Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
They get a franchise fee from MENA partner from bricks & mortar / on line sales plus same on Debenhams U.K. site as a marketplace platform
Boo carry no stock on Debenhams as such it’s just portal, they are adding brands each month, by the looks of things via their franchise partner
Sheffield which cost £125M of cash to put together is focused on logistics/ handling apparel for the group
Debenhams looks like a smart model to me, other than the UI there is no capital required
Hi C/Man
Worth a look at Debenhams MENA web site, it’s as good as the Next offering, the franchise has 2000 multi brand stores 60,000 staff including 23no full on Debenham departments stores
Then look at Debenhams U.K. site and you can see the same products being added, this is the capex lite model they have been explaining to Analysts, basically it’s a market place and
Debenhams basically a UI who take a percentage, it’s why they have been able to tell analysts it’s profitable.
Jefferies have been advising clients they see £300M plus Rev 2023 and big growth in the Debenhams model
We may get more information next week ,I expect Boo will open up to the wider market on Debenhams not just choice brokers
Fair comments Teddy.
Think we can see why Boo BoD have pivoted the business model towards Debenhams including growing the franchise model in MENA region - 1.25M sq/ft making up 23no stores
and then the capex lite marketplace model utilising their partners buying power as they start to mirror Next’s on line offering - Next revenue in store is now only 35%
Nb the wider Markets have missed what’s happening with Debenhams
Karen Millen - marketing ramped up
Pretty little thing - ditto had £750M Rev last year, £75M profit
Both being pushed hard USA side
Then we have the Beauty side with Rev B and Debenhams branching out into bricks and mortar beauty stores - worth following RevB in USA they are running a parallel marketing campaign to PLT, interesting to see this play out
The other Boo named brands will grab what they can and Boo will push product via their app which has 18M downloads.
I am not sure PP could exceed the stupidity of saying Mike Ashley was conducting insider trading in Boo shares by Shorting whilst buying £40M worth - there have been many to choose
However Boo having 50M returns a year knowing Boo generate £2 a pop put aside that would be 50% returns then web site sale conversion rate of 25% are possibly new entries into the PP top 10 gaffs
Shein are taking the PP out of the U.K.
14 staff generating £80M each of sales and just £2M in tax U.K. the U.K.
They are growing to 50 staff :-)
They pay 3p per garment apparently to their factory staff
Fair doos to Shein, they won’t get away with it in the USA but they are milking the U.K. Treasury and HMRC, you have to laugh how they run rings around this Government
China-founded fast-fashion giant Shein has seen its UK sales race through the £1 billion mark just two years after setting up in Britain.
In the first set of accounts to show the impact the company has had on British retail, Shein said it made £1.1 million of turnover and £12.2 million profit in the 16 months to December 2022. Its tax bill was just £2.3 million.
The online retailer’s prices — Shein sells T-shirts and dresses for less than £2 — have won over a large customer base, mainly of young women. The sales figure is equivalent to £80 million for each of its 14 UK employees.
Founded by the reclusive entrepreneur Chris Xu, Shein has kept costs down by using a close-knit group of suppliers clustered around its base in Guangzhou. Until recently, it has also saved money by shipping all its goods directly to UK customers’ homes from China, rather than using expensive UK distribution centres.
The business model is changing, however. It has recently taken some warehouse space in the UK and established a corporate office in a Westminster building once home to MI6. It expects to employ 50 people directly in the UK by the end of the year.
The company has changed its domicile from China to Singapore as it gears up for a stock market float in the US. It is aiming to raise global sales of $22.7 billion (£18.5 billion) to $58.5 billion by 2025. Total profits were $700 million last year.
Last month, Shein struck a deal with the owners of youth fashion brand Forever 21 to sell clothes on its site and app, which boast more than 150 million users. Shein is also in talks to buy Missguided from Mike Ashley’s Frasers Group.
Shein’s rapid rise, and prodigious use of air freight, is reigniting concerns about fast-fashion’s environmental impact. About 350,000 tonnes of clothing goes to landfill every year in the UK.
An investigation by Dispatches last year found workers supplying Shein were paid as little as 3p per garment while on 18-hour shifts.
Shein said it was committed to respecting human rights, had zero tolerance for forced labour and robust compliance for Shein-branded products.
https://www.thetimes.co.uk/article/sheins-uk-sales-hit-1bn-but-chinese-retailer-pays-just-2m-tax-npxcfbpd5
I can’t see PP’s post but picked up via T4G’s thread
The info is out there for PP - I keep saying it but if you don’t buy broker reports whom have interviewed the Company or buy transcripts of meetings which discuss same you lose all credibility although this is also in the public accounts of Boo
It’s 3.6% so 3.6 visitors per 100 visitors purchase goods
Average spend is around £55 with 3 items
5M items returned H2
Are we now seeing in real time the strategy the BoD have been more forthcoming about with analysts rather than the wider market
Debenhams - Franchise within bricks & mortar stores 23no and 1.25M sq/ft space now in MENA region and counting /Market place, capex lite model starting to mirror Next product lines
Incorporating a Beauty platform and a controlling stake in Fast Beauty Chain with a view to sell Boo Fast Beauty ranges to their 18M App users
Karen Millen - building a standalone brand within the group
Receiving what appears to be a good chunk of change for marketing / far reach main stream influencers
PLT - £75M profit last year on £750M revenue
heavy marketing especially USA East coast, tours of colleges and of course Collabs with Campbell, positioning PLT as a cool Urban brand
Boo own brands which go head to head with Shein appear to be ticking over using lesser known influencers and maybe the $ spend here is lower as a percentage with the focus on the 18M app users ?
I would argue and say Boo named brands whilst important for the this transition are not seen by the BoD as the future growth and profit, it’s Debenhams ( Next model ) Beauty, KM and PLT
Debenhams in my view is going to surprise the market - to the upside - this brand is on a roll and arguably the gem within the group, let’s see if they start segmental reporting for Debs
IF Boo exceed their forecast of £78M EBITDA and could hit £100M EBITDA its then about can they squeeze another 2% working cap for the year in full? It’s possible they could squeeze £35M
Worth noting they pulled out £100M last year
Then we have £135M of cash generation
Less £85M Capex,
£16M Finance / including legals Rev B
£25M exceptional’s - they advised this number
That would be a result for this year
The market always looks ahead, all depends can they get back to near the £2B @ 6% ? It’s possible we look at the cost of sales percentages
Then we have the elephant in the room … Debenhams which I think is going to surprise to the upside but let’s discount to zero growth for this example
£120M EBITDA - know they say 6 to 8% but work lower end
Less
£10M exceptional’s USA
£20M maintenance capital and even though they say
heavy lifting capex is done if we look at last year Sheffield phase 2 which is automation, ball park allow another £20M
Less finance £12M
£60M free cash
Don’t forget no tax bill for years, it’s net net
Nb they are forecasting to analysts £78M EBITDA top of the range full year
H2 they benefit from USA opening and 2022 head winds are now tail winds with inflation falling as Next plc said yesterday
it’s not impossible they try and push to hit the headline £100M EBITDA, if they hit £42M to £46M H1 as explained below the £100M looks visible
Hi Pipe
As always good to see your views
You ask about views on results, my thesis below
I am going for worse case revenue drop of 15% however this could gap up due to Debenhams surprising to the upside
it won’t materially affect working cap as Boo don’t fund this business and we could see a few quid helping the margin
COGS - Draper have the percentage higher but let’s go with the lowest being Just Style at 10%, that equates to £35M to £38M
Administration- £7M (1%) based on analyst call
Marketing - it ‘ feels’ like they cut back H1 especially USA whilst they opened up the new depot, this is a pure guess nothing more, £20M cut as it’s an easy win for Boo
Distribution - it was extremely high last year as they identified on the conf call, containers down 90% this year and they did say they will push some of that saving into Air Freight as they return to test / repeat, this is course had a knock on affect on Working Cap days which they reduced to 10% (46 days)
On a straight line basis that £13M to £15M cash with reduced revenue give or take and that’s offering no benefit of test/ repeat
All in am going for 5.5% and FCF neutral
If we get the above and they guide to 6% we get a healthy rerate, I fully understand the above has risk which I am comfortable taking ( long position )
I go back to Debenhams for final comment, the market is missing what is happening here
https://www.just-style.com/news/boohoo-demanding-10-supplier-discount-to-cut-costs/
Agree West, top share off Reardon
Didn’t realise Boo Sheffield due to automation can handle 150,000 returns a day
40,000 orders an hour/ 960,000 a day - thought 840,000 a day was the optimum
We know from the accounts that the average item sold is around £18 and 3 items per baskets, some capacity there.
Boo have spent £125M capex putting this together at Sheffield