The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
The times reporting Shein are expressing interest in Topshop again. Would be good to know what the TS performance was for the period covering the latest update.
Brand market cap £14M / Stock £112M
Maybe worth an offer from a strong online retailer, anything to avoid JD getting it for cheap and screwing shareholders.
I feel it would be more beneficial to JD to sell the brand has he holds a 30% stake rather than take it private. This could be part of his intentions in stating he is looking at taking it private, sounding out interested parties to act. This is what Ray Kelvin did pre Ted Bake’s sale. It will be an interesting month, though I feel the extension will be granted and we would be waiting until April for any real clarit, my guess is a sale rather than taken private
Ted baker sold at £211M in a year they made a £35m loss and held £136m of debt. Potential for Superdry to go for £1.50 should several parties show interest, has they carry similar financials, could be argued Superdry is more appealing with a wider customer base and the recent cash raise from IP sell off in Asia. If it’s only JD then most market takeovers average a 40% premium to current SP. Let’s hope other interest is also shown in buying the brand.
Shein revenues £20B euro in 2022 and they have set a target of 54B euro in revenue by 2025 with Europe been the key focus to achieve this. 2022 profits were 637m euro. I think the plan as to involve acquisitions as just opening in these market as they currently stand wouldn’t get them their 54B in revenues in that timescale. Could be interesting to see if they do look at Boohoo or Asos? If they are in the plan you’d have to suspect they would move sooner rather than later to achieve their revenue targets, also the already established distribution centres of Boohoo and Asos you would think as huge appeal to Shein to support their infrastructure in Europe. Online retail maybe an interesting space for T and A over the next 12 months
@Lord.
I’m also reading the update in the same manner as yourself regarding the 50m US upfront. If it wasn’t included then there wouldn’t be a need for a cash raise in May or the recent raising of the current leading facility.
Sdry have a hard cycle to break ref cash flow as too much is spent upfront on excessive stock that just sits redundant in stores. They over stock stores and lease properties that are far too large for the turnover the brand generates. I would have expected a strategy around a reduction in stores as part of the reset programme.
Founder has just announced is resignation.
The recent decline in SP coincides with a recent short position opened, increasing further on the 26th March.
The cost saving opportunities are easily identifiable for Superdry. The concern I suspect is generating cash flow, the brand as a high cash burn and the selling of the IP to Asia could be the reason behind this. The brand does not turn its stock fast enough like other retailers to generate monies back into the business quick enough. Instead stock holding in their retail business is excessive tying up much needed cash to move the business forward. Superdry could take the same turnover from retail on half the stock levels, freeing up cash that currently is ruining the business.
I have just read an article published in the last 24 hours, confirming Superdry have used £40m of the £70m loan facility. The cash burn is extremely high. Sharing as someone asked a question earlier relating to this.
Kerching, I don’t doubt that Superdry will continue as a brand, but there is a real risk it will at the expense of investors losing all their investment. Superdry failing is not what people are questioning, it’s more a question of how it continues it’s journey and Julian as the option of not refinancing, which then allows him to take the brand private on the cheap. Why wouldn’t he do this? This is the reality unfortunately and is often the case.
This can only go 3 ways in the next 4 weeks,
1) Debt is refinanced
2) Debt can’t be refinanced and Julian presents a buy out offer as best case scenario, which will be lower than todays SP
3) Administrators are called in and the brand is eventually purchased on the cheap and taken private.
No one is going to buy the brand prior to the debt refinancing deadline, it makes no sense. Therefore either the brand enters administration , investors lose everything and Julian buys the brand out on the cheap and takes it private, or Julian presents a buy out offer prior to deadline day so he doesn’t enter a bidding war to buy the brand out of administration.
Only option 1 would benefit investors but is looking like the least likely outcome at this stage.
The company is currently 25m in debt with no cash in the bank.
It looks like the banking facility will not be renewed by the existing lenders in January, therefore another lender needs to be secured, otherwise the brand will fall into administration with the existing lenders potentially taking ownership of the brands assets as soon as January.
Securing a new lender may not be that easy, backing a brand with £25m debt in a slowing consumer market. This would be high risk for a new lender, as seen with Joules, talks failed to materialise resulting in administration, Superdry is in the same situation with a short timeframe to secure a finance package. Hence the drop in SP today.
If the brand falls into administration, JD could bid to buy the assets back and take the company private much cheaper than if he chose to take it private with a bid on the open market, his only risk would be other bidders pushing up the price.
Possibly further Director buys, not enough trading volume to relate to any significant news.
Agree that SDRY will be a potential takeover, Julian has made no secret that he would be willing to take the business private again. I feel a management buyout is more likely than a hedge-fund approach.
Reuters are reporting ASOS RESULTS this morning as very poor and I would agree.
Guess we will see how the market reacts shortly but I’m expecting a considerable fall in sp at opening.
Hope I’m wrong though.
Retail shares dropping today due to the recovery not materialising as expected, retail sales on the high street are not achieving the week on week lifts expected. Hopefully a blip distracted by the opening of hospitality.
The big red flag for Ted investors is in the last results, online sales only lifted 2% LFL when most stores where closed in the peak quarter, this result was the worst in the industry. similar brands were hitting 30% - 44% growth in online sales from a similar position.
Ted as recruited some good personnel but ultimately the brand needs to be desirable to succeed, which it isn't and this is reflected in the poor performance. You can't operate in the premium or luxury end of the fashion market carrying the status of a been a chavy brand, product failure is the brands biggest failure. Another French Connection/Karen Milan?
Optimism v facts always a dilemma on a recovery play.
Good luck all.
100% Agree Neversellshell22
I see lots of comments on here stating that the SP will never break £3.30/£3.50 which astounds me. The SP as been between £4.50 & £5.50 for 9 out of the last 10 years, with a clear link to the price of oil and obviously demand.
The oil price is already back to levels mainly seen over the last 10 years in the last 2 months of this year and demand as the potential to be higher than at any point in the last 10 years. Long term there will be headwinds around higher costs transitioning to green energy, however i don't see this as a major factor behind the SP over the next 12 -18 months.
I'm personally very confident the SP will increase between 30p/50p per quarter for the next 12 months, comfortably hitting a minimum of £4.50 come March next year. It as to be one of the best FTSE 100 opportunities.
More of a red flag i'd say.
Why appoint a new NED now if the company as genuine suitors interested in a sale? Chances are its the same old news, S. Marks still values the business unrealistically and the interested parties are only offering what FC is worth at this stage. Which at today's £20m price tag still remains overvalued.
No company sale and S. Marks remaining in control will result in administration and Hilco acquiring all assets, with all shareholders losing their investment.
The newly appointed NED is a very poor appointment for the brand. A Brand Director of high caliber in buying and design is the only appointment that may save this brand, but as we know they can't work with S. Marks hence Christos leaving after only 10 months service to head up Reiss which he has elevated into a £800m brand since departing FC.
@Tom8080 - I'd agree.
The update was disappointing, identical to the previous RNS. Global economy opening up and predicting a 12-16% revenue lift looks underwhelming and below expectations, no news on new products or new marketing initiatives to drive a better sales growth?
Cash rich - I'd look to open some Fevertree experienced bars in the major cities such as London, NY, Berlin etc. and take the marketing to a higher level of consumer engagement, collaborating with key spirit brands. Just a thought! but something needs to change to create the next level of excitement around the brand. Still a fan of Fevr but the numbers need to be better.
@Acker - I agree but also feel the SP movement is now overly reliant on progress in the US and we may need to wait another 12-18 months to truly understand if expectations can be met in the U.S for the SP to move forward at a good rate of growth.
Great to see Coca Cola cancel their premium Schwepps tonic ranges.
@Gsmiley. Congratulations on your original buy in price, you where a brave man back in the chaos period. During the last recession retail shares bounced back strongly with 100% - 200% gains not uncommon. I feel Sdry is a real 50/50 share that raises equally as many good points for a share price rise as maybe a fall. It will be interesting to see how much the rent savings influence the fundamentals as a quick win goal in view of the longer turnaround strategy. If Sdry does get it right and with the history of past Sp values, then the potential of 100% + gains are still more than realistic from todays SP. I maybe tempted to place a holding should £2.10 represent itself. It was interesting to see Ted fall to 97p on a recent update, only to lift to £1.30 ten days later. Best wishes on the next update!