Mbl Share Discussion Threads

[davidosh] 08/11/2010 13:41

supernumerary...Have you made the suggestion re tickets and merchandise to MBL directors ? HMV of course seem to be going down that concerts and tickets/merchandise route somewhat.

[fmcalorum] 08/11/2010 13:40

If past RNSs are anything to go by we can expect if after 4.30pm!! and they will also manage to put a negative slant on it!!

[supernumerary] 08/11/2010 13:36

Surely the importance of the Sainsbury business is not only in the revenue it may generate but in how it could help to change the perception of mubl as a business?

At the moment it's often portrayed as a geriatric old dinosaur dealing only in products that are on their last legs. The Sainsbury's online business could help to change that view by showing that mubl is adapting dynamically, aggressively and successfully to changes in its marketplace. And since it already has a physical distribution network in place, at only marginal cost.

This was why I suggested ticket sales as a new avenue worth exploring. We all know that bands are turning from CD sales to concert tours to replace income lost to downloads and bootlegs. Why, with a new album, shouldn't mubl also provide the tickets and t-shirts that inevitably now go with it? In this way, it's seen not as an organisation that's stuck in a cul de sac with no way out, but rather as one that actively sees new challenges as new opportunities.

[davidosh] 08/11/2010 13:28

I do not do RNS of course but if Carlsberg were running things we would expect one !! I think the huge pressure applied today by shareholders will mean an RNS will be inevitable but no doubt it needs agreement from many parties including Sainsbury and the Takeover Panel advisors etc etc. To my mind if WH Smith and Best Buy were worthy of release then this certainly is too. It has only just gone live so on balance it is unfair to say they are suppressing the news but they do need to get something out IMO.

[scott84] 08/11/2010 13:12

No Rns David then ?

[davidosh] 08/11/2010 13:11

Call of Duty is literally the most popular video game currently and the next release Call of Duty Black Ops is released tomorrow. Sainsbury online is offering it at £39.90 with free delivery to your door tomorrow morning and Game Stores do it for £44.99 and Play.com online offer it at £42 so they are ahead of the main competition for sure. Although Asda online have it at £36.97.

Just thought I would mention it and of course if some of you are using the site please log your order numbers so we can track the scale of things.

[charliebrown2000] 08/11/2010 13:01

Apologies to Supernumerary, my criticisms were mis-directed.

I seem to have hit a raw nerve with Timesmoney who clearly seems to have enough time to criticise this new business development. Picking up on your points however...

Low Value Consignment Relief is well established and known to the Treasury under the old and new govts. They watch it and may not like it very much, but there's no immediate threat. It's certainly not a scam.

In early 2010 the UK Treasury issued a statement to The Guardian that said "The implication that businesses are simply setting up on the Channel Islands to take advantage of this relief is not true. In fact exports from the Channel Islands account for a very small percentage of the CD/DVD market".[3]

In July 2010 George Osborne Chancellor of The Exchequer for the new coalition UK Government confirmed that his Government continues to monitor the operation of the relief.

Note that George Osborne had an excellent opportunity to address this issue in the recent budget but chose not to.

In fact, I believe this is ultimately irrelevant. Even if LVCR is abolished it isn't going to stop major retailers with online strategies (make that all of them!) from wanting to continue. Prices may have to be re-aligned, the supply chain may change, but the trade will continue becuase that's the way consumers want to shop.

As for the online transparency issue, I think this is a red herring. Most consumers are happy to re-visit the online stores they are most comfortable with and have their accounts set up with. Most don't leap from site to site to look for that extra 20p saving - some do, most don't.

As for the margin splits, I see little difference in principle between MBL providing stock for a retailer to sell online or in store. The retailer takes a margin / mark-up, the product is a cost, the distribution chain is a cost and the remainder goes to MBL. Yes, there may be less margin available in one model compared with the other, but the volumes in the online model are potentially orders of magnitude greater than through brick and mortar stores.

I really don't get your comment about Morrisons. Are you suggesting that working with any other supermarket is non-core??

As for the demise of record merchandisers, that has been brought about by the success of online retailing (yes, the bit we are doing now) and the impact of digital downloads and piracy.

I'm surprised any shareholder would be as quick as you are to argue for less information and transparency from the company as you seem to be suggesting that you'd just rather not be told about these things. Most of us, I believe, want to be told what's going on so we can make up our own mind. Given the recent tide of downbeat comments, I believe many of us would appreciate hearing some good news.

[yump] 08/11/2010 13:01

fwiw I think low margin non-essentials is a different proposition from low margin essentials, but it depends massively on the competition.

There are a lot of wealthy retired business owners in the black country who just made millions of small metal widgets. Overseas competition came along but fortunately they'd already made their millions.

If you've got a virtual monopoly on non-essentials, the margin just dictates whether your business is viable or not. If it is, and you run it, you're OK until some competition comes along.

[goonertone] 08/11/2010 12:57

Timesmoney

EUK was the profitable part of woolworths and was brought down by the collapse of Woolworths high st presence.

GT

[timesmoney] 08/11/2010 12:30

You may feel my comments are nonsense that your perogative. However every major entertainemt retailer sells on line and most via the Channel Islands scam.
In a bricks and mortar enviroment you may well buy from the supermarket you happen to be in purely for convenience and on impulse. The on line market does not benefit from these facts. The market is totaly transparent (try a Google search for CDs and DVDs)consequnetly the sales are very fragnented and margins vey low. The only company making real money in this model is Play who are Jersey based and sell on their own account. All the others have to split limited margin between the seller which includes WH Smith, Debenhams, Tesco, HMV, Sainsbury,Woolworths, Zavi and a host of others with the distributor usualy the HUT. In consequnce MBL are not going to crow about more business that carries wafer thin margins and is a model built on clay.
As regargs MBL selling to major retailers, the primary customer has always been Morrisons and the margins generated by selling low price budget material which MBL sourced or produced cheaply. Since the demise of EUK the Woolworths owned wholesaler, MBL picked up the 'Front Line'distribution of chart music.
NO COMPANY HAS EVER SUCCEDED FOR ANY LENGTH OF TIME IN THIS MARKET. See history of Record Merchandisers, TBD, Wynd up, NOW, EUK. and many many more.

[charliebrown2000] 08/11/2010 12:03

Supernumerary

Selling entertainment products through UK retailers IS MBL's core business. What nonsense from you. The margins may be squeezed as the supply chain is different, but the volumes should be very considerable. It IS material. How can BB with a small handful of stores in the UK be worthy of making a fanfare about and this major step change in MBL's distribution activities go unmentioned?

[timesmoney] 08/11/2010 11:55

Splitting hairs 'started during this financial year' what new ventures? The only info on segmentation and performance we have is in last years r and a and that showed the majority of new ventures were a negative on profits. So what new ventures have started in the first half? And 'in line with expectations' can mean anything including start up losses.

By the way Woolworths now a pure on line player is owned by Shop Direct, Barclay brothers I believe. Their entertainment division is also white labeled by the Hut.

Be in no doubt the VAT loophole (previous post which no one has commented on) is a bear trap for all involved. The UK government will not simply sit back and watch large scale VAT tricks that costs millions.

[someuwin] 08/11/2010 11:27

Woolworths is still trading online...

[davidosh] 08/11/2010 11:23

It looks to me like MBL through GMV are mirroring the business model used by The Hut which I did flag up about a year ago and actually emailed to TA to ask why we could not benefit in the same way. This story in the trade press gives an indication of how The Hut see things developing...



It made me smile when they mentioned Woolworths as a key customer....sloppy journalism/editing !

[supernumerary] 08/11/2010 11:06

According to the trading update, precisely the opposite is true - the new stuff (that we aren't told about) is doing well and the old stuff isn't:

'The Board of MBL, the UK distributor of home entertainment products, is today
making a trading update. Whilst the new ventures, started during this financial
year, are performing in line with expectations, overall revenue and
profitability for the Group is behind forecast and consequently profits for the
year to 31 March 2011 is expected to be materially behind market expectations.'

[timesmoney] 08/11/2010 11:01

Every man and his dog opperates their on line sales via Channel Island White label (see previous post)Its the only way they can be competative at a retail price level. Given that the prices are very low, the competition fierce, margins very very tight the Sainsbury business will not be material. Like all of the MBL non core opperations it will probably lose money.

[kimboy2] 08/11/2010 10:37

Looks like an RNS will be through gritted teeth if it arrives. I wonder if we would have heard about it if there wasn't an alleged MBO in the offing.

If the claim is that it isn't material then why are they bothering with it.

[charliebrown2000] 08/11/2010 10:09

It's absolutely a growth play when you consider that Morrisons doesn't have an online store and this puts MUBL in a position to go after others such as BB and Asda.

[scott84] 08/11/2010 10:05

Say market cap 18 mil

Cash of 6 mil, possibly lower due to this news with start up costs.

Profits say lower due to warning, say 7 mil, but then to jump again
with this new deal, maybe 8-10 mil.

Dividend to be maintained at 7.5p so yield 7%+

There would have to be a mighty cheap stock out there to make you sell
these to buy something else.

This Sainsbury deal eliminates the "one trick pony" status as well so
surely Mubl can be seen as a growth play again ?

[scott84] 08/11/2010 10:02

I reckon they will issue a Rns later not that it really matters except
to get the price marked up and see more people chase it up.

Medium term i reckon if this set up is indeed up and running for this
xmas then it will be a big boost to revenues and profits so it will mean
(yet again) that Mubl are valued at approx twice their profits.

Sticks out to be bought despite the management doing their best to keep
the price down with lack of good pr.

[charliebrown2000] 08/11/2010 09:58

How is it possible that PC, who is charged with looking out for the interests of the shareholders, not think it material to let us know about providing the UKs 3rd largest supermarket with its online entertainment service??

As for confidentiality, lots of companies in the supply chain must have known about this situation as well as any competitors who were probably pitching to win this business. And if it was so confidential, what is GMV doing dropping big hints on its website?? A new company gets set up back in June and we don't even get informed??

Any news from DD? He is usually in the thick of these discussions. He's conspicuous by his silence.

[someuwin] 08/11/2010 09:56

This Sainsbury's deal must have a material affect on the shareprice and thus must be RNS'd surely?

[yump] 08/11/2010 09:40

Strikes me that a lot of these areas where MUBL should have been more forthcoming, are likely to be explained by them as an 'error of judgement' and we've all seen in other areas of life what that phrase can be used as an excuse for.

[scott84] 08/11/2010 09:29

"I just wonder how they have managed to set this up without shareholder knowledge. Any ideas?"

This is Mubl/Amu, PR is not their strong point.

Guess some shareholders may force a rns from the company later ?