me being from balkan - i observed western corporation teritory take over
1. copy their domestic retail operations. getting few stores, employing fresh, mini logistics centre etc. failed
2. cooperation, dealers network, contracts. building up relationships. getting to know best people in the trade. risking capital on consignation items only ... eg giving owned products to domestic partners to sell. after 10 - 15 years... when customer was educated, product accepted, best people were hired, long term contracts with the domestic businesses terminated and then western corporation establishes its own retail network, own employees etc |
 RT, it's nice to actually have some specificity so thanks.
It may well grow into a significant profit stream, but at the moment, the UK operations are and look to continue being very profitable. There was concern over the h1 results. That being said, they didn't give specific guidance but did clearly state that profit growth would happen in h2 at the FY24 results. Wages did come in a bit ahead, but there was an extra day's trading, a few more stores and probably some headcount increase for the year for the overseas expansion plans. That being said, it left a question mark as to where the rest came from, but I have an inkling, which I will keep to myself. So, you are right that those costs were not mitigated in h1, but the UBS broker note actually predicted a 2.2ppt decrease in the pbt margin in their price target report, and that seemed to be what got the blood rushing and pushed us from the 1.20 range to the 1.40 range.
Well, hopefully you attended or viewed the h1 presentation as they reaffirmed their guidance and gave some indication of how they were going to do it. When I analysed it, I did think that full margin recovery to 12% as they said they were aiming for looked like a little bit of a stretch, but it was far from impossible. The CEO has been conservative, honest and competent in the past, so I actually thought we would hit the margin and at worst fall 1ppt short. Also, I encourage you to watch the presentation as their is minimal contribution coming from blunt pricing and most (outside the typical h2 improvement) is through cost control, specifically -- you guessed it-- labour efficiencies! They actually have said they don't want to just raise prices, calling it the 'easy way'.
So, we come around to the start of December, and they basically say they are on track for revenue and profit. That means they are achieving a super-strong margin h2, and that will carry through into next year. I've actually noticed various things they have done to improve this margin, including in-housing, but this puts CARD in an enviable position among-st retailers next year: will largely have offset the budget impact through last year's efficiencies and has pricing flexibility. I
They are on target for doing that extra lifting, and that makes next year exciting. |
Willing to take a £1 bet that the US ops are profitable next year, probs this one, too, given that the update said the acquisition would make negligible contribution to results this year. Just let me know how you want to sort out the wager :) |
Also, Aldi seems more like CARD than Tesco, being value. How are they doing? Good! |
us business should eventually become the crown jewel but short term think the uk side is going to be a drag vs expectations simply because they dropped the ball on the margin side blaming it on wages which were foreseeable. they essentially made a call which didnt play out and blamed the wages when the revs didnt play out as they expected. upcoming results will show whether theyve raised the prices to match the cost increases as dont forget that in order to meet pre miss expetctaions they need to recoup the h1 miss as well as bat far enough ahead to offset h2 wage increases too. thats a big ask for h2 to do extra lifting as its already the bigger lifter y/y given xmas period. |
So, as we are picking seemingly random examples, I believe SDG is being held up by it's US ops. Talking from memory. I'm sure I could I could find others but I don't believe it adds anything to the argument.
We have good management, a capex-light expansion model into the market and a profitable acquisition that retains the knowledge-holders in the market. Those relationships will be important, but it's just a design and supply game. I honestly would be astounded if it didn't work out.
I ran an e-commerce business and I was able to expand wholesale overseas to the US and Malta. I think CARD will be able to do so as well. |
So, I gather Tesco tried to open stores? We are not opening stores. Primark have and they are doing well.
IGR acquired a large part of its US business right at the pandemic, right? But they still make profits on a wholesale basis.
So, of the two that are referenced as being bad examples, the one that most resembles CARD's approach is profitable.
But most importantly, we have profitable overseas business using the exact model they will be using in the US! Surely, that precedent combined with the fact that IGR are profitable is encouraging, rather than depressing. I think people may just have the January blues because there is more reason to be optimistic than otherwise. |
Even Tesco couldn't break into the US market |
Yes can be difficult to break us market Look at igr Premier foods doing well with their products |
I think he or she must be working for Clinton Cards or maybe Moon! ;-) |
Quite the opposite. If you wish to be specific in your criticisms and how specifically they apply to the US partnership expansion and quantify how you believe this will affect the value of the company, I'll be happy to respond. Otherwise, you cannot be said to have made a valid point or contributed anything substantial.
I already have arguments against what I believe you may mean but I won't assume until you are specific. |
Is this forum reserved for cheerleaders? |
There's risk when you butter your toast,too,. Can we please stop giving this person the time of day. We all know he is talking nonsense and hasn't grasped the basic difference between wholesale and retail. The CEO is very good. He already highlighted the need for the right, measured approach into the US and abroad. The partnership model works abroad and is already profitable. He is not going to go gun-ho and commit to 200 stores by year end, even if they were opening stores, which they aren't. Still, I could see this model working there as said. CARD is one of the best retailers in the UK, and I can't see why it can't do what Primark is doing over there.
Let's move on to the results next week. Obviously, we look to be in-line (price was 1.43 the last time this was the popular opinion), but I'm expecting online to do really well. I think we might start to get some momentum there. |
No risk at all? Just about every retailer that ever expanded into US has failed. |
Besides all this nonsense CARD has just bought Garven which already has its established customers in the US, including Walmart and Amazon. So no risk at all there. |
Kaos3, ditto. There's actually a void now in the market that CARD can fill with small, nimble stores, as opposed to the larger more cumbersome ones that marked successful retailers in the sector in the last. |
I also think card could do great in the us.
commercial real estate is extremely cheap
people will be refocusing to the traditional values
hardship environment will strenghten human relationships
legal taxonometric endorsment - produced in the usa
etc |
Are you working for WorldQuant by chance? 😂 |
It's such a non-issue, and your reasoning is so poor that it's actually quite humorous.
Do you understand that a wholesale agreement entails none of the risks you imply? Do you know it will be profit enhancing from day 1? Do you also know that value retailers like Aldi and Primark are doing well in the US? Even though there's currently no plans, I could actually see CARD's lean model doing exceptionally well if they were to open stores. I wouldn't be surprised if they offered the franchise model there.
Anyway, stop trying to purposely create FUD in others where there is no reason.
PE looks ridiculously cheap for a growing company:
50m PAT this year
55-65 PAT next year |
Bounty...how many of those are retailers? US expansion screams sell. |
Aldi reports £1.6bn sales in 4 weeks to Xmas, a rise of 3.4%
CARD supply 1000 Aldi stores. |
That was released a few weeks agoHere are the estimateshttps://www.edisongroup.com/research/look-inside-the-card/33707/ |
Card Factory Trading Update
CARD provided a reassuring trading update, albeit with the peak Christmas trading period in the next few weeks. Ahead of the trading update on 14 January 2025, we make no changes to our estimates. Management has not publicly quantified the effects of the changes to employers’ National Insurance contributions in the recent budget and the National Living Wage increase from April 2025, and the potential mitigations of these. CARD has a track record of offsetting wage and cost inflation through productivity, efficiency and range measures. At the time of the H1:25 results, management reported that it had secured a nationwide wholesale retail partnership that would roll out in time for Christmas. Trading with the partner (name not yet disclosed) has commenced in more than 1,100 stores. With respect to current trading, although the peak Christmas trading period is ahead, management has reported that trading in H2:25 to date was in line with expectations and is encouraged by the start of the Christmas season. Combined with the programme of productivity and efficiency savings, management’s profit expectations for FY25 are unchanged.
Edison: December 2024 |
? bounty, LOL |
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