Waking up.. |
Peel hunt suggesting 100 to 130m for the high street biz. Hilco and alteri front runners |
Perhaps there's some crossed wires and the bidder is Victoria 'Secrets'! 😉
I'll get my coat. |
These 'secret' talks seem to be broadcast to the world. I'm starting to get the impression that they are somewhat desperate for anyone to take it. Maybe I'll give them a call and offer them a tenner paid in monthly installments over two years or I'll ask if I can buy it on Klarna. |
Am I missing something here? Apparently, Modell Capital are looking at, not bidding, for Smiths retail shops and on their website, they have Paperchase down as a 'successful' transaction. They went into admin.. 🤔
Why on earth anyone would be looking at buying Smiths and not Card is beyond me. |
Am I missing something here? |
Closure of stores would be good for Card and also Card could buy some stores where they currently don't have a presence. |
WHS:
"The company could confirm the plan in a statement to the London Stock Exchange as early as next week, according to Sky News." |
There maybe an announcement tomorrow. Let's see. |
WH Smith selling their high street stores... another competitor potentially leaving the scene? |
I get what you're saying but I just can't see it being a threat. The chances are that at least 10% of their stores will close before someone puts a bid in, maybe more.
I don't think people will be too keen. It doesn't seem like an easy win. Maybe you'd buy the ones outside the traditional high-streets and leave the rest, which would probably do better as primarks or something given their size! ;) |
All takes time, Meanwhile card has the reputation, supply chain and good management to continue their growth plans.Even with good fortune it will be 24 months before anything turns around at smiths. |
As we grow Travel, the High Street division will become a smaller part of the overall Group. This division, which now accounts for around 15 per cent of full year Group profit from trading operations, is profitable and cash generative.Pre ifrs16 basis but still. Also, need to look out. Reputation, leases, product offering etc. will go through a big shake up. |
And of course there may well be lots of upside here if card were to make an audacious bid for FP |
WHS is not cash generative in their high street offering - it's quite the basket case, hence the company wanting to jettison it. Their online offering is horrid and sluggish, the only benefit is delivery to store. Reputation is pretty poor and they only get footfall these days for the PO tie up.Be honest, outside of the PO it airport/hospital, when does anyone go to WHSmith?. I don't see them as a threat at all. |
I'm not saying it's a material worry at this stage. And it's all speculation. But high likelihood of pe taking it on and plausibly being a disrupter in this space. Good to think through the risks |
My point is around the future here. PE could move v aggressively into gifting and greeting cards. Strengthening toys r us tie up say. Making a more difficult space for card given their expanded range offering. WHS is profitable and cash generative. Someone will take it on, probably give it more focus than current whs management. |
Also, I think card could take share from WH but I don't think WH could take share from card. It doesn't make sense to me given the customer.
There's no price comparison, and that's the main reason I can't see people swapping over, amongst other things. |
Exactly, lease payments for card's nimble model have been coming down for years while sales have been going up.
It would be a problem for WH, but I haven't looked at the lease terms etc.
I feel like given we have management saying they expect good growth next year despite the extra budget costs that if I wanted to be in any retailer, it would be card. I see people getting into other things where lfl sales are declining and the demand is a lot more sensitive.
If you do the research, you can see why card will do well. |
The problem with closing stores, unless it is the end of the lease, you have to negotiate with the landlord. In the cureent market, they are not going to settle for much less than PV of rent to espiry, less say 10%. I used to do those deals - no landlords want vacant shops to let at the moment. |
 Card bull case is clear. Low valuation, strong management consistently executing, modest but promising growth catalysts via partnerships, etc. However, we need to stay mindful of downside scenarios and this is one to monitor in my view, as is the extensively discussed headwinds from the budget. WHS high street arm has been poorly managed - recent rebrands an example. If a well capitalised private owner get's its hands on this then there'll be some competitive pressures for sure. E.g. PE could leverage whs heritage more effectively, inject some efficiencies/reduce cost, pivot to a higher margin product mix, go aggressive on pricing, etc. PE is most likely suitor given the high street division wasn't current management's focus. PE will leap at the chance of flipping this. Risk is manageable but there's definitely some overlap between CARD store estate offering and whs high street estate.One to watch. Love the optimism on the board, which is of course well founded, but good to air possible downsides. |
If we had a proper Labour gov, they’d buy the stores and turn them into cheap accommodation.
Sorry I shouldn’t have used the word “cheap”. I believe its now offensive. |
The only times I have been into WHS in the last few years has been to queue for the post office but even that is pretty much redundant nowadays. Most won't even notice that they've gone and there will be a few more customers for Card Factory. |
Yeah, it's not an estate that screams longevity. Maybe some of the shopping-centre ones do okay, but the one on my high-street is always empty. I think they'll close most on traditional high-streets.
The budget effects will further consolidate the market in card's favour imo. It's time this business was recognised for what it's worth.
I also think they might just keep FP. |
Travel retail (i.e. railway stations and airports) makes 85% of WH smiths profits. They intend to open more stores in train stations, coach stations, bus stations etc. Given the low volumes and margins in the high street, which will get worse with the increase in minimum wage and employers NIC in April, it would not surprise me if WHS sell off or close all stores apart from Travel Retail (with or without a sale).Which, should be ok for card factory. It won't do wonders, but will provide extra traffic for the items that overlap between CARD and WHS. |
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