Member Info for Okehurst1

Rev B /Debenhams would be a master stroke by THG - if it comes where we have control

Rev B enjoys the USA distribution side for its bricks and mortar customers

Debenhams gets to sell in house produced Beauty products

Rev B is good taking a branded product and reproducing/ selling at a fraction of the cost using same chemicals / packaging

Oleplex is an example

Add this to the BOO stable ?

GGG

Agree, transport / distribution looks best bet - as per previous posts

Rev B being the variable (FCF ) although I feel we could rerate if we pick up the equity we don’t own at say a 50% premium to the suspended price ? Am guessing but putting a bit of bunce on the 19p to get over the line?

Hi Hexam - out and about not near my pc

Was running / playing with the numbers on the spreadsheet last night looking at calendar year rather than accounts year, need to revisit

Top of my head page 30, (£134M) reduction vs (£45M) 2021

Trying to evaluate can they squeeze a bit more?

Looks like the low hanging fruit is the transport element ?

Yeah

Mentioned I need to cross ref below as it differs to what they say

Just on inventory - need to double check below

Looks like Boohoo plc reduced its inventory by £124.3 million in 2022. This represents a reduction of 24.4% from the previous year

Re working capital days decreased from 52 days in 2021 to 47 days in 2022.

All helps FCF

Hexam , agree

It’s the £200M extra costs to be stripped back - like for like 2019

23% transport for 2022 and them quoting £15k container cost vs £1500 etc today

Slashing 4% transport / 1% Admin and it’s £85M - discounting any growth H2

Looks possible?

Covers Capex ?

GGG

Hexam is correct based on numbers we know

They talk about lumpy Capex of £80M plus to complete USA and Sheffield phase 2

If they can nick some of that £200M extra costs they are paying percentage wise and reduce inventory same time, plus savings in Cotton etc

There is a chance they can close that gap like they have done in 2022

It’s was remarkable that they generated £30M FCF plus spent £91M on capex and £15M on Rev B

Good to get challenged on any shared data btw

Helps us all be Long / Short

Weighing up the numbers, reading alongside the Conf call I think the risk / reward is decent at these levels to be Long

Big IF … if they pick up the balance of Rev B they don’t own at lowish price and assume all ok - think we would know if there was a material problem cash wise in Rev B after 8 months of trading post suspension, John has been bullish.

Rev B provides BOO an opportunity to be rerated, they secure a chemical manufacturing plant with all the experience that comes with that and they get £200M Beauty sales including a presence in Walmart, they can then cross sell own produced beauty products on Debenhams platform

BOO Beauty sales could then be be heading to £350M with the infrastructure in place to grow this segment of their offering

Hi Hexam

Agree on the guidance on FCF for 2023

Reading the script it feels like the BoD are playing it safe re FCF

Under promise over deliver stuff - like how they surprised on the upside this week

Because they have discussed percentage costs and how they plan to reduce transport / admin and they refer to Pre Covid we can work back that the total saving to be like for like is

£200M

I can’t see them hitting the same percentages in one go but even 5% blended - being 4% transport 1% Admin - gets them £100M of extra cash, does that sound reasonable ? Feels so to me

They have also got further cost cutting due to cotton price reduction

Against that ? Set up costs in USA, no idea what that will work out at ? Vs cost savings and opportunity

Inventory is down 36% and they allude more to come there

The fact that BOO generated £30M FCF in 2022 after chunky capex of £91M and spending £15M on the 26% stake in Rev B, they deserve some credit for that? Benefit of doubt they can continue the cost cutting ?

Inventory was cut by a whopping 36% and due to freight opening up lead times slashed

If we look at £200M of extra cost in 2022 as a percentage of sales compared to Pre Covid then they have yet more scope to generate further cash savings

Hi Moody

Market Screener web site , it’s behind a fire wall though

Handy subscription platform as you get the conf calls voice to script

Full Q&A

Administration costs were 10.1% of sales 2019

13.2%. 2022

They say on call they except to reduce this 2022 percentage

If we look at the 23% distribution costs and the above, comes in @ 36% combined in 2022

Pre Covid just over 24% combined

They are well focused on closing that gap as we head back to more normal trading / transport

Putting it into numbers, on £1.7B of revenue they spent an extra £200M over and above in 2022 on where they would have been in 2019 like for like

# 12% of £1.7B

Has to be some savings there as they say

T4G

Just ran through transcript to double check

£50M on headcount - but they add and other initiatives and all in flight so the £50M may not be straight single line but £50M headcount / other whatever that is ?

Yeah

That’s the number they quoted to analysts -£50M -on conference call and more to come

It was the 23% spend on distribution that got me tbh

They quote the $15K container last year now £1500

and airfreight being even cheaper

They are forecasting big savings

So if we look at 2019 pro rata it’s under 13%

Nb the transcript from voice to data is quite long with the Q&A well laid out, but it’s via PDF, would take up reams of posts but well worth a read

I subscribe to a platform who converts the above £360 a year

Market screener - hope that helps

Boo did remove £50M of people cost in 2022

More to come this year they say

Mute point as we have to take the BoD at face value

Before Covid BOO distribution cost was running at 12.8%

Last year due to Covid it was 23%

In the Conf call they pointed out they were paying $15000 for a container in 2022 and it’s now $1500

Air freight even cheaper

It’s done tail wind, throw in the drop in price of Cotton off 20%

USA /lb

2019 62.5

2020 58.1

2021 77.5

2022 102.5

2023 87.5 - actually 83 cents tonight

Two decent tailwinds

Think so PaperP

Ovs a punt but am happy with the risk/ reward here

People, let’s see, we place our bets

Taking them on face value re 23% distribution costs, looks like bit of bunce to be had

I waited for the results as cash doesn’t lie or cash is queen is what they said on the conference call, based on their 2022 performance re cash am giving them the benefit of doubt

Beauty is of course reliant on them and management nicking the 38% they don’t own on Rev B

Am new to this BB, been watching from sidelines only bought in late on yesterday

For what’s it’s worth Peoplepower has some fair comments on Shein, they are cheap it’s fact and the poster has a right to voice their views/ data

From my point of view I like the Beauty angle/ fast to market offering in USA and I think there is an opportunity for BOO

BOO at these levels 40p is a decent risk/ reward punt for a PI, they don’t need to raise cash and that juicy 23% distribution cost coming down gets them towards the 6% plus EBITA

The II Shorts have to take a view, they are paying maybe 4% for the cost of the loaned shares, do they take profit now knowing the above ? Is BOO going lower especially if they nick Rev B and move more towards Beauty ?

Who knows ? As I say risk / reward sat up nicely at this level

BOO are saying something different for USA market

They think they can drive cost lower by reducing distribution charges by manufacturing in Mexico and also be quick to market and distribute anywhere in USA in 3 days max but many places 1 to 2 days

Suggest this gives them an edge time wise

Can’t disagree Shein are cheap btw

BOO a moving further into Beauty is telling, owning their own chemical manufacturing plant and add USA distribution unit will be a game changer

officially they only own 27% but with management they own 62%

It’s just a question of sign off accounts and how much they squeeze the 38%

in my opinion it’s a done deal barring how generous they need to be to get to 75% deal with the rest via scheme of arrangement

They acquire Rev B for the right price (19p looks a steal on the 27%) and BOO has a good chance of a decent rerate upwards from what is all time lows