stuff, and not if the stock will survive next month like the majority of these troll boards.
They do believe their own viability analysis it seems.
"we are working a lot on click and collect to compete with online retailers. For example we are looking to allow clients to try on their item during their collection in contrast to taking it home and then chossing to return it back."
"Most of Christmas on peak days we will be open 9 to 9"
That's. Its over. Nothing new really.
"we are growing our sales online to cope with the declining footfall" "some competitors have done cvas seen their rents fall, whereas we are sitting in the same structure" "retailers are paying the vast majority of the high (rent) rates. The rates we pay are disadvantaging brick and mortar retailers (compares to online)"
"There are new lease models arising in the retail sector shorter around 10 years" , "the vast majority are fixed upward going leases. Our approach is to put a number of stores that we see potentially unprofitable and we will speak to all our landlords next 3-5 years so as to come to an appropriate solution". " We are also starting to see landlords conning to us for suggestion, one landlord came by himself with a revised plan and a store that would be for closure will remain open". "Clearly we have a responsibility to our stuff and customers to those location. Ultimately we can't take responsibility on our own for the future of all store location, its up to the landlords to also have an exit plans for their locations".
"We are looking to help landlords and local community to find a proper future for the locations that we will close"
Some direct quotes:
"Hof is a competitor" , "grateful for the 40m loan, but the offer made came with conditions that would affect shareholders other lenders, pentions , stakeholders, looking to collaborate"
"166 stocks, we are a big bussinsss, 3 bn in sales, we are addressing the challenges that the industry is throwing at us. We are strengthening the balance sheet with cash, but still we are closing down 50 stores and we are negotiating with landlords to close stores. They are not unprofitable now but will be if trend continues"
"Our online sales are 20% around 500m, so we are one of the biggest online retailers in UK". We are bringing online closer to physical stores with the new strategy so as to drive footfall to our stores."
"We don't have opening many stores in our plan, we are looking to bring other stores closer to wadford which has been very well received which convinces an exciting beauty store with other services"
"We are working very hard on the service offers , click and collect and the other proposition. We want the 100 stores that will remain open to replicate this experience"
" We need our landlords to work with us on that because costs put too much pressure."
All this is known but still , good to hear plan is still in motion.
here now live for whomever is interested
https://www.parliamentlive.tv/Event/Index/e63d941c-2443-49d2-b8f2-23a105c57214
I won't argue with that and I am not saying it's not justified for the 2 companies to have different market caps, however 60m versus 4bn (last friday) is 66 times difference!!
So as I said the market thinks asos is the next amazon and that Debenhams is bankrupt, and so it values their shares accordingly.
The market is almost always wrong both on the extreme highs and the extreme lows.
Asos has the same sales as Debenhams and very comparable net profits and their mcap is more than 2bn today , even after the 40% drop.
It's already reflecting a company that went bust. It's a company with 50m market cap and 2.2bn in sales. Only reason for this price is that the market is regarding Debenhams as bankrupt.
All I know is that I am not taking seriously bots that spam these forums, other forums and every related article about Debenham's collapse. They must be paid by the post to waste their weekends spamming.
I understand a shareholder following forums interested for their investment, but why on earth all those bots post every two hours, after midnight and weekends without skipping a beat?
Better tone it down a bit, it's too obvious.