RE: Recovery16 May 2025 08:54
The results were relatively good, up to March and their profits were okay. BUT, they've now said they're to spend £3million into starting up a new business which looks to not be operational until... 2026?
while they will utilise their own warehousing and delivery service, the area they're moving into is already crowded. it's unclear whether they're really going to offer kitchens if it's just online (!) and homewares is already crowded. so not so sure they can grab a good share.
MFI, while they already own it, isn't a good brand. it's certainly not habitat, which Kingfisher (?) now own.
so there's confusion about whether they're just online, which is fine for homewares (though note that homebase was in trouble for several years, sold twice, before giving up the ghost). if they're doing kitchens then they'll need substantial sales space as noone buys £several thousand just online, like one would a lamp!
it means they're also splitting their efforts away from their expertise. if they said they could buy an existing business for the £3mill, that'd be different,
starting from scratch is time-consuming and, as already stated, as they spend... 30% of their revenue on advertising, even with free publicity, how much extra will they have to spend? it's moot whether they will contain it all for £3mill...
and, in the end, MFI is a bit like the only Brentford Nylons. so they're fighting against an oddly broken brand.
i suspect that 80p is just about fair value. if they junked the MFI project and kept the £3mill or reduced significantly their homewares to a sideline to main products, and grew it as it progressed into 2026... and spent signficantly less, be a different matter.
but, it's true that market sentiment is an odd creature atm, and it could be that any share that drops 30% is due at least a partial recovery.
you pays your money...
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