Member Info for Paulof2

A placing to raise £75m is one thing but doing it when shares are at a years low is a disaster. Sounds like desperation

How can anyone make out that this is remotely good news?

In effect everyone is now paying to get rid of ingenuity (the same ingenuity that Matt Moulding said was being valued at more than the rest of THG, now just valued at 100m. Utterly embarrassing).

Could be a bloodbath here tomorrow.

People on this chat over the last few months going on as if this is going bust in dire cash straights, then it posts 79m FCF in the first half alone and those same people still aren’t happy!

Distressed share prices will always come on to PE radar, the likelihood is what MM failed to mention is when they conducted their proper due diligence they learnt more about the company, it’s horrendous financials and then swiftly made it clear that any bid would be to break it up to perhaps salvage some part of it whilst the others are wound up, likely at a share price around 50p, which given the profit warning since would be generous.

You need to understand they clearly weren’t properly interested or else they would have made a bid.

Read the news outside of the THG delusion bubble and you will see Apollo are linked to company takeovers all of the time, normally they do get a little further than this. MM likely suggested his proposed valuation and was laughed out the room.

How can you debate they were unrealistic? That’s two apparent bids now leaked incredibly early to the papers solely to prop up share price, which have barely even got over the first hurdle with regards to a bid being made.

It was nowhere near a done deal

Classic immature THG investor had his fingers burnt now in a mood so unable to provide any reasonable logic.

Where are all those rockets that were being posted the other day now?

Which part exactly is crackers?

No bid - what a shock.

Events now following the classic ponzi company trade.

Profit warning - share price tanks

Horrendous results - share price tanks

Fake bid rumour that was never going to happen - share price explodes

Repeat 2x and probably a few more times.

I guess the good news is this unrealistic bid rumour detracted from the latest profit warning and horrendous results, this would be sub 30p without this so I guess it has been successful in that regard.

It’s not a good thing that MM thinks this is worth more than everyone else does, it’s sheer delusion. You can even see that in his LinkedIn post - Share price tanked from 800p purely due to numis shorting in his eyes - nothing to do with the countless profit warnings? Yeah, right.

Be surprised if this ponzi, essentially loss making company survives to 2025.

My hypothesis is it’s the other way round, alliance family buying (particularly the initial tranches they purchased from Schroders) forced frasers into action to take a large stake, just enough to prevent any easy takeover hence no buys since. Frasers want to wait in the wings until the old alliances die when then, and only then, would they have a realistic chance of a takeover imo (primarily based on IHT benefits).

As to why the alliances started buying recently clearly a large part of it started with the friendly buys from Schroders who wanted to offload but I do wonder if perhaps they were scared the Allianz claim may have ended up being many multiples higher, it doesn’t seem a coincidence to me that they have only just started ramping up the buying after that was settled.

Unhooked, the last chunk went to frasers yeah, but when they first started selling down last week it was alliance family buying - there were numerous RNS’s where schroders were reducing and lady alliance was adding the same amount of shares.

Few more rns’s this morning albeit delayed from Friday, for this to take off we need to see frasers or alliance battling it out to buy shares in the actual open market now schroders are out IMO.

Frasers usually only low ball because they buy companies in distressed sales - that is far from the case here.

The alliance family didn’t sell when it hit near £5 a share when Asda were rumoured to be interested in taking the company over 8 or so years ago, struggle to see why they would sell it now at c.30p and also forgo all the tax benefits they have entitled themselves to with the move to AIM.

NAV here is well above the current share price as others have mentioned, but also the value to frasers in particular is more than that.

We know frasers big strategy this year is around financial services, they already bought studio retail last year to get the ball rolling on that. Now if they added n brown into the mix that could really accelerate their strategy, not to mention all the synergies they could get down the line.

I still think the most likely scenario here is that frasers have been waiting in the wings for lord alliance to pass away to table a bid, then schroders start to sell and to frasers surprise the alliance family start scooping these up. Then, to stop the possibility of the family taking it private themselves frasers start buying shares, defending against any possibility of them taking it private and getting them a seat at the table and first dibs essentially when the alliances eventually pass.

I don't think it is unreasonable to assume they have generated significant cash around their peak trading period, particularly as we know that as of the last update inventory was already high (up 14% compared to the prior year) and they had plans to manage future intake, so I expect they will have traded that down to a more normal level generating cash and deferring or cancelling some future orders (again like 99% of retailers have done over the last year)

I think its difficult to look at it on a quarterly basis from an EBITDA basis and try to ascertain cash from that as a big part of it depends on the non cash provisions within the loan book.

I'm a bit disappointed by the size of the settlement, I thought that given N brown had counterclaimed there may have been at least some possibility of a smaller settlement as they must have thought they had a chance, but clearly not. A settlement twice the provision is a bit of a disaster, luckily n brown is in a much better cash position than a few years back or it could have been a lot more of an issue. I suppose it is good at least that the uncertainty has now gone, but I do think for some long term investors in particular they may just wonder what historic disaster will rear its head next, given PPI dragged on, now this settlement, all as a result of operations year ago.

Still, I think its difficult to argue that N Brown isn't very undervalued on almost every metric. Look forward to seeing their trading update next week, I think they set the bar very low with their last update which seemed to come out just before retail sales across the whole market started to improve (See BRC data, corroborated by Next's recent update).

If they cant hit the revised target of c. 9.4% down over the latest trading period and disappoint then I think I will be finally throwing in the towel and giving up on this.

No position here, but unfortunately looks like another situation where shareholders will get nothing.

I’ve seen quite a few administrations in my time but don’t think I’ve ever seen one where the founder somehow manages to maintain an equity stake after it’s acquired out of admin.

What an absolute crook, unbelievably unfair on other shareholders.

I'm not sure Joules has superior staying power compared to Studio Retail is a fair statement at all. Studio was bigger, more profitable, had more assets & had been around 30 years longer than Joules. Studio was bought out of Admin for c.25m, which is actually not far off the MCAP of this before it's even entered Admin.

Joules may have a better brand affinity, no doubt about that, but good brands don't save business from administration alone, e.g Debenhams.

Unfortunately this has the same fate as Studio Retail written all over it.

That was a similar profitable business, that overbought and overstretched itself following some strong online growth throughout covid. Then suddenly in a matter of weeks this year in February it all came crashing down and was snapped up out of administration by Mike Ashley. That case is worth reading for a bit of context at what may happen here. That was listed with a mcap of c.£80m the day it announced administrators were going to be appointed.

Don’t think because there are some big shareholders that means it’s unable to go bust. With this low a market cap now it would need a very substantial equity raise to even keep it going for just a few months into peak trading.

Unfortunately the reality is these are the most difficult trading conditions many online retailers have ever faced and not all of them will survive.

Not company specific unfortunately, just when the US markets picked up . Almost all retailers saw a similar uptick towards the end of the day. Still not complaining and nice to see a rise!

I don't think there is any doubt about it that last years results were stellar, and some on here seems to think that means the share price would automatically shoot up.

Unfortunately thats not the case in the current market, and the lack of any clear guidance is no doubt putting people off, which is a shame given this year seems to have started well also. Inflation increasing costs will be no surprise to anyone, but when the guidance for this year essentially just says 'Lower profits than this year' thats not really very helpful. The impact of Russian business and rates can be calculated, but what about the impact of inflation?

How much lower than last year? £25m, £50m, £150m? Based on their statement today no one has a clue.
I actually think the market may have reacted better to any sort of estimate, even if it was on the lower end and perhaps a cautious but beatable target, rather than just leaving investors completely in the dark with the throwaway 'lower than last year comment'

The lack of dividend too doesn't really suggest they are very confident with the future outlook, so why aren't they sharing their estimates and letting investors decide?

Don't get me wrong I don't think the share is a sell at these levels, but until either the market gets some more clarity on guidance, or a market wide rally I cant see this going anywhere fast. You can say this looks primed for a PE takeover, but look at the current UK market, you could make the same PE case for many shares.

Even after the provision;

NAV per share - 96p

NAV per share completely excluding intangibles - 71p

Almost 3x the current SP, utterly absurd

Unhooked, I think if they were to take this back private it’s not necessarily a bad reflection of ipos, I think it’s more of a reflection of just how shockingly bad U.K. investors are at pricing stocks effectively.

That’s something which isn’t just an ipo problem (record premiums being paid to take more mature companies private over the last 18 months too).

I can’t really think of a single reason why one would prefer to be listed on U.K. markets rather than US. Some US ipos have been equally as disastrous, but in most cases they are companies which never turn a profit. This is very different in my eyes in that at 50p this was on just ridiculously cheap multiples, would this have ever hit anywhere near 50p on the US market on these multiples? I doubt it very much.

Perhaps people seeing companies getting snapped up for huge record breaking premiums right in front of their eyes encourages them to buy cheap stocks, rather than deters them.

https://news.sky.com/story/exhibitions-group-hyve-sells-russian-operations-in-wake-of-ukraine-war-12583064

£100m for Russian business, seems cheap but also judging by the share price the market has almost completely wrote that off already