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Assume we need to raise Q1 2026 in advance of the Audit sign off, we know now that we can’t leave it till the day the cash has run out being June 2016?
What do we think the cash that will be required to fund
Phase 3 ?
Trying to gauges estimate what this will be ?
Few thoughts, with all the bull of many quoted Plc’s reporting adjusted EBITDA it becomes a minefield for us little Pi’s
Suggest we also have to look at EV valuation to FCF ratio as well
So in BOO’s case £500M EV and FCF at last results was a cash outflow of £12M in 6 month period and this period didn’t include ramping up USA stock / new centre opening
Forecast EBITDA average £63M less capex £75M which we are told hasn’t changed ? But we also have to add cost of finance so overall negative FCF could be £40M to £45M ?
Some analysts think £60M, but if we go with £45M negative FCF vs £500M EV
Rev B has an EV value around £125M and £12M EBITDA less capex £5M less finance £2M , FCF of £5M vs £125M EV
Appreciate the above is a grey area to measure 100% but its something to think about when we know it’s difficult/ costly to raise finance, ideally we want to see positive FCF in Boo or at least breakeven
Frasers don’t need to Bid once they hit 29.99%
Not saying it’s a day 1 event but they can obtain a ‘whitewash’ if they underwrite a fund raise and assuming they have some control of the BoD - that’s not a given mind
Frasers could of course buy the debt facility off the existing banks as another option and put pressure that way, with one eye on credit insurance as well.
Few moving parts and of course speculating but an ASOS/BOO merger, eradicating joint debt or a good chunk of same with Frasers Corner Stoning new funds has merits?
Assume there must be decent cost saving with a merger ?
Pipe,
Few thoughts
I guess the issue is what happens ‘the day after ‘ Frasers are sitting at 29.99% ?
Do they force themselves onto the BoD ?
So they repeat at ASOS ?
Assume that’s the game plan as an outcome
The II shorts have a problem at that point, limited free float and a potential merger / substantial cost savings and capital reconstruction of the ‘ newco’ balance sheet alongside one of the best retailers in Europe pulling the strings
Frasers could seek a ‘ whitewash ‘ on a raise and cornerstone same time, take their equity towards 50%, big Mike has form with using ‘ whitewash ‘ look how he got to his stake in Frasers to the size it is ?
Hi,
Been watching these on and off, genuine questions
What’s the view on the dividend being held ?
Looks cheap IF they can continue paying out ?
Do we think the dividend cover is sustainable?
Thanks in advance
Suggest it’s helpful for Boo if Shein can IPO, they could be held to account for their actions
Some decent money / fees involved, Shein don’t need to raise big $ to get this away
Big Mike one step ahead of the game
Oakley described the Singapore-based group in a recent legal filing as “repeat counterfeiters”. Shein agreed to stop selling glasses that copied Oakley’s designs in February 2022 but resumed selling the exact same items the following year, according to the company’s complaint.
Shein did not file a response to the complaint, but is now finalising its second legal settlement with Oakley in the space of two years, according to filings.
Fashion group Ralph Lauren has been locked in a dispute with Shein since 2021. Last year it expanded its complaint after claiming it found new infringing items, and warned it may expand the case further as it discovers more breaches.
Oakley, Ralph Lauren and Deckers did not respond to requests for comment.
Jeanne Fromer, a professor of intellectual property law at New York University, said a certain amount of copying was intrinsic to the apparel industry, particularly the fast-fashion sector.
“It may be that they say, ‘we’ll take a calculated risk on this’. You get sued on a certain percentage of products, or receive some cease-and-desist letters, and that’s part of your cost of doing business.”
But, she added, repeatedly infringing after agreeing earlier settlements would raise the risk of being forced to pay more severe penalties.
Shein said IP infringement was a problem across the fashion sector, and it was “committed to driving industry-wide advancement”. It has recently launched two of its own copyright complaints against businesses that sell items on the website of its close rival Temu.
Gerber, of Kushnirsky Gerber, has also represented artists in copyright claims against companies such as Amazon, Gap and Guess. He said: “In my experience no one else has ever come close [to Shein] in terms of the sheer number and scope of infringements . . . Our firm is constantly being contacted by aggrieved artists.”
Shein was valued at more than $60bn in its most recent private fundraising, which, if maintained in an IPO, would make it the most valuable company to go public in the US since Uber in 2019. It filed a confidential preliminary prospectus with regulators late last year.
However, the deal is facing intense scrutiny from lawmakers and regulators. Dozens of members of Congress and state attorneys-general have questioned whether Shein’s supply chain is free of forced labour. They have also criticised it for using a loophole to avoid import taxes by shipping low-value packages directly to consumers.
Shein this week said it had a “zero-tolerance policy” towards forced labour and was “committed to respecting human rights”. It also said it was “working closely with industry peers and policymakers” to help reform the contentious import tax rules.
Rick Scott, a Republican senator from Florida, told the Financial Times he would not stop fighting to keep Shein from listing on US exchanges.
Scott said: “Shein’s lack of transparency, seemingly illegal business practices and allegations of unethical conduct, like IP theft, may be OK in Communist China but won’t fly in the United States. Shein is bad news from any angle you look at it.”
Amid pressure, the company has been paying out more for lobbying in Washington. Disclosures released last week showed the company spent $3mn in 2023, more than 10 times the amount reported in 2022.
At least 93 different designers and companies have filed lawsuits in US federal courts against Shein for alleged copyright or trademark infringement since 2018, according to a Financial Times analysis, including at least 30 new cases filed last year. Retail giants H&M and Fast Retailing, which owns Uniqlo, have also launched lawsuits against Shein in Hong Kong and Japan, respectively.
The majority of the cases against Shein ended with settlements whose terms were not disclosed, making it difficult to assess any financial costs to the company.
Philippa Loengard, director of the Kernochan Center for Law, Media and the Arts at Columbia Law School, said settlements in similar copyright cases “tend to be handsome to the artists. Possibly more lucrative than a licence agreement would have been”.
“This [issue] is not new, but the scale is larger than others in the past, even among other fast-fashion outlets,” she added.
At least 10 businesses have sued Shein more than once, including Deckers, a shoemaker with a $20bn market capitalisation, and Oakley, the sunglasses brand owned by €80bn eyewear giant EssilorLuxottica
Full article
‘The online retailer Shein has been accused of breaching its own legal settlements and continuing to sell copycat items despite pledging to stop, with one of the world’s largest fashion groups accusing the company of being “repeat counterfeiters”.
Shein has long faced criticism that its blistering growth relied on cheap knock-offs of other people’s designs. The total number of copyright cases against the group has grown to nearly 100, according to legal filings.
The retailer has repeatedly denied the accusations, and said it invests heavily in systems to detect copyright infringements in its supply chain. But the persistence of the allegations and claims of repeat transgressions highlight a risk for potential investors as Shein attempts to pull off one of the largest — and most controversial — US initial public offerings in years.
“Many of [the cases] involve flagrant recidivism,” said Andrew Gerber, an intellectual property lawyer at Kushnirsky Gerber who has been involved in more than a dozen lawsuits against the company. “Shein knows what it’s doing. They use unscrupulous suppliers and continue working with them.”
Shein, which was founded in China and is now headquartered in Singapore, said it “takes all claims of infringement seriously” and was “continually investing in our review process”.
The pace of new legal complaints against the company had declined from its peak, Shein said, adding that third-party vendors selling goods on its platform “are required to comply with company policy and certify their products do not infringe third-party IP”.
A Shein pop-up store inside a California mall.
A Shein pop-up store inside a California mall. At least 10 businesses have sued the company more than once © Allen J. Schaben/Los Angeles Times via Getty Images’
Daytrade, fair point on the RCF
The market had £60M plus debt Q1 2024, think we can assume they are not materially away from this figure?Am guessing as that would be ‘in line’ ?
One of the key metrics we won’t find out until May is USA CAC and retention rate, has to be key to turning Boo around in a material way? We had $28 on the former and 44% on the latter back in October ?
Suggest Frasers picking up the stock today, intrigued to see what happens to the share price after they hit 29.99%
Do they repeat at ASOS then sit and wait until the market sees the numbers in May?
Any thoughts ?
Jeremy
No detailed TU over what is the busiest time of the year is not helpful but coupled with the immediate resignation of the CFO it’s not a reassuring sign ?
The market needs to see how the USA is trading ?
If it was good news then an update would have bolstered the share price and maybe deterred Frasers by costing them more to get to 29.99% ?
Would an II add on the back of this RNS ?
Re Frasers buying PLT and Top Shop
Would they need to buy 29.99% of the equity in both Boo/Asos to push these disposals over the line ?
It’s a big upfront cost / investment, does it help their controlling stake in both companies post transaction ?
Not too sure ?
Would ASOS/ Boo be each valued on an EV basis ?
That’s pretty straight forward ?
Frasers then have 30% of the enlarged group ? They even underwrite a placing to pay off combined debt and apply for a whitewash - like how Mike Ashley operates Frasers ?
Speculating of course but an EV merger makes sense IF Frasers can push it through that is ?
Pipe
There was a short lag before New Year’s Eve then the market woke up to the extra cost of containers 3X overnight
Boo got caught with wider market
The market including Frasers await the next TU, depending on the £numbers of course dictates direction, however we have Frasers in the wings so based on past trading history in Boo think we can say there is a decent chance they will sweep up the free float at some point ? It’s at what price they let it fall to assuming it fell ?
Will shorts ex Quant funds like Qube bet against Frasers at that point and double down ? Highly doubt it unless there was really bad news
Frasers underwrite Boo, have done since they disclosed a notifiable holding
That’s my take
Hi Pipe,
Agree.
Suggest it’s Frasers though that offer the practical support which under rights the technical analysis if that makes sense ? It’s buying patterns from Fraser to watch for ?
They appear to be on the Bid in ranges, take worse case Boo still has high CAC USA and the market frets on debt level, think we can say Frasers will mop up to 40p
Then it’s will they go on the Bid 40p to 45p as next range as no more sellers under 40p.?
For us little guys if that pattern continues there is money to be made picking up under 35p, selling at 45p