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Why would JD want to buy a business that others think is going bust? that would be a waste of money
Equally he could buy it out of administration
This is JD trying to get the company at a cheap price before it starts to recover
finally why would an investment fund by 5% of the company if it was going bust
regardless of all the Macro economic challenges - someone/investors feel this is a good deal
It's just reached half that amount - who'd thought that at 8:00am
I'm surprised how much of a squeeze is happening here - up over 110% in one day
I can only guess what Monday will bring if this holds and there's a news update
Investors just need to hold until Monday (at least) - if not longer as this is a long term situation
It looks like it's paying off as the SP is being squeezed upwards
Good luck and DYOR ;-)
Something is happening in the background at SD between potential buyers and/or investors who could inject new funds into the business, hence my point regarding the weekend - News normally leaks out on Sunday
If Investors hold their nerve they'll be a squeeze this afternoon as per my previous point, and then it's likely will see more upward activity on Monday
The SP is now nearly at it's high of the day and it's only 10:20am
The SP is moving up faster than I had expected with no firm news - I'm guessing as I noted this morning it's the opposite of what happened when the SP fell 50% due to the Sky News article
The key thing here is what will happen between now and 4:30pm, and over the weekend - normally the SP would fall back in the afternoon as day traders exit, equally with a weekend investors would bank profits in case something happens
I think this time around there could be more news over the weekend as SD has a history of news coming out over the weekend - this along with the heavy speculation makes it an interest situation; should one hold for what could be a bigger jump on Monday or should one sell as per the playbook?
I'm holding as it's a long term 2024 punt stock - I would suggest others consider that approach as it's the long game which will win vs. the short-term gains and trying to catch those ups and downs
Good luck and DYOR ;-)
It's all heavy speculation in the other direction now - compared to the near 50% fall from the Sky News article a few weeks ago
As I said back then there was no actual news of anything - I think a takeover will only work if JD allows it
Unlike Ted Baker the founder is still working at the brand and has a near 25% stake in the business
The other point to note is the value of SD has dropped so much that a takeover at 30p would be too cheap, noting Ted Baker was sold to ABG for £220m - that would imply an SP of £2 - I'm not sure the SP can rise to that level that quickly but I would have thought a deal at the May-23 funding event (about 80p) would insure all key shareholders were getting some of their investment back
I think this will drop back this afternoon to around 25p and then level off over the next month at around 30p - unless there's some news update over the weekend which changes that ;-)
I still think it's a good 2024 punt and as the potential to climb back to where it was Dec-22/Jan-23
Good luck and DYOR ;-)
I think the negative news as now flattened - the H1 figures were not great but showed the early signs of improvement - H2/FY results will be a key test on cost cutting progress and sales rebalancing
SD needs to get it's sales volume to around £500m, it's Margin to 60%, and a profit of around £25m per year - this is what Ted Baker was working towards before it was brought out by ABG - it's last set of finances before it was brought out indicated that position - Ted Baker was valued at £220m before it was brought - so I would see no reason why (if the numbers move towards what I've noted) that SD could be worth a similar amount - £2 per share
This will take some time - I'm guessing FY23/4 will be a loss year - FY24/25 will probably be a small profit year, if they're able to reduce the cost base, and the wider economy improves - so Aug-2025 FY results is the target - 18months - the SP should slowly rise over this time period - it's currently up 10% from Friday close (not a big jump but a more positive trend than the last 12months)
Good luck and DYOR ;-)
Agree regarding the cash position - however they do need to bring down costs - the store model is too big/expensive for the turnover/inventory numbers they're moving to - it would be a good outcome if they can close some stores/reduce rents
If the value is £3m then why is the SP not 3pence, why are IP rights for non-core part of the business selling for £25m+, and why is only 1.5% of the stock shorted - if it's going to fail then wouldn't the shorts be higher
Not saying it's success story, but it not's going bust at this point in time, and they'll sell off more parts of the business, and raise funds before it got to that stage
this is currently an unloved stock which is struggling to get itself back in shape - it needs to reduce it's inventory to a more manageable level, reinstate it's higher margin, and get the cost base down to a more realistic level which reflects it's market position/turnover - all of these points are currently in play with some success seen within the HY results
2024 punt stock which will take all of this year (at least) to turn itself around
Results are not good, however not a surprise as the Dec-23 update indicated that - so no change there
There is a cash challenge which is being looked into - the new CFO has experience in turning around companies in a difficult situation
The net debt increase was expected and within it's headroom - the results are up to the end of Oct-23, the sales decline as started to flatten out as per the Dec-23 update and this update
Cost saving have increased to £40m (£5m more), there was a net profit (£3m) due to the sales of IP rights - inventory numbers are down and will continue to come down
To me the results are what was happening between May/October-23 - it looks like areas of the business are improving and will be shown within the FY results
it will be interesting to see what JD says in the investors briefing later on this morning
This still feels like a 2024 punt stock which has the potential to improve over the next 11 months
Good Luck, and DYOR ;-)
Good points - just can't work out why the SP has fallen so quicky and so far, unless it's just a low volume stock with not many buyers so sellers have to take a lower price to sell - driving the SP down - which then triggers other sellers (stop losses etc.)
We'll have to see what comes next week - by this time next week it's either a winner or a loser stock ;-)
Good Luck and DYOR ;-)
The only thing I can think of is another Funding Raising at a really low Price (at 10p) - increase the shares in issue by 100m - generate an extra £10m (similar to what happened in May) to help manage any debt discussions they have - I don't know the exact amount, but that might be why it's not being shorted as I believe those individuals would be liable for the fund raising too - that might also answer why a large holder has sold out this week
Just a thought
Open short positions is a good point - there's only 0.78% open (at least from what the short position website are reporting) - I would have thought with all this negative press and speculation that the company was about to go bust/delist/etc. that the shorts would be much higher - Those who believe that SD will not exist as a PLC by this time next week, why are the shorts so low??
The research I've done doesn't present a going bust/delisting position - I could be wrong, but I don't understand why from the Dec-23 trading update to now (just over 3 weeks later) that things have got so bad that it's now not going to exist this time next week (as a PLC)
I agree JD is not in a position to buy more shares, director lock-out period and any increase would mean him having to declare this takeover intensions - that would mean a price nearer to the fund raising price
taking it over will not resolve the problems and he'll end up with all the debt to manage, where the PLC does that for him
It's not helpful that SD are allowing so much speculation on it's own future - this is a tricky one as it could go either way - I still feel it's worth a punt as looking through the numbers and the trading update from Dec-23, it's still got potential
The key is (and it's obvious) what's actually going on now, PwC looking at options (unconfirmed by SD), how much as the debt increased by (I assumed it's still within the £100m range as they've raised £70m in IP sales and fund raising since the last set of results)
Aware it's all a bit frustrating not knowing what's going on, however it will all come to ahead on the 26th-Jan ;-)
Good Luck and DYOR ;-)
I think it's a good piece of news that SD have confirmed the release of the HY results - they could have easily not said anything, or delayed the results like last time, or just said the company is going into Administration - why wait for the HY results to say that
Not saying that none of the above could happen between now and next Friday - it just there's no point in playing games, it's a business and business decision are made
I think the challenge at the moment is will there be an update over the weekend, via the press, regarding some sort of suspension and/or delay in release of the HY results - I hope not but the Risk of this is increasing every day the SP drops 15%+ :(
Good luck and DYOR ;-)
I’ve looked through the FY23 Accounts and the SD news updates from April-23 onwards and this is my interpretation of the financial position
April-23 FY Position – Net Debt £26m – Loss £22m (part of net debt) – Wholesale Turnover £183m 30% Margin/Retail-Ecomm Turnover £440m 60% Margin
[note fund raising was not noted in the accounts as that happened in FY24 – stated in the accounts]
Fund raising (to date) – £11.5m (New Share), £34m IP Sale, £28m IP Sale - £73.5m – Cost Saving £35m = £108.5m
Loan options £80m + £30m (approx.. 14.5% interest on draw down) - £110m (£26m used)
Dec-23 Trading update YoY – Retail down 14% (£440m – 14% - £61.6m – Margin loss £37m), Wholesale down 40% (£183m – 40% - £75.6m – Margin loss £23m)
April-23 Operation cost £329m – FY24 saved £35m offset against high loan Interest and Inflation – assuming no saving
April-23 Margin of 50% - Operational profit £311.5 – note sales decline – Operational profit (Sales £485m & 50% Margin – £243m – Net Loss of £86m – Net Funds raised = forecast loss of £12.5m
Loan increases from £26m to £39m (interest of £6m plus peaks – October-22 was £76m)
From what I can see from the reports is the £110m loan position is too expensive and part of it is due to expire in 2025. The other point is sales volume, that needs to increase, or the base needs to reduce so to balance off the operational costs. I’m assuming; another IP sale will happen which will help keep debt under control, Sales have improved over the last 4 weeks, and resizing of the business is nearly complete
It looks like SD are working with PwC to see how they can get a better loan rate, and release more value from the assets (HQ and IP Sales)
We’ll have to see what the HY results provide us with next Thursday
Just my observations - Good Luck and DYOR ;-)
It'll be interesting to see what SD says about the news - at this point in time it's a news report with no comment for PwC or SD - not to suggest it's not true but we have no context on what's going on - hence the fall in the SP (information vacuum)
Assuming all of this, along with an update on the potential IP sales, and current trading will come out at the HY results on the 25/1
I still feel this is still worth a punt, as 10,000 shares are currently £2.5k, not a massive investment scarify, if it goes back to £1 a share (which it was at about 9months ago) - then it's a nice return :)
Good luck and DYOR ;-)
We'll have to see what comes with the half year results - I feel the results will also contain an update on the sale of more brand rights, either US or Middle East - guessing that'll be £20-30m injection, and as the weather is turning colder, maybe an uptick in sales which might provide a small amount of hope
Either way with a valuation of £30m it does feel like a 2024 punt which may turn good by the end of the year
The half year results will probably set the tone for the rest of the year, so positive sounds will be well received - where as the on going 'it's the weathers fault' will probably just see the SP slide further down until it either goes bust of someone jumps in with a few quid to buy it out ;-)
Gook luck and DYOR ;-)