Koovs Share Discussion Threads

[harebridge] 05/9/2016 12:57

Paul Scott (Paulypilot) update on Koovs on Stockopedia. He clearly hates the stock, calling buyers 'muppets'.
Not sure where the hatred comes from. Either has history with management or missed a good entry point when he was slating this at 12p

Koovs (LON:KOOV)
Share price: 64p (up 7.6% today)
No. shares: 149.7m
Market cap: £95.8m

Trading update - this online retailer is trying to become the Asos for India. I remain very cautious about this company, because it is still a million miles away from demonstrating that it has a viable business model.

The model Koovs has adopted is to throw huge amounts of money at marketing, in order to drive customers to its website. Marketing spend is the major issue that fashion websites have - barriers to entry are minimal, but you then have to spend serious marketing bucks in order to drive traffic to your website.

So whilst Koovs can publish exciting-looking top line growth figures, as it has done again today, the actual amounts are still very small. It only achieved £5m sales (tax inclusive) in the 4 months to 31 Jul 2016. Sure that's up 115% year-on-year, but is still tiny. Moreover, we're not told what level of marketing spend, nor overall losses, were incurred to achieve this fairly trivial level of sales.

Heavily loss-making, cash-burning companies like this are always reluctant to publish the figures that matter - losses, cash burn, and remaining cash. Sure enough, I can't see any of those key figures mentioned today by Koovs. Instead, a lot of other KPIs are given, which are largely irrelevant as far as I'm concerned.

One KPI which alarms me is that the company now has 10,100 product lines! So they must have a large warehouse full of stock, yet is selling only a small amount of it. That doesn't sound like good business to me, at all.

If you look at how successful online retailers have grown, e.g. Boohoo.Com (LON:BOO), they specialised in key product categories first, e.g. dresses. Then once critical mass had been achieved in sales & profitability, then gradually expanded the product ranges into other categories. This is the sensible way to do it.

Whereas Koovs has taken, in my view a potentially disastrous approach of trying to run before they can walk. The result is large, ongoing cash burn, and a requirement for more fundraising in future. Note this comment today;

Koovs continues with its phased capital raising to support the Company's three-year business growth plan.


I reckon they came close to failure with the last fundraising, it looked knife-edge stuff. Who's to say investors will be happy to continue pouring in more money? Existing shareholders are in a very risky position, facing continued, unknown extent dilution. I would never invest in anything like that, as it usually goes wrong.

Overall - if you like punting on blue sky stuff, then every now and then you might win big. However, in the vast majority of cases, the losses will be 90-100%.

Maybe Koovs will work out, who knows? All I'm saying is that, to date, there is no evidence to suggest this is going to become a viable business any time soon. It needs further cash to continue its high cash burn in the meantime, so people are really taking a big risk here.

I hope it works out for holders, but it's far too risky & over-valued for me. I'd rather stick with profitable, growth companies in this sector, which have already proven they are viable, and have no further funding requirement - e.g. Boohoo.Com (LON:BOO) and MySale (LON:MYSL) , both of which I currently hold long positions in.

[kevinjwsmith] 05/9/2016 10:06

The PI's must be right as they seem to be selling and all the analysts must be wrong saying a £ ?

[harebridge] 05/9/2016 09:39

Koovs PLC 57.5% Potential Upside Indicated by Peel HuntKoovs PLC with EPIC/TICKER LON:KOOV had its stock rating noted as 'Reiterates' with the recommendation being set at 'BUY' today by analysts at Peel Hunt. Koovs PLC are listed in the Consumer Services sector within AIM. Peel Hunt have set a target price of 100 GBX on its stock. This would imply the analyst believes there is now a potential upside of 57.5%

[bobsha] 05/9/2016 09:29

Will be inline with market expectations

[hazl] 05/9/2016 09:08

unsurprising in a way MM its pointing to possible success at last

imor

[market master] 05/9/2016 08:59

Zak Mir predicting target of 110p for KOOVS based on charts!

[hazl] 05/9/2016 08:52

at last what we wanted to hear.
well done harebridge for keeping awareness up.

[harebridge] 05/9/2016 08:34

Koovs enjoys summer sales surge as online traffic rockets5 SEPTEMBER, 2016 BY LUKE TUGBYIndian etailer Koovs' sales more than doubled during the summer as its bosses hailed "significant growth" in brand awareness.https://www.retail-week.com/sectors/fashion/koovs-enjoys-summer-sales-surge-as-online-traffic-rockets/7011754.article

[market master] 05/9/2016 08:23

I have strong feeling next raising will be at premium to share price and will propel share price over £1

[mrcoolguy] 05/9/2016 08:18

It will be interesting to see at what price the next capital raising is set.....Autumn was stated

[rackers1] 05/9/2016 08:14

wheres the resident clown hvs.
whenever he spouts bearish claptrap, the price bounces.

love yer work hvs.

one day rodders..... one day lol

xx

[harebridge] 05/9/2016 08:07

We'll just have to wait & see what the market thinks. Sounds very positive to me.Could be a good entry point ; )

[funkmasterp12] 05/9/2016 08:00

Harebridge - most other (good) companies will give a steer on whether they intend to meet market expectations. Look at CAMB today for one of many examples.I wonder why Koovs chose not to mention this.

[market master] 05/9/2016 07:58

Now we know why PEEL HUNT upgraded target price from 40p to 100p few weeks ago. I wonder if they will increase further after today's news!

[harebridge] 05/9/2016 07:48

Profit numbers are not declared on trading updates- they are saved for Final Results.

Yes there will be more funding- they have always been open about that- as its an early stage company. It's too soon for organic growth.

Thank you for your assistance.

Great figures & momentum building fast. Well done to those that got on board recently.

Remember that it's just a trading update- not detailed Interims or Finals.

[melody9999] 05/9/2016 07:48

errr does this not make the TU meaningless or I am misunderstanding the sentence below:

"Gross sales order value placed through the KOOVS.COM website including taxes. This does not represent the revenue of the Group."

So we have no idea of revenue, or marketing costs to achieve whatever sales were generated??

[funkmasterp12] 05/9/2016 07:40

No profit numbers and a hint of more placings to come. Buyer beware.

[market master] 05/9/2016 07:35

Excellent trading update, better than I was expecting!

[adorling] 05/9/2016 07:30

...I like the fact that KOOVS is outgrowing the pace of Indian e-commence by over a factor of 2!

[harebridge] 05/9/2016 07:20

RNS"significant growth in sales and brand awareness. Sales* in this period reached GBP5m/INR473m, 115% up on the same period last year, while Koovs increase in brand awareness to 18% has contributed to a step change in web traffic, registered users and social engagement."India offers a huge opportunity for ecommerce and online fashion in a rapidly expanding market which is expected to increase five-fold by 2020, to GBP2.5 billion. Koovs 115% sales growth over this period is notably ahead of India's market benchmarks of 50% annual growth in ecommerce, and 75% in online fashion.

[moormoney] 03/9/2016 15:02

I agree shores, lots of potential as Harebridge points out in post 1120.

[shores] 03/9/2016 08:55

I would suggest that the exponential growth possible with Koovs is not now possible with Asos. The migration of personnel underpins the investment argument 'back the management'. Whilst Koovs has the potential to grow 10 fold in a few years, this is unlikely with Asos at the size it is now.