Marks Electrical Share Discussion Threads

[sphere25] 26/11/2024 10:49

Thank goodness for FRAS. They are the bid in the AIM market.

Imagine where AIM would be without them.

Wonder what they will buy into next.

[johndoe23] 13/11/2024 08:25

Correction, 26 x

[johndoe23] 13/11/2024 08:19

24 x forward earnings here, ludicrous. Further to drop IMHO. Short.

[controlledmadness] 12/11/2024 12:14

seems a violent reaction.

[darrin1471] 15/6/2024 10:33

I am surprised that Thursday's large trades and the following series of buys did not follow through into Friday.
Only 3 declared large shareholders:
Mr Mark Smithson 77,278,181 73.6%
Canaccord Genuity Wealth Management 5,750,000 5.5%
Stancroft Trust 5,454,545 5.2%

Plus Octopus Investments who were selling 21/11/2023 when they had 2,769,040 or 2.64%

So we will not see an RNS if Octopus were the seller and the buyer is a new shareholder.

Full year results are on 26 June 2024 and we already know Q4 sales growth fell to 2% which did not hit the share price as I would of expected.

The impression I get from the webcasts is that growth is related to marketing spend and this can be reduced quickly if margins and profits are under pressure. Without share price weakness I think Smithson would have sacrificed profits for growth. I think Q1 sales and the webcast will be very interesting.
Falling "average order value" and leaving Euronics may continue to hurt margins in the short term.

Fundamentally I think MEs low cost single location business model coupled with their high customer service offer is a winning formula which will lead to further growth in market share.

Wider improvement in consumer sentiment would of course help but as most of MEs sales are non discretionary, I think the main growth story is about their low cost business model.

Non discretionary MDA sales are built upon home improvements and house sales which I think will be under pressure for several years whoever the government is. This may lead to a continued negative view of the sector.

MEs targets premium MDA brands and customers, so a Labour government will disproportionately add presures to MEs customers.

Higher wage costs effect all competitors equally and will just be passed on to the end consumer.

[pugugly] 14/6/2024 09:56

CT- Unlikely (IMO) whichever party wins the election taxes will probably still be higher overall and disposable income lower. OK there may be a short term relief bounce which will soon fade. Also wage costs if Labour win as an odds on favourite will be significantly higher.

[castleford tiger] 14/6/2024 08:54

i am a buyer as the market for big ticket items will improve soon.

tiger

[darrin1471] 13/6/2024 16:09

Highest ever daily volume in MRK today.

Some chunky trades for MRK have been going through daily since 31/05/24

[debsdowner] 18/4/2024 14:01

darrin,

"I'm surprised MRK held up so well today.
Sales growth crashed in Q4 to 2%
"

Yes that was the highlight to me.

If they are that competitive sales should not have crashed as much imo.

But big ticket items have slowed somewhat.

There is another play here which could affect future performance ansd that is products are lasting longer due to a new europeam law.

[darrin1471] 16/4/2024 18:24

I'm surprised MRK held up so well today.
Sales growth crashed in Q4 to 2%

Q4 2023 20%
First 2 months of Q1 30%+
First 4 months of H1 30.7%
H1 24.8%
Q3 17.8%
Q4 2%

31 March 2024 closing net cash position of £7.8m(ahead of lowered forecasts of £7.05m)
Last year closing net cash position of GBP10.0m

EBITDA of approximately £5.0m is inline with lowered forecasts but down from £7.5m last year

Leaving Euronics "will lead to revenue and margin upside in the medium-term". But not the short term?

Falling "average order value, resulting in customer order volumes growing faster than revenue. This impact will limit our ability for margin expansion in the short-term".
No recovery in margin.

Most of the above has already been priced in with previous trading updates. The 2% sales growth in Q4 has not.
The p/e was better than many shares and could be justified by the growth prospects. With margins under pressure and now growth suffering the share price has to be at risk with little margin for error.
I wonder if margin pressures in Q3 resulted in lower marketing spend, leading to lower growth.

It will be interesting to hear what Mark has to say. In the short term it appears there may need to be a choice between margins and growth.

I'm not currently holding MRK but will be watching closely for a re-entry point

[debsdowner] 16/4/2024 09:59

Growth seems to have fizled out in last quarter hence overvalued on pe ratio.

bspgamer hyou are probably right, with a caveat I don't know how tight the shares are held.

Outlook will get tougher still with unemployment rising and consumer spend set to tighten up further.

White goods always been very competitive. I think managemnt trying to put a possitive spin on company since listing.

Yes they have done well but still a small company and the gients also struggling.

[bspgamer] 10/1/2024 23:01

There is no way this is a 70 million market cap business, 40 at best this will drop much more yet!!

[debsdowner] 10/1/2024 17:01

SKY business:

Said like some other retailers Black Friday too promotional hence lower margins.

[debsdowner] 10/1/2024 11:46

Could be a value trap?

However you have a good take on most retailers darrin and I havent followed for long so don't take my view on this just watching.

[darrin1471] 10/1/2024 10:18

"revenue growth of 17.8%" in Q3-24 (October to December)is not the problem.
Its the gross margins in H1 and now in the golden quarter of Q3 which has kicked the share price.
This was initially a value/growth share for me. I reduced as the price rose and it became just a growth share. Its very much a value/growth share again for me at the current price. All time low is about 56p, so we may test that level again.

[debsdowner] 10/1/2024 09:37

Shock expected fall in profits, risk has increased hence fall of 25% in share price.

There is certainly going to be less discretionary spend and more retailers will find it difficult to make headway on profits.

White goods always risky.

[johndoe23] 10/1/2024 09:34

Can see this falling further

[pugugly] 10/1/2024 09:14

Macro economic forecasts against the company (imo) - Less discretionary income likely. Also if offering free delivery but not up front about only limited to orders of £1,000 or above possible breach of Advertising Standards Authority (CAP rules)

[eigthwonder] 10/1/2024 08:31

In the market for a new freezer I thought I would give them a shot, helped by the competitive price and promise of “free delivery “. But when I came to look at the basket they had added in all the unnecessary extras, which I had to untick and I was still left with a “shipping charge”. Turns out free delivery only for £1,000 orders, so they were no better than the competitors. The use of default extras and disingenuous use of “free delivery “ all felt a bit yesteryear and I took my business elsewhere

[darrin1471] 10/1/2024 07:40

"our gross product margin did not increase to the levels we expected, and despite proactive action on other controllable costs, the impact of this in the peak trading period has had a material impact on our full year profit guidance."
"As a result, we now expect our full year revenue to be in the range of GBP115-118m with EBITDA in the range of GBP5-6m"

[darrin1471] 28/12/2023 10:52

"Defra explained online sellers and in-store retailers would have to collect any broken or rejected large electrical goods while delivering replacement goods from 2026."



Marks already collect for a fee.

[edmonda] 22/11/2023 15:07

Video recording now available - Investor Presentation with Q&A (Interim Results)

Marks Electrical Group, the fast-growing online electrical retailer, conducted an investor webinar following publication of their Interim Results.

Mark Smithson (founder & Chief Executive Officer) and Josh Egan (Chief Financial Officer) ran investors through key details of their HY24 numbers which included strong revenue growth and the impact of distribution & installations costs on margin.

Management discussed their expanded geographic presence and the roll-out of their next-day installation offering, as well as their strong balance sheet and cash generation. There was also a wide-ranging Q&A session following the presentation.

The full video has been divided into chapters, as below:
0:00:03 Key highlights from HY24
0:03:00 Financial overview
0:10:51 Strategic update
0:24:14 Summary & Outlook
0:24:50 Questions & Answers

Link to full video:

[edmonda] 16/11/2023 07:56

"Market share gains and efficiency drive cash flow"

Results confirm 24.8% sales growth to £53.9m in H1, and despite lower EBITDA margins, Marks Electrical converted 145% of operating profit into cash (vs. 118% for the whole of FY2023), enabling a 0.30p unchanged interim dividend.

Margins, as expected, were reduced by the strategic decision to add integrated gas, electrical and television installation services to its next day delivery service, and increased wages for the company’s drivers. As a result, EBITDA margins were two percentage points lower than a year earlier at 4.3%. Importantly, gross product margins were almost unchanged – i.e. products were not discounted.

Market share improvements in both Major Domestic Appliances (MDA) and Consumer Electronics (CE) demonstrates the success of the company’s strategy. In H1 MDA share rose to 2.9% from 2.4%, while CE share increased from 0.3% to 0.5%. For online only, the MDA share was 5.4% and CE 0.9%. Given the substantial headroom the company enjoys in terms of awareness and reach, that over 1 in 20 UK online MDA orders are already put through Marks Electrical appears impressive.

Operating efficiency in terms of overhead costs improved in the six months. Inventory days reduced to 64 in FY2024H1 from 82 days a year earlier, and net cash rose by £0.9m to £10.9m in the past 6 months. The company generated a still impressive 37% return on capital employed in FY2024H1. With sustained robust sales growth, driven by consistent market share increases from an already meaningful level online and strong cash conversion, we retain our 150p fair value.

Link to report: