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Also, I didn’t expect us to pay down debt during these quieter months. We were likely using the RCF to make the final payment instalments of the £70m, so making those payments would have had no impact on net debt. I’m looking forward to what our net debt will look like after Xmas/NYE this year
‘The Board expects that the combined impact of unmitigated headwinds; predominantly the increasing cost of freight but also the impact of inflation on staff costs and utilities; plus investment in headcount, IT and development of the online platform to support the delivery of the strategic plan, will add approximately £30m to the pre-Covid FY20 cost base net of mitigation. Looking further out, the Board expects a number of these cost headwinds to subside, and the Company to be able to further mitigate certain cost pressures. In addition, the Company should realise the benefits of the growth investments. Further details will be provided at the time of results’.
Investment, temporary inflationary headwinds and a quiet trading period for us due to the cyclicality of CARD. Nothing to worry about imo as we have pricing power (this was demonstrated in a previous report or presentation, hence the decision to increase prices). Such inflationary headwinds will impact our competitors to the same extent, at the very least. As consumers see their disposable income fall this year, I expect us to benefit from higher sales.
Remember when Roxbury House kept pleading with everybody on the board to revisit previous reports? All the answers were there imo, albeit very discreetly:
• The instalments required at certain deadlines to avoid the £5m fine were almost certainly being paid out of the undrawn RCF (robbing Peter to pay Paul), so a raise was never a realistic possibility. Took me a while to establish this as it was only mentioned in a sentence or two in one annual report. Darcy clearly saw a buying opportunity when this was overlooked by the market.
• Refinancing (in the form of deadline extensions) was already agreed, providing that those instalments were met.
• ‘Permitted to raise funds’, doesn’t mean ‘will have to raise equity’. Permitted = allowed to raise equity, if they wanted to, which is actually a good thing.
Moving forward, if trading is uninterrupted in FY23, I expect:
• Higher revenues from higher footfall on the high street and a shift towards budget retailers as consumers feel the pinch.
• Less debt should result in lower interest payments = better margins.
• Reinstatement of dividend?
• Upward momentum in share price due to a change in sentiment and no threat of an equity raise according to the management team.
I think today will mark the start of the turnaround. If it doesn’t; I’ll start topping again. DYOR and don’t listen to anybody on this BB (myself included)
Cheers both. Mine came in today (Trading 212)
Has anybody received their dividend yet?
NOISEY,
I’m still heavily invested in CARD and my conviction has never been higher. I’m staying quiet on LSE in general, as I want to continue buying shares in my holdings at basement prices. If I’m honest, I can’t believe my luck; being able to bulk buy shares of CF in the 40’s, because Mrs Market (yes, Mrs) misunderstood the wording of an RNS, due to focusing on the tone of the update. There’s a real elephant in the room where CARD’s liquidity is concerned imo, but so far, most people have missed it, because it was only referred to very briefly in one of the recent updates. I missed it myself during my first couple of reads. I think RH highlighted it a few months ago when he was encouraging everyone to re-read the recent CF updates/reports. I’m glad I did; I’ve slept much better since :D
Simes,
71 posts. 100% of them about Card Factory. Why?
Simes,
Good question. It's called a growth strategy mate; most companies have them. Find out more in CF's most recent presentation.
Pokerchips,
I forgot to add that I do think oil could reach a ridiculous price in the short-term (over $150), but it takes a rather vivid imagination to believe that such a high price will be sustained. What's your verdict on RCH atm?
LPD,
Unlike some, I don't comment on these boards to pump or de-ramp; I try to remain objective. FWIW I also think this is a great buying opportunity.
Latpulldown,
I don't know why you think that Card Factory is completely insulated from oil and gas prices. We feel the impact via:
- Increased distribution costs
- Increased freight costs
- The cost of some raw materials might increase
- The last time I checked, the main source of electricity in the U.K was natural gas. Obviously we use electricity for production purposes and in our stores
- Consumers will have less disposable income (yes, I know, this could actually benefit a budget retailer like ourselves)
Just off the top of my head
Pokerchips,
They're saying $150, so they have buyers for their options/futures. Russia exports 7 million bpd (half of this goes into Europe via direct pipeline). If Russia fail to sell one single drop of oil in the future, oil prices will rise to $120-£130 a barrel, theoretically. That's worst case scenario and doesn't take any mitigating factors into consideration. For example:
- Oil demand within Ukraine has fallen drastically and will remain low, for obvious reasons.
- Russian oil demand (3 million bpd) is expected to fall (a deflationary pressure IF they can find a buyer for their oil... and I'm 99% sure they will, at the right price).
- It's estimated that oil demand could fall by 1 million bpd per day due to the Ukrainian 'war' (I wouldn't call it that).
- Iran have over 100 million barrels in storage and can produce c. 1 million bpd. Light or not, it's a further deflationary pressure.
- Saudi Arabia and the UAE can, and will, increase production. I expect Venezuela to do the same.
When the market releases this and the media decides to sell another type of fear, the market will rebound imo.
https://oilprice.com/Energy/Oil-Prices/Oil-Turns-Lower-On-Rumors-Of-Imminent-Iran-Nuclear-Deal.html
^ Consequently, I expect some of the inflationary pressure and fear to subside. Venezuela are also hoping to do the same.
https://oilprice.com/Energy/Oil-Prices/Oil-Turns-Lower-On-Rumors-Of-Imminent-Iran-Nuclear-Deal.html
Oil inflation danger averted, hopefully. Venezuela hoping to do the same, according to many sources
Cheers pal, I appreciate that. BILN looks interesting at a quick glance.
Laughton,
What else did he recommend? I’m not a subscriber you see.
Cheers
Do Card Factory have one, or are we expected to guess the dates based on previous announcements?
Cheers Ian B,
He views the company in a similar light to myself
Ian B,
Can you list some other stocks that meet that criteria please mate?
Stevebt,
Even Berkshire have had made some terrible decisions in recent years, so I’m not losing any sleep over Lombard’s short. Pretty much I’m reading lately is positive regarding both CARD, Covid-19 and the U.K. economy. Moreover, if CARD was a such great opportunity for a short, surely there would be several funds with large short positions. If I remember correctly, there was a 1.91% short open on RCH at c.50p per share in August 2020 (for a company with underlying earnings of c.30p per annum). Around a year later, it was trading at £4 per share, and still had a relatively low p/e at around 11. What qualifications do you need to work at one of these funds? A pass in BTEC healthcare and beauty? If I failed to my back myself against Luxor, I’d be a poorer man for it today. Whether you top up or not is your business though. I don’t have a crystal ball; I’m just saying that I wouldn’t personally hold fire due a short being outstanding