Member Info for Okehurst1

The Shorts will carry the water for us Longs here ….

Ticking along nicely

That was some conference / broker call last week

2022 FCF due to inventory management didn’t affect EBITDA profits - Hex taking on board your comments :-)

Pre Covid distribution cost of sales pre Covid 13% to 23% 2022 is a mind blowing £170M difference and it’s serious $$$ and we know container costs have fell 90% this year to last

But it also affects the profit margin

Not saying they can pull in the full 10% but it looks like a no brainer - brokers are defo looking at this one

Under promise over deliver looks the mantra of the BoD

Worth noting there is execution risk in the USA but they already have £400M sales @ 58% gross margin - beats the average

Other than a left field event can’t see a material downside from here

Nb the Shorts have to start closing here soon and play Bank

Positive comments off the Brokers below

The Shorts have a lot of profit inside their BOO trade, can see a few taking profits alongside II Longs adding as the weeks go by, we will look back at the last month as the Low point

Analysts are optimistic, encouraging investors to consider purchasing Boohoo shares, noting that the company’s most challenging times are likely behind it’

In addition to urging investors to acquire shares, these analysts have raised their target price from 60p to 70p, showing their confidence in the company’s future. At present, Boohoo’s shares are being traded at 43p, reflecting a market capitalisation just shy of £550m​‘

T4G

Bottom is in ….

‘Despite falling to a pre-tax loss of £90.7mln and revenues slipping 11% to £1.7bn, investors latched onto surprisingly positive cash generation.

Net cash for the year to 28 February stood at £6mln, defying forecasts the online retailer would be carrying £60mln worth of debt.

The prelims prompted Shore Capital, which has attained guru status in the world of online fashion, to upgrade its stock recommendation to ‘buy’ in a bullish show of faith.

“The upcoming fiscal year offers favourable year-on-year comparisons, along with streamlined inventory and then phased launch of a US warehouse, which are expected to boost the company’s prospects,” Shore added

Auto store offer 30% capex up front and pay per collect - since Feb 2023

Provides options for BOO - cash wise

https://www.roboticsandinnovation.co.uk/news/events-news/autostore-launches-pay-per-pick-service-to-reduce-costs-of-warehouse-automation.html

Guess on automaton it’s cost per pick & collect automated to that of a human ? Per item ?

Not sure what that is at Sheffield ?

Any ideas anyone ?

Just REV B and do they try and pick up the 14% day they need to seal the deal ?

As the company needs £working cap and has bank debt / owes $$ for the manufacturing plant then the directors have more scope to restructure hiding behind fiduciary responsibilities by joining BOO and using their balance sheet

We should know by end of month

Hi Hexam

Thanks for reviewing my post - appreciated

I agree with you it’s not in the bag yet hence the risk /reward but gut feel there has to be bunce in the (distribution)

23% 2022 vs 13% 2019, I think that’s what the analyst’s are looking at FCF wise, whopping £170M to go at ….

Noticed BOO now want 30% off Turkish manufacturers so are they nicking a good chunk back

I guess they pay them in $ so they want a kick back on that as well taking the view the Turkish lira has lost significant value against the US dollar in the last two years

30% 2022 and down 40% YTD on top, arbitrage to be had

Fair comments T4G

There may well be a bit of bunce on inventory but either way big cash to be had from the lines below

Good post Wolf, well presented and spot on

Hexam raised a valid point on Friday, gist being why miss the

‘D’ out of EBITA ? - forgot to reply

It’s a fair point as assets have to be replaced one day.but at this stage it’s all about cash

I am looking at FCF today / next 12 months

BOO has at the max £170M of pure cash to nick back from distribution - can’t see us getting back to 13% but we could grab 5% being £85M ?

Inventory won’t be repeated ? Can’t see it being material

Admin has 3% to play with still - maybe we get 1% ?

Suppliers, defo bunce to be had here, their distribution/input costs have fell with cotton down 25% but let’s leave at £zero savings and work on Pre Covid costs of doing business for extra cash

Snap shot on cash - be helpful to be critiqued btw

We discount REV B to £nil until we know what’s going on

ditto work on 5% EBITA then add back something from above, mindful 2023 still carries risk

They identify distribution costs have come down 90% at the extremes but let’s go with 50% saving to 18% of sales, which is still massive compared to 13% Pre Covid

Appreciate some of below would be in EBITA but it’s easier to evaluate this way

Cash at EBITA level

£1.7B @ 5% £85M

Distribution. £85M as above

Admin 1%. £17M

£187M

Less finance cost /leases/ £85M capex

Less REV B 38% they don’t own

I think they will repeat last years FCF position- £91M capex, £15M REV B and still generated £30M of FCF cash but again like last year will dip in /out using the revolving credit line

Happy to be challenged on above, appreciate there is risk,

REV B comes off need to review once we see their numbers

Suggest the above helicopter view is why the brokers are calling the bottom - all the info was on this weeks conf call

Good money to made here for us Longs at this level

PP1 am new to this BB as you know and was giving you the benefit of doubt as non of your posts had any £numbers / data/ analysis for discussion from the recent accounts/ analyst call.

Think intellectually you let yourself down with the post below - btw personally I think you should be allowed to have / project a negative view to BOO on the BB but the post below is not cool, it makes you look dumb and I don’t think you are

They said £135M intangible capex on conf call

Maintenance has run single £M’a last few years by the by

Put aside Ocado will spend £1.5B next 5 years on their SaaS as an example of what’s required

Regardless of the partnerships they have told us £135M however it’s broken down it’s kind of irrelevant where it sits

We don’t generate the FCF to fund it

MM said the 65% didn’t back the Apollo deal

so they must have known the terms to back it - to say they support him infers they must

The BoD should now tell the 35% the Apollo offer , it’s not a fair market for 65% to be able to trade on that knowledge and that us the 35% are excluded from knowing

Via linked in will do but just tell us, it’s fair comment

I look at it this way

We knew in January that they need £100M for Ingenuity SaaS after the trading update, the BoD have been clear

They told us again a few weeks ago on the broker call - its now £135M for 5 years, 80% of our current £m/cap

We know the core business will do £2B cash @ close to 7% after paying Ingenuity their fee

Debt is £140M once they sell the property - servicing debt is not an issue although it’s high at £60M a year

So the pinch point as always is Ingenuity

One way or aother Ingenuity will be spun off and they raise the cash independently, they can’t fund otherwise we don’t generate enough cash - fact

You need to be in it to win it stiff now, who knows when we get the RNS? But what we do know it has to happen and quickly - within months

Tbf thats the Helicopter view

Current USA sales £400M

REV B was £100M USA - close to last full account

£500M base

Hi Moody

Good gains to be had here, the Shorts have allowed a decent entry point for us

Acquiring Rev B will be the next inflection point as the market digests the benefits of integrating into Debenhams and owning a specialist chemical manufacturing plant

Posts crossed

One by one the brokers on the conf call this week have gone away ,crunched the numbers and are calling the bottom for BOO

PP1 suggest it’s worth accessing full BOO Q&A analyst report this week, the info is all in there, it’s what’s sparking certain brokers reviewing / upgrading their share price target for their II clients

Anyone not accessed the Broker meeting let’s look at some of the Data for BOO USA, I will try and keep concise, appreciate some posters don’t like numbers as it’s confusing but it’s important and assists how you make £money but not a quick day trading buck

BOO revenue in USA is £400M a year and the gross profit margin 58% - this is before the new 1M sq/ft fulfilment centre opens

USA makes up around 20% of Group revenue

If the ROW sales including U.K. matched the USA profit margin we would have generated an extra £120M extra gross profit

it’s a massive difference. - Our average margin being just over 50%, don’t forget that’s gross profit

BOO are moving manufacturing to Guatemala and Mexico for super quick lead times - they mention 3 week reduction in lead times

The new 1M sq/ft automated USA Fulfilment centre will ensure BOO can deliver to 95% of the USA at a max of 3 days

but urban areas 1 to 2 day

The capacity in place across the group as they move to 3no fulfilment centres is around £4B of annual sales and the USA - we can work back on sq/ft to sales -,they are looking at £2B for USA

This is without REV B , they themselves have a decent platform in the USA in the likes of Walmart etc

Once BOO have full control of this business John alluded to Beauty in the USA will be a growth market for them

Add back a big chunk of the £170M difference in distribution costs as a percentage per Pre Covid - this is the low hanging fruit now, it’s massive savings, even 50% would bring in an extra £85M of bunce but why not go for the full amount as containers fall 90% in cost

John (CEO) says, the new USA 1M sqft automated centre is a gamechanger

The risk / reward ratio is looking very attractive, add in a heavily shorted stock and we will get a squeeze as the Shorts run for the doors, it’s coming, need to have patience.