Choicesuk Share Discussion Threads

[promethean] 23/3/2007 10:24

Couple of questions for anyone who can answer here... I'm fairly new to the business, but am attracted by the low price to book and sustainability of the DVD rental market...

Can anyone tell me approximately what proportion of the turnover is between stores, local, and direct? I can't find it in the annuals...

Do we provide DVD's to other online distributors?

What are the plans to divest the retail/store side?

Anyone have any links/information regarding longevity of the DVD market in the face of the digital onslaught? I'm still of the view that the storage and bandwidth are major issues that won't be resolved for at least 10 years due to the size of the files, so the business here should be pretty sustainable.

Many thanks... I'm going to do some number crunching...

[steveb3] 20/3/2007 08:14

Interims ?

[sporticus] 19/3/2007 18:58

Record xmas sales but if it wasn't for andromeda.......
Their are more redundancies in the pipline and more shops close

[jtcod] 02/3/2007 15:02

Also worth noting is that T&G are forecasting a reinstatement of the dividend next year at 2.5p. I think CHUK could pay double that but it's still more than 5 % yield, even at that level.

[jtcod] 02/3/2007 14:58

Don't think so fordtin, not unless every one of them has 52 years unbroken service.

[jtcod] 02/3/2007 14:36

Well, here's my take on things:

On 23/1/2007 we received a trading statement covering 36 weeks that said

......................................................................
Overall the Company had a record breaking Christmas, with total sales during the eight weeks ended 13 January 2007 increasing by 15 per cent year on year. The Company made a pre-tax profit over this period compared with a loss for the same period last year, reflecting a strong performance by its Direct to Home and Local businesses.

However, trading for the ChoicesUK stores remained difficult, particularly during the first 8 weeks of the interim period which was adversely affected by the audience lost during the World Cup. Despite this and the disappointing retail trading environment, the Company expects to report a materially reduced pre-tax loss for the interim period.

Management is considering a strategic plan to ensure the Retail division, ChoicesUK stores, will not detract from the value and success of other Company activities.

ChoicesUK Local, remains profitable and continues to expand its customer base. For example, it recently won a fulfilment contract with Welcome Break for over 60 motorway service stations, and is actively developing other opportunities.

Following the successful integration of its games fulfilment business ChoicesUK Direct the mail order and internet division returned to profitability and continues to show substantial growth and opportunity.

Cost reductions continue to be a top priority for management and, as a result of further restructuring, management plans to save approximately #500,000 per annum, in addition to the #3 million per annum savings achieved to date. Cash generation continues to be a key focus. Full interim results will be announced on Tuesday, 20 March 2007.
.........................................................................

What interests me is the 'strategic plan'. It certainly sounded to me like they had an option on the table.

3 weeks later, we saw a post:
Sporticus - 15 Feb'07 - 19:29 - 309 of 318
Sad day for chuk employees. Polish friend in the packing area has told me of more than 50 job losses tonight.
End

3 days later still Sporticus said it was 70 job losses and I have no reason to doubt his information. This would certainly make sense if we were offloading 200 retail outlets. That could well be the undesired staffing requirement that would be covered by the new owners.

I think the saving of minus 70 employees in wages and employers Tax & NI contributions could well be enough to put the retail unit back in profit for the new owners, (if indeed that is the plan.) 70 staff must have been costing approx. £1.5m pa when you add in employers tax and NI contributions as well.

If we could offload the freehold property shown on the balance sheet on a 'sale and lease back' arrangement, that could reduce borrowings by a further £1.5m and then sell the retail for perhaps £1 (and this months launch of the PS3 must at least help garner interest. We have already closed the bad shops also), I think that would leave the group with low borrowings by July 2007 (£8.74m net debt 3/6/2006) and a solid group going forward.

6/2006 Results:
ChoicesUK Local £1.8m profit
ChoicesUK Direct £1.7m profit despite many delays.

Finance costs: (£0.524m)
Net profit before tax: £2.976m
Tax at 30 %: (£0.89m)

Net Profit: £2.08m
EPS: 11.5p

Now, given the comments within the trading update, it is clear that these 2 divisions continue to grow profitably. In fact they sound almost vibrant.;-) But I notice the house broker Teather & Greenwood are forecasting EPS 11.7p for next year, which seems pretty cautious to me given the above. I think this would allow them to upgrade forecasts as next year progresses. To their credit (imo) they have at least issued a 'buy' rating.

Let's face it, if the management eschew the retail division and it's looking quite possible the remaining divisions could achieve normalized EPS of 13-14p for this year alone and both divisions are growing and have manageable debt going into next year, how long will it stay on a foreward P/E of 3.5?

I know there are many people who just do not like this sector, for obvious reasons but I say, every profitable company is worth something, and a profitable company that is growing will be worth more than one that isn't. I remain convinced that I am right on this one and this remains a classic Ben Graham investment. I had to raise a bit of cash a few months back and sold 45k @ average 62.5p (lucky) however, yesterday and today, I bought back 60k at 47p.

We will see if I have read it right when the Interims arrive in 18 days time.

As ever all IMHO and DYOR
JT

[steveb3] 25/2/2007 10:00

PlayStation 3 the key to Blu-ray format triumph.

Link:

The PlayStation 3 looks set to drive Sony's Blu-ray high-definition format into pole position, according to research.
Understanding & Solutions says it has identified a huge gap in the numbers of homes in Western Europe which have HD-ready screens and the number of those that have the means to play HD content or receive HD content.

The research group predicts that by 2010, some 115m HD-ready screens will be installed in European homes, but only 17m homes will be located within reach of HD broadcast signals.

This, the company claims, will create demand for HD content that will make the PS3's Blu-ray capabilities one of the main reasons to buy one, rather than being viewed simply as an extra.

So successful will the PS3 be - believes Understanding & Solutions - it is expected to make up 52 per cent of all HD players by 2010, with sales in excess of 28 million..............

[moneypit23] 22/2/2007 11:50

From:


"Sony's latest gaming console arrives in the UK on March 23. But how big a hit - or miss - will it be?

Is it a world-beater waiting to fly off the shelves, or a yawn-inducer that has left gamers with their hands firmly in their pockets? For the UK launch of Sony's PlayStation 3, due on March 23, the answer seems to depend on whether you believe the retailers - who may have a vested interest in talking up its promise - or the gamers.

First, the excitement. Last week the high street chain Woolworths issued a press release saying that it was taking a pre-order for a PS3 every 20 seconds. "The hottest gaming system since the PS2!" declared its head of games. Meanwhile Play.com, the online retailer, said the PS3 was "the most pre-ordered in history", with six times more pre-orders than for Microsoft's Xbox 360 and 15 times more than Nintendo's Wii.

And the high street chain Game said "customers are extremely excited" about the PS3 and, unsurprisingly, "we are receiving more pre-orders every day". Yet numbers were suspiciously hard to come by. "We want to keep all our [console] suppliers happy," says Game. (The Guardian has established that Game had 60,000 Wii pre-orders. It did not provide numbers for Xbox 360 or PS3 pre-orders by press time.)

Play.com promised to fulfil all pre-orders for PS3s. But here's the odd thing: it was not able to meet all the pre-orders for Xbox 360s and Wiis. You would think that if it messed up on the Xbox 360, it might have the system in place for the Wii. Apparently not; so how is Play so confident that it will meet its PS3 demand - unless the pre-orders are not overwhelming?

Reaction on the Guardian's Gamesblog and on other British gamer sites do not imply huge pent-up demand for the PS3. There might be financial reasons why not: initially, UK residents will only be able to buy the more expensive version of the PS3, costing £425, which comes with a 60GB (rather than 20GB) hard drive. No UK launch date or price has yet been set for the smaller version.

"As a Brit, and as a gamer, the PS3 is not appealing at all," wrote ElNini, a commenter on kotaku.com, which pointed to the disparity between Woolworths' excited words and the reaction on the street. "As a gamer, because the launch titles are nothing to be excited about, and as a Brit, because I'm not shelling out £425 for it when the rest of the world got it for half the price four months earlier."

He added: "Anyone that buys one in the hope of eBaying it off and making a profit, dream on. They're not going to sell out anyway."

So how many PS3s are being ordered? Are they selling faster than the Wii or Xbox 360? Woolworths admitted that the Wii took less than three weeks to sell out its presale allocation. The PS3 has been available for pre-order since February 7 - so if it hits Woolworths' pre-order limit in the next few days, it will clearly be as popular, in relative terms, as its smaller rival.

One commenter at Otaku estimated the Woolworths figure - assuming a 12-hour day, seven-day week - to mean it is taking just over 15,000 orders per week. For a chain with 800 stores, that's not bad - but it wouldn't put the PS3 ahead of the Wii.

Sony did not return our calls for comment."

[steveb3] 19/2/2007 15:13

Sony's gaming spokesperson describes Nintendo Wii fans as mere amateurs compared to PS3's hardcore, committed gamers, but they still only send 222,000 to the UK.


Many Wii-owners may take offence to the latest comments made by Sony's spokesperson Dave Karraker, he said: Wii could be considered an impulse buy more than anything else, but we believe the PS3 will be the console to attract hardcore, committed gamers, while Wii will do little beyond satisfying new and causal players."


This comment came at the same time as news that just 222,000 PS3's are expected to arrive in the UK for the 23rd March launch date. With such a small number of consoles due to arrive Sony is advising gamers to make pre-orders immediately and ensure they are confirmed to guarantee getting one.


Sony's PS3 is the third next-generation games console to arrive in the UK in the last 14 months, following Microsoft's Xbox 360 and the more recent and controversial launch of the Nintendo Wii. However, despite expectations of rife competition, Sony believes there is no comparison between the three, and sales of the PS3 will not be affected.

[jtcod] 19/2/2007 12:14

MP
Well if we haven't, we must have a big allocation imo.

Having said that, cancellations is a valid point. Only time will tell.

[moneypit23] 19/2/2007 11:42

JT - Not sure about the PS3 orders - nobody has sold out their allocation of PS3s yet. You can still place your pre-order with all of the big retailers (Argos, Game, Amazon, Woolworths etc). Also there are a lot of people who have multiple pre-orders going with the specific intention of selling on Ebay if demand out-strips supply. If that demand isn't there there will be a lot of cancelled orders or returned PS3s. I know we are still over a month away from official launch so the picture will become clearer in a couple of weeks I guess.

[jtcod] 19/2/2007 09:25

It's amazing how we see developments completely differently Sport.

When I hear of job cuts at H/O, I am obviously sorry for the poor people who have lost their jobs. It must be aweful for them. However, as an investor I do not see this as 'bad news' for the company. Quite the contrary in fact. Head office is still a sprawling mass of buildings and obviously that is not the most desirable way to run a company. The management are still in the process of vacating leases and slimming it down. The job losses are part of that process also, as things become more streamlined. I am quite confident that the retail part of the business can be sold (should the management desire to do so) but they may hold off until they can evaluate the extent to which the PS3 can weave it's magic.

I hear back orders of PS3 are substantial. If trends follow the US and Japan, 'games/blue ray content' will be equally substantial. Armed with first month statistics end of April, I think the management will have a choice at least. The extent of the job cuts though, imo indicate they have already made up their mind.

As ever all IMHO.
JT

[sporticus] 18/2/2007 16:25

JT,
he just said at head office. theyve been trying to get rid of the shops since june last year but noone wants them because they are all leased and the only real assets are the staff. the stock has very little value because of downloads. he says the best department is choices local and its still growing. strange then that mrs d gardener had to go. it looks like she had the only profitable bit in the end. update from friend says that he got it wrong and its more like 70 job losses now. sorry for the bad news. not sure how it changes things for choices. please let me know your fellings. perhaps you see it as a good thing?

[jtcod] 17/2/2007 10:46

Which dept Sporticus?

[sporticus] 15/2/2007 19:29

Sad day for chuk employees. Polish friend in the packing area has told me of more than 50 job losses tonight.

[jtcod] 14/2/2007 15:10

Happy to be wrong GT. I'm making a habit of it lately.;-)

[goonertone] 13/2/2007 23:39

Fordtin/JTC

I'm going to stick my neck out and say that JTC is wrong (there I've said it).

Both Chase and Nortrust are nominee share holding companies and hold shares on behalf of funds and companies. Can't find the bit of paper I'm looking for but I'm sure that HET had two lots of Chase nominee holdings and that both were pension funds, british coal and a.n.other. One has sold up to P Gyllenhammer and the other is still holding.

SVG has used Nortrust on other shares under a variety of names so I am going for Nortrust to be SVG and therefore they have upped their stake slightly. However where from and why not showing in trades I have no idea.

GT

[jtcod] 13/2/2007 15:25

Looks like I'm wrong and it's a reduced holding fordtin. I suspect it's both.

[jtcod] 13/2/2007 14:18

Increased holding imo

Edit: reduced holding imo.