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Rag, record sales mean nothing without looking at the cost of those sales.
The language you are using implies that Debenhams history can inform you its of its future. It can't. The only thing that Debenhams now has in common with Debenhams a few years ago is the name. Debenhams history is irrelevant other than its brand equity. As a business it does not resemble anything like what it was 4 years ago and so the sales figures from 4 years ago are of no interest.
They have bought Debenhams because it provides brand equity that boohoo can use to enter the beauty market, and hopefully expand its demographic reach although it remains to be seen how many customers they can hang onto online only.
What Debenhams and a marketplace provide should it be successful is for boohoo to apply its data strengths to both new products and new demographics. It's the first stepping stone, a vehicle for boohoo to explore optionality and opportunity in the future into different products and broader demographic ranges. There is almost zero chance that high sums of investment are going to go into Debenhams over the next couple of years given more profitable capital allocation alternatives available to them.
Problem is rag I think your too close to this side of the business, you need to zoom out a little.
I don't get offended, so don't worry about it. I do the same on Twitter and get pulled on it.
These forums and the likes of Twitter are just notepads for brain dumps to me. Somewhere to thrown ideas about and see what comes back. If I was to edit and filter and formalise my thoughts, I wouldn't do it on here.
I know this is annoying to people who have a sort of detailed oreintated and organised personality shall we say, but It's really none of my business what you think of me.
People unable to understand concepts that require a bit of lateral thinking often seem a bit thick to me, which is often the same people correcting me on my grammar. It's funny how that works.
Oh and Kallu, I don't know if you've noticed, but almost everything is in a bubble right now. The idea that with all the pent up savings sloshing around, that middle class people are shopping in Primark is utter drivel.
Far from being squeezed, household savings are through the roof. It's almost like you don't understand the very basics of what is going on right now economically.
If all it took was a bit of spit and polish to turn Debenhams into an online powerhouse, it would of not gone belly up in the first place, and it certainly would not have sold for £55 million.
£50 notes dont lay in the street for very long. There's absolutely no chance, zero, that the market just stood back and watched Boohoo just pick an asset up on the cheap that could easily be turned into a billion pound business. If this isn't obvious to you, you shouldn't be in the market.
How can anyone look at the growth and margins of boohoo's core business and think the correct course of action would be anything other than having the majority of current investment go into further expanding them, especially given their overall market share has plenty of headroom to grow into.
I think if you asked most investors what they'd like to see boohoo doing with cash, it would be investing in distribution and pushing the winning formula that got them here. I'm not saying debs is a side show but it's a longer term vision. It's also U.K. centric where as boohoo and plt are making ground in the US so I wouldn't be so sure debs will ever dwarf them
I don't agree here. I think one of the biggest mistakes boohoo could make is spreading theirselves thin trying to be everything to everybody indiscriminately. You take on next on competitors from a position of strength, you don't sacrifice further investment into your most successful leading brands and growing that winning formula into new markets like the US in favour of taking on the likes of next with relatively weaker brands. Doesn't make sense at all to me.
Well this is the point, I mean I've never looked into them much because they are tiny in terms of revenue and not likely to be a big driver even in several years as individual brands. I would hope the brand portfolio is targeted, well thought out and refined over time than simply added to indiscriminately. Weak brands should be ditched if under performing over time, last thing we want is mediocre brands under the umbrella. One or two debs brands might do well, but remains to be seen.
Admittedly I don't know much of the brands that came with debs, you probably do so happy to be corrected. How much brand value have these brands got? I may be underestimating the potential, but they are not as strong as the other brand aquasitions boohoo have made are they, Or have I got that wrong?
In terms of some of the brands that came with Debs some of which you've mentioned, it remains to be seen if they can do anything with them. They are afterthought in the debs deal. The investment and staff are required whether those brands survive or not, but none of the brands you mentioned will ever be as big as PLT.
Rag I get you work in the sector, but there's no way low margin online retailing of brands it does not own is a focus for boohoo without an ulterior motive, and debs had nowhere near the data driven operation boo boo could create.
They obviously want to be a fashion and beauty brand to as many demographics as possible, and in the short to medium term if marginal cost of retailing these brands is small then it makes sense for boohoo to use them to help boohoo achieve a broad offering quickly to drive traffic and access to more demographics but longer term the goal will not be as a low margin platform for brands they don't own. Much more likely to use it to broaden their own product offering over time, especially into beauty .
Well if we start from the understanding that boohoo have gone from sales of 195 million to 1.7 billion in 5 years, we all have to agree boohoo have some sort of competitive advantage. Last time I looked businesses did not grow at that rate into over 100 million in profit in that time frame without a competitive advantage, unless we live in some sorts of alternative Kallu world where left is right, up is down. Obviously if incumbent businesses could do what boo do and boo had no competitive advantage, incumbents with much deeper pockets would have just done it, and stopped boohoo's rise. The fact they didn't isn't because they didn't want to it's because they couldn't.
So what is the competitive advantage. It's Speed and data and and boohoo's distribution network. Test and repeat is not new, but its much more agile and much faster online only. That retail space on consumers phone screens is incredibly valuable, and one of the reasons is that the data it generates allows businesses like boohoo to tailor its marketing and product offering very quickly and very precisley. Surely anyone can understand why it's just so much more efficient to do this online only than with bricks and mortar. If I walk into a Primark, what does Primark know about me? 90% of everything I see in the store is irrelevant to my needs. A boohoo customer sees marketing and products tailored to them every time they click that button that's sat on the Home Screen of their mobile phone. And the choice available is unparalleled in bricks and mortar stores. It's not a complicated concept. It's Amazon. That product can be delivered to you before you've even had the time to get to Primark.
In terms of selling products of brands you don't own, there is some value in it in terms of margin especially if there's little added cost. But it also is likely to be valuable in terms of data. We saw this with Amazon. Amazon basics comes from data driven analytics. They see a brand of kitchen knives selling really well on their platform, make a similar product themselves at a cheaper price point and push their own offering. I don't know what boohoo's aim is with Debenhams, but I doubt its some big rush into low margin retailing. Might also assist in future brand acquisitions, not sure.
As for the p/e I think this is where people like Kallu make big errors. I've made the same errors in the past of avoiding what on the face of it seem to be expensive companies. I no longer make the distinction between growth and value. All investing is value investing but you can get trapped into poor businesses looking around for things that are nominally cheap. The problem is boohoo asks you to make a qualitative analysis of its growth prospects to recognise its a value investment, rather than a quantitative analysis of its current cash flows. I'm not sure what a normal price to earnings ratio is, but boo is not expensive at this price.
Some of the brand acquisitions will do well I'm sure. I very much doubt they will get centre stage anytime soon. Which are you talking about specifically because for instance Debinams as a retailer is not going to set the world on fire in the next few years.
Some of the brand acquisitions will do well I'm sure. I very much doubt they will get centre stage anytime soon. Which are you talking about specifically because for instance Debenhams as a retailer doing lower margin sales of brands boo dont own is not going to be a d
It is impossible, I wouldn't base any investment decisions in boo based on anything other than the main core brands. As you say long term it's an unknown but short to mid term, no chance the are that important to boohoo's bottom line
Can we all just take a moment here just to thank Kallu. I haven't laughed this hard for some time, a real Monday morning treat.
Kallu , let's not forget, is a long term Buffettesq investor. He now tells us that just 1 quarters data is enough to inform the conclusion that a decade old trend has reversed. Kallu has either not understood Buffett, or he hasn't read a single word of Buffett. This is an astonishing level of stupidity. The funny part of course, being that the trend hasn't even reversed. Even after unlock online sales remain way ahead of 2019, and has actually accelerated.
When has a trend ever been defined in any other way than "general direction"?. The general direction of online retail is not downward. Haha imagine applying this logic to anything, where every new short term up or down fluctuation is regarded as a new trend. Dont recall Buffett ever writing anything but the exact opposite of this.
The cognitive dissonance here is on such a level it looks like gaslighting, but it has give me stomach ache level laugh this morning.
I haven't followed the beef on here so I don't know what's going on. Just to float that out there. It's only the absolute drivel from Kallu making my brain melt that got me commenting in the first place haha