Patisserie Share Discussion Threads

[smokybenchod] 11/10/2018 21:34

I’ve tweeted LJ and the tweet is visible on his profile as a reply to his latest tweet about Jeremy Corbyn (as LJ has DM disabled). My message is in reply to a tweet where a supplier to PV has been asking him what the deal is! Probably a waste of time but made me feel a lot better.

[topvest] 11/10/2018 21:25

Coffee is super high margin as well mate!

[thegreatgeraldo] 11/10/2018 21:24

Marsh sold 666,666 shares in Feb for a profit of 190p/share (after exercising options under LTIP). Then repeated the trick in July, same number of shares, sold at a profit of a quid a pop. Seems to be still holding close to half a million shares

[rubberbullets] 11/10/2018 21:21

tea = water + tea bag = must be 98% margin

pret sell more protein which is expensive versus tea and wheat

pret spend more on marketing

pret cannibalise same store sales as close proximity

Cake has 2.6m internet sales, up from £1m last year and v high margin


go to school

[topvest] 11/10/2018 21:19

Pret makes a 9% operating margin on 6x the sales. There is no way that CAKE are twice as profitable as Pret. Absolute nonsense!

Pret and Greggs are on 9% and 8% and are world beating businesses, but CAKE sell double gateaux and a cup of tea for 17% net margin...hmmm!

Easy to spot now, but why didn't someone pick this up? Short sellers asleep on the job.

[eeza] 11/10/2018 21:08

From Daily Mail

"Patisserie Valerie was founded by entrepreneur Luke Johnson, who was a millionaire aged 30 after floating Pizza Express - but up to £165million of his £260million fortune is believed to be tied up in his ailing cake shop."

[rubberbullets] 11/10/2018 21:00

Pret sold for £1.5 bn,

500 stores

[topvest] 11/10/2018 20:54

I would guess that he'd be buying from the administrator instead for a nominal sum, if at all. His net worth must have halved or more in a week as I thought he was only worth £100-200m or so at a guess. I remember a number of £100m quoted a few years back.

Unfortunately, I think CAKE's listed company life is over. Anything listed by Luke hasn't really left a pleasant taste unfortunately.

Signature Restaurants of Belgo, Ivy and Strada fame was my only experience of investing in LJ and I felt that he took advantage of the situation in a go-private transaction with Strada played down before being sold for a lot of money a few years later. He is a deal making entrepeneur, so I wouldn't expect any favours!

[barnetpeter] 11/10/2018 20:54

The thing is....does he have that amount of cash floating around? Most of his money is here.

[cockneytrader] 11/10/2018 20:50

This Friday only, 'The BTG, Brown Trouser Gateau'

[thegreatgeraldo] 11/10/2018 20:37

Wonder if this started as a small "adjustment/tweek" by the FO to hit a target, which then had to be repeated 6 months later to keep it secret, & then again, & again..... & snowballed out of control?

[clocktower] 11/10/2018 20:31

You should have known you can`t have your CAKE and eat it. Luke should do a Philip Green and put his hand deep in his pocket and cover whatever loss has been incurred so private stakeholders do not suffer a total write off.
If its £20 million, its pocket money to him.

[knigel] 11/10/2018 20:26

topvest, I suppose the five year growth in profits etc. was due to rapid expansion of its store portfolio? 140 stores in eight years states the header.
Maybe expanded too fast?

[johnwise] 11/10/2018 20:03

Pay back time for the worst service on the high street..W H Smith..Only a fool queues to spend money

[topvest] 11/10/2018 20:00

GLOBO CEO and FD disappeared without being sentenced. It was an absolute disgrace.

[red5] 11/10/2018 19:58

I had these for about 4-5months and made a nice princely sum I went into a patteserie valerie and I was told to sell my shares glad I listened to the man behind the counter.

[topvest] 11/10/2018 19:56

Awarding of 666,666 LTIP options to the FD (which have been sold), is a good newspaper story headline as well. You couldn't make it up!

[jsforum] 11/10/2018 19:55

Greggs does well and they're better known as dregs - besides the tea and coffee must be very profitable Luke Johnson could just lone the company some cash - might save the embarrassment until the true accounts are understood and blame apportioned correctly

[davr0s] 11/10/2018 19:55

I do sense that even with hindsight people are struggling to see there was a problem. If this was a well worked fraud then I can see how it could have gotten to here - but what were they thinking? It was always going to end in tears. If this is indeed fraud the authorities have to throw the book at them otherwise others think they can get away with it

[topvest] 11/10/2018 19:53

Lets hope staff keep their jobs and someone buys this from the administrator. You have to feel for everyone involved. Luke Johnson's credibility has, unfortunately, gone up in smoke. I have read lots of his material. He really should have known better, if the profits were overstated by a factor of 2 or 3. Surely the CEO and Luke should have had a better handle on how profitable this really was?

[topvest] 11/10/2018 19:50

Getting into this now. OK look at page 1 of the 2017 annual report. Revenue, Gross margin, EBITDA and net profit over 5 years. Perfectly consistent growth on all 4 metrics for 5 years with no deviation. That is suspicious. Too good to be true. Absolutely amazing that somebody didn't spot this in advance. You would have thought a hedge fund or shorter would have been on to it. I've just checked and there were NO disclosed short-positions.

[tomleafs] 11/10/2018 19:47

Just to touch on your point about PLUS. They essentially pay almost all of their profits out as dividends and share buybacks each year, having paid almost $400m to shareholders in the last 3 years alone. I know that money isn't accounting gimmicks as it has been turning up in my bank account and I've been spending it (inc. the withholding tax refund). As for CAKE I looked into the company but was put off by the paltry 1.5% dividend yield and the massive 23 P/E ratio so didn't bother looking any further. I was attracted to CAKE by the amazing margins and incredible looking graphs going up, up and up every year. I was lucky CAKE wasn't trading on a lower PE with higher dividend when I researched it or else I might have bought a chunk of shares. Anyway, time will tell on PLUS but I do feel it is harder to 'fake' cash when it is being paid out to shareholders each and every year. They have already paid $165m of the $500m of cash and there is another $157m set to be paid end of November. That leaves a couple $100m at end of year for special dividend and buybacks - also helps the company during the current difficult period due to new regulations.
My condolences to any staff and individual shareholders of CAKE. ATB

[mammyoko] 11/10/2018 19:35

Investors bought into the Luke Johnson name and ignored the 'too-good-to-be-true' margin. They were reassured by the cash balance which turned out to be a fiction. I remember thinking that the interim accounts were unusual in that they never used to show LFL. Otherwise there was nothing to suggest the size of accounting hole that must exist for this to be insolvent. The Sky £25m must be an under-estimate. This is going to have read-across consequences for other supposedly cash-rich businesses where there could be some suspicion that the cash is not quite what iot seems - e.g. PLUS with a supposed £0.5bn of cash at the last balance sheet date.

[topvest] 11/10/2018 19:18

Prezzo was 13-14% at its peak.