Brown (n) Share Discussion Threads

[kirk 6] 06/4/2020 21:19

This is going to surge tomorrow especially after Wall Street rocketing past resistance

[ivancampo] 06/4/2020 18:23

That's another good post. I could add more positives based on personal experience but discretion is more important. Still a crazy price. This isn't Debenhams.

[paulof2] 06/4/2020 18:17

Nice close for the day 47% up that’s more like it, glad to see people agreed with what I mentioned yesterday.

Interesting post jacknife I’ll address it below.

1st - sales are down yes but just how much remains to be seen, yes there is criticism over the business continuing to function but as you said yourself there are lots of businesses like that. As I said n brown is in a better position than most - Let’s not forget that n brown isn’t purely a clothing retailer it also operates as a department store, people might not be going out buying new clothes but it doesn’t mean they’re not buying expensive outdoor furniture to make the most of the good weather and their fridges / ovens aren’t breaking so you can’t really compare it to boohoo either.

2. Stuck with old stock - well true but once again if anything this puts n brown on a stronger footing than most retailers because it’s not all clothing. Even so though almost every other clothing company will be in the same situation and I don’t see their share prices dropping from 150 to 10. Let’s also not forget that if worst comes to worse they can fly goods in, yes it’s more expensive but can get them at short notice when demand picks back up.

3. These suppliers are losing out on sales too. Do you really think they are going to refuse them when they come back asking to buy again? Don’t be ridiculous they can’t survive with no sales themselves.

4.
Good point - warehouse and fulfilment relatively fixed. However marketing - this was already set to drop very substantially before the covid outbreak and was likely to come in closer to 100m. However I don’t know whether you’re familiar with digital marketing but the beauty of it is you can stop very quickly, ppc, google shopping can all be turned off at the drop of the hat and this makes up a substantial portion of the groups marketing spend. The rest of the spend will likely already be spent on summer campaigns etc so there will be no cash leaving the business for that.
Other admin and payroll- well there’s the government absorbing 80% of that,problem solved.

4. You’re right there will be more defaults. However have you looked into how the provision for bad debt is calculated? There is substantial room in it to absorb more defaults, in fact you can see that just based on the impact of the irs which has meant it needed to be increased substantially yoy just because of a change in accounting, this just means there is even more room in it above the actual receipts they will lose.

B - you say no new receivables and I think this is the key flaw in all of what you’re saying. You’re assuming that the business completely grinds to a halt where it’s getting no more sales but is still spending heavily, that just isn’t the case. Demand will be down no doubt likely less than 30% but not completely, there will still be new customers joining n browns books. If the government furlough scheme wasn’t in place and we were seeing mass redundancies I could see your point of view however the reality is that many workers although they may be furloughed are still getting an income, there will be some that lose out no doubt and that will reduce sales but I don’t believe to the extent you mentioned where there is no ‘new material receivables’.

To your final point

Negligible customer demand - how can you possibly call likely >600m negligible? and that’s a worst case scenario assuming it lasts a year. Secondly as I already mentioned it’s actually a very flexible cost base so not sure where you’ve got that from. Lots of debt yes but manageable.

We will see, good initial signs by the market today however.

[iamgreat1] 06/4/2020 16:56

From ?1bn to ?28m - This is priced to go bust. 99% divi yield!

[rumobejo] 06/4/2020 16:46

I recommend new joiners read paulof25 today's post 1484

[iamgreat1] 06/4/2020 16:34

The company are up to 414m in their secured facility Bank covenants will be breached the way it's going Hence why it has and today was a dead cat bounce will stay under these levels for the next few months

[ivancampo] 06/4/2020 16:18

IG shorts closing

[singh is king] 06/4/2020 16:16

Bought a few of these today.

[rumobejo] 06/4/2020 16:09

delayed buy 750,000 at 11p just gone public :D

big guns coming for ya DMA boys

[rumobejo] 06/4/2020 16:05

15p close? let's go...

[orchestralis] 06/4/2020 15:58

Buffet would

[orchestralis] 06/4/2020 15:58

This is definitely worth a small flutter, with some spare cash. Upside potential good.

[sbb1x] 06/4/2020 15:47

Never seen you ramp anything, how much you down here ?

[ivancampo] 06/4/2020 15:26

Agreed. All over this. What an opportunity.