Supreme Share Discussion Threads

[dr biotech] 05/7/2023 07:20

Looks a very positive statement. This should be much higher, they are still paying for the lighting related profit warning two years ago.


I did like this bit too. I know he’s wealthy but it’s still a decent thing to do.

Supreme responded quickly to the cost-of-living issues faced by our colleagues and awarded an immediate 10% pay increase to more than half of our colleagues, regardless of location, role or length of service in September 2022. The scheme was directed towards those colleagues who were particularly impacted by the cost-of-living crisis. It is testament to the culture and values within our business that Sandy, our founder and CEO, volunteered to sacrifice his entire salary from then until the end of the financial year in order to finance this in FY23. We realise that our colleagues are one of our key assets, many of whom worked tirelessly through the Covid-19 pandemic and who continue to be pivotal to the future success of the Group.

[johndoe23] 05/7/2023 07:13

Should be up 15-20% today, we will see

[boonboon] 05/7/2023 07:13

And massive new distribution deal with good profits attached and increasing the ability to cross sell.

[johndoe23] 05/7/2023 07:10

Significantly ahead...

[actscap] 03/6/2023 09:37

Warehouse move happening soon. Existing warehouse closes 23 June, reopening in new site 3 July. New address is The Ark, Trafford Wharf Road, Trafford Park, Manchester, M17 1HJ. Hope it all goes smoothly.

[podgyted] 01/6/2023 18:25

Bought a starter stake - under £1 this looks a steal. Lets see.

[dave2608] 31/5/2023 22:17

I'm surprised this one is down. It looks like a cracking little company. The share price just looks wrong......IMHO.

[actscap] 30/5/2023 12:09

https://www.gov.uk/government/news/no-more-free-vapes-for-kidsGovernment takes steps to crack down on rogue firms targeting children with free sampleInteresting comment at the end about vape kits for smokers......While the rise in illegal youth vaping is a cause for concern, many addicted smokers have found using vapes as a quitting tool. In April, we also launched announced a world-first national scheme, meaning almost one in five of all smokers in England will be offered a vape starter kit alongside behavioural support to help them quit the habit as part of a series of new measures to help the government meet its ambition of being smokefree by 2030 – reducing smoking rates from 13% to 5% or less.Be great if supreme could be involved in this initiative.

[hammergaumet] 23/5/2023 18:56

https://insiderideas.substack.com/p/sup-supreme-plc-110p

[biotechbull] 23/5/2023 09:52

A Substack blogger has today updated his writeup on SUP from last year - search for 'Insider Ideas'. Subscription but a bargain. A good intro to the stock and the current key debates.

[hammergaumet] 22/5/2023 09:03

She made comments on a previous video interview that she didnt have much liquidity to buy stock back when sandy bought.

[johndoe23] 17/5/2023 12:12

CFO bought some, not a great deal but shows some confidence

[robbnw] 15/5/2023 22:32

Superb and I added this amNow have substantial holding

[11_percent] 15/5/2023 10:11

Indeed......don't jump on a spike.

[dr biotech] 15/5/2023 09:37

I follow that tip sheet. SUP is one of the primary recommendations. Interesting to see that the MMs have widened the spread to rip the PIs off. Always worth waiting a bit until it settles down.

[brummy_git] 15/5/2023 08:42

Judith Mackenzie of Downing talked positively about Supreme here (starts 31:50).

[johndoe23] 15/5/2023 08:11

Was this mentioned in a tip sheet this weekend?

[peterjones2023] 19/4/2023 09:19

i think the companies margins have been impacted by a few reasons

1 i think that the aquasions have added a lot more costs in the short term like cuts ice and liberty flights ( cuts ice had a lot of fat before they reduced it and then sold )

2 also the incremnental disposable busines will be lower margin but this is incremental and will probably grow with time

i dont think the new DC COSTS are in as most will be capex any way

[dr biotech] 18/4/2023 21:46

Can't see a takeover as the founder/CEO holds more than 50%.

Hopefully vapes will become more of a regulated product where manufacturers and importers are held to account - should in theory stop the cheaper lower end products and protect margins. There have been some eye opening stories about the levels of some additives recently.

I bought these originally as the company has set up an excellent distributor network that should in time end up supply independent retailers with a wide variety of products, not just vapes. It seems that the latter has become almost the sole talking point, admittedly for obvious reasons as its pretty much in land grab territory whilst other products have become more marginal. I'd really like to see the vitamins and sports nutrition lines develop. There must be more complimentary products they could supply.

[taursus] 18/4/2023 21:20

Biotechbull

Thanks for the reply. We appear to be largely in agreement! My point about the gross margin goes to the quality of earnings (and hence the multiple investors might pay for those earnings).

Supreme’s highest quality (and highest margin) earnings are from those brands which Supreme owns and for which Supreme manufactures the products predominantly in-house (for instance, 88Vape). Management seems keen to stress during presentations the high proportion of the GP that comes from own manufactured products. The lowest quality earnings (and lowest margin) are from distribution of battery brands, mostly under non-exclusive licences (for instance, for Energizer batteries), or where it just acts as a distributor (for instance, household goods).

Until FY23, the vast majority of Vaping earnings appeared to be at the very top of the margin hierarchy. But a fair portion of the increase in this year’s Vaping sales seems to have come from (Chinese-manufactured, I assume) disposable vapes(Supreme’s own brand(s), third-party brands, or both?), closer to the bottom of the margin hierarchy than the top. And at the same time disposable vapes have attracted increasing controversy because of environmental concerns and fears about increased use by children. The risk of action (through increased regulation, taxes or whatever) against this part of the vaping market therefore appears to be growing, in my view; this doesn’t/won217;t help sentiment towards what many investors, or so I am told, regard as a play on vaping.

Perhaps the margin on disposables could be improved by bringing manufacture in-house, but would in-house manufacture be feasible and more economic? And would reputational risk increase if the only disposable brands sold are Supreme’s own brands?

Those are my concerns.

[simmsc] 18/4/2023 21:20

Another thing to bear in mind is that this will for forever be at takeover risk. The big tobacco firms are under pressure to diversify away from traditional tobacco to more healthy smoking products... And the best ones are being acquired. They are only focusing on brands\manufacturers (not distributors) ... And Supreme have their own strong brand. They could be sitting on a goldmine. Let me correct that, they are sitting on a goldmine.

[biotechbull] 18/4/2023 14:58

Brilliant work and reply Taursus. I agree with everything you've written including where you partly argue against my points from yesterday. You ask a few Qs to me and the world:

Do we know pods can be done cheaper in Manchester? Not that I am aware of, but at the time of the Liberty deal they talked about £1m insourcing (or alternatively using Supreme scale to get better prices in China, if not insourced) benefit (pods + liquids, liquids will already surely have been moved to Manchester).

Liberty GM% dilution. I can't find info on Liberty gross margin. Looking at what we know about EBITDA (1.5m vs 9m sales) there is definitely EBITDA margin dilution, but if there are large overheads like salesforce it might not be lower GM% (it's a higher-price product after all).

I'm less confident that you are that Lighting wasn't down much in GM% in H2, but no point debating it, we need to wait for July!

I agree with you that the vast majority (you say all) the GM% fall must be from vape. It's probably best explained by a MORE than 20%agepoint gap between gross margin of 10ml and disposables. Key next question - once disposables are a more mature product, can Supreme manage their margins up? Air freight was mentioned on one of the calls, I think the FY22 call.

Interesting that you think that the GM% mix benefits of faster-growing Vape division was a big part of the thesis. It happens not to have been part of mine! And if a whole new and largely incremental (not cannibalising) type of vaping appears, but with dilutive gross margin, I can't really see that it harms the thesis.