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Supreme Plc

2.50 (2.51%)
Share Name Share Symbol Market Type Share ISIN Share Description
Supreme Plc LSE:SUP London Ordinary Share GB00BDT89C08 ORD 10P
  Price Change % Change Share Price Shares Traded Last Trade
  2.50 2.51% 102.00 98,986 14:08:48
Bid Price Offer Price High Price Low Price Open Price
101.00 103.00 102.00 99.00 99.00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Household Appliance Stores 130.79 13.75 11.80 8.29 118.96
Last Trade Time Trade Type Trade Size Trade Price Currency
15:15:13 O 10 103.00 GBX

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Date Time Title Posts
01/6/202318:25Supreme imports floats on AIM852
11/1/200123:00SPERFRAME a Super Shell ?-
11/1/200123:00SUPERFRAME a Super Shell ?-

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Supreme (SUP) Most Recent Trades

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Supreme (SUP) Top Chat Posts

Top Posts
Posted at 31/5/2023 22:17 by dave2608
I'm surprised this one is down. It looks like a cracking little company. The share price just looks wrong......IMHO.
Posted at 23/5/2023 18:56 by hammergaumet
Posted at 18/4/2023 14:58 by biotechbull
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.

Posted at 18/4/2023 14:27 by taursus

Thanks for your comments about my post.

I agree with your comments about adding back amortisation of acquired intangibles. Supreme has not been consistent between its half-year and full-year results with its treatment of these. At H1 FY22 and FY23, all the intangible amortisation was added back in arriving at adjusted PAT. But at the full year in FY22 just the amortisation on “customer relationships” and “trade names”, which are written off over 5 years. For instance, at the half-year in FY22, £146k was added back (all the intangible amortisation), and at the full year just £196k out of £378k total intangible amortisation.

If the same approach is adopted this year (and why wouldn’t it be?), there would be nearly £1m to add back (last year’s £196k plus 10/12ths of 20% of the “customer relationships” and “trade names” acquired with Liberty). And about £1.15m in FY24. This add-back is not in the Equity Development note, as you say. Adjustment for this would take fully diluted adjusted EPS to 10.2p for FY23 (from 9.4p per ED) and 11.5p for FY24 (from 10.6p per ED).

Regarding your points A & B in response to my original post. I agree these should be favourable factors for the gross margin percentage in Lighting & Sports Nutrition in FY24. In the case of Sports Nutrition, where the margin toughed in H2 in FY22 (and especially Q4), the whey price factor should also have impacted the gross margin percentages favourably in H2 in FY23, whether viewed Yoy or sequentially. (Management indicated on the H1 call that the margin in this division should be bit better in H2 this year v. H1 this year). The Lighting margin was slightly down in H1 this year v H2 last year (1.7ppts); management indicated on the H1 call that Lighting should be slightly better in H2 this year v. H1 this year. In other words, viewed Yoy the Lighting gross margin percentage in H2 should be down only slightly, and slightly better sequentially.

Taking management at its word, this means that--either year on year or sequentially--substantially all of the fall in the overall gross margin percentage in H2 this year must be in Vaping, assuming batteries has been stable.

Re your point C, I can see that dilutive effect on the gross margin percentage of Liberty will have been felt more in H2 as it was only acquitted in June 2022. (I have access only to the ED note and there wasn’t any detail given from which to work out gross margin dilution). Also that if the pods can be produced in-house rather than in China this should be good for margins. Has Supreme confirmed the pods can be produced more cheaply in-house?

Re your point D, I don’t think Supreme acquired the keys to the new warehouse until March (see Paul Hill interview with the CEO) so I doubt there were much, if any, double costs moving Liberty production to Manchester.

It is therefore likely that the margins on disposables are as low as you suggest, or at least materially below Supreme’s historic Vaping margins. Since flotation the story has been that the gross margin percentage will mechanically improve as Vaping, being the fastest-growing category and with the highest gross margin percentage, becomes a larger part of the overall cash gross margin. If it turns out that some/most of the incremental sales in Vaping are (or will be) at a much lower gross margin percentage than either Lighting or Sport Nutrition (normalised), the story would no longer be true. In other words, it would take a higher increase in sales than has hitherto been assumed to achieve operational leverage on the cost base below the GP line. Let’s hope the FY results bring clarity.

Regarding the new warehouse there should be costs in H2 as the lease was signed in mid-November. But the majority of these will be lease costs and below the adjusted EBITDA line in the form of depreciation and interest. It also remains to be seen how many, if any, of the other costs associated with the new warehouse (eg, business rates, insurance, utilities etc) have been treated as “adjusted items” in FY 23 by Supreme/the brokers. Also how the lease costs of existing premises (£1m+ still outstanding at the end of March 23) and the costs of the move to the new warehouse have been treated by the brokers in the FY24 forecasts. (I see ED has “adjusted items” of £2.7m for FY24).

It won’t be until July,as you say,that we get any real clarity on this, and it will take a least a year before we see what operational/manufacturing efficiencies are available from the move in the form of getting greater productivity out of the cost base.

Posted at 17/4/2023 15:34 by biotechbull
Excellent post Taursus. A pleasure to see someone doing real work. Berenberg note calls out following 3 explanations for short term margin weakness, on which I elaborate:
A) high variable margins of the lost Lighting sales. Lighting is high GM%,33% in 2022, and the lost business, being FOB, had no distribution cost attached to it. Temporary, assuming you believe co when they say Lighting sellthrough is now recovering. Maybe £12m off revenues YOY, but profit will be -4m to 5m YOY.
B) Input cost pressures in Sports/Wellness. Until we get divisional breakdown in July it's hard to know exactly, but roughly speaking flat top line 23 vs 22 yet c. 4ppts (nearly £1m) off gross profit. We know they hedged whey late and high so they haven't yet benefitted much if at all from its sharp fall (See Eq Devt note). But it was clearly some post-Covid superspike now normalising.
C) Acquired businesses lower margin (Liberty Flights) and likely some double costs while they move production to Manchester. Both largely temporary as insourcing production will fix Liberty margins. See broker notes at time of its acquisition.

I would add:
D) maybe late in 2023 double costs from this new warehouse

All those A-D should reverse at least partially in 2024.

And you are right, Vaping margins way lower YOY in H2 (and also H1). We don't know how much lower until July (NB Berenberg and Eq Devt have quite different gross profit numbers so can't both have been guided by mgmt). But plausibly 10ppt lower GM% YOY. That's partly mix effect from Liberty (At the time I estimated about 3-4%, again much of this will be reversed once liberty' pod production is in-housed) but I think mostly Disposables mix. E.g. if in H2 disposables were 25% of sales up from 0% the year before or c. 10% in 1H, and disposable gross margins are 20%age points lower, that's a 5%age point GM% headwind YOY. Is that permanent? Kind of, but I expect Supreme to become more efficient on disposables once it's not a brand new product being rushed to market: purchasing scale in volumes, smoother/slower shipping, etc. Could be some other effects pushing down margins. Price (hope not) / product mix / channel mix / ...

I don't think Elf has been out of the market at all by the way?

Posted at 17/4/2023 07:54 by edmonda
"A positive update of further momentum" (new research note with audio summary here:

Supreme has issued a Trading Update for FY23 performance (year to 31 March) which it expects to be ahead of market expectations, and again in FY24 to slightly exceed the current market outlook. We have revised up our FY23 revenue outlook by 8.5% and, for FY24, by 7.6%.

At the Interim we raised our outlook on the basis of strong results (see ED report 29th November 2022: "H1 23 results buoyed by strong performance from Vaping"): FY23 revenue by 7% to £138.3m, and FY23 EBITDA (adj.) by 6% to £18.5m. The subsequent Trading Update added evidence of continuing positive momentum (see ED report 10th January 2023: "Positive trading update – strong busiest quarter").

On the basis of the strength of trading Supreme now reports, we again raise our outlook: FY23 revenue, in line with the trading update, by 8.5% to £150.0m and (adj.) EBITDA by 5.2% to £22.6m. For FY24 we have raised our revenue outlook by 7.6% to £162.0m and (adj.) EBITDA from £22.2m to £22.6m. There is evident margin dilution to 13.9% from our prior 14.7% estimate; this principally reflects the surge in Vaping revenue such that FY23(E) already exceeds our prior FY24 estimate.

Our Fair Value remains 190p/share – a price indicative of a FY24 EV/EBITDA of 9.4x (see note for full details).

Posted at 17/4/2023 07:02 by brummy_git
Better than expected FY23 results & upgraded guidance from FMCG products group Supreme today.

Thanks to a standout performance from Vaping alongside improved conditions within Lighting.

All the details here.


Posted at 02/4/2023 11:29 by brummy_git
If anyone is searching for an attractively priced, economically resilient and repeat revenue consumer-facing business.

Then have a look at Supreme. All the details here.

Disclosure: I don't own shares


Posted at 30/1/2023 14:40 by topvest
Agreed. UPGS is possibly a better company in my view, although they had a post-IPO warning themselves and took a while to recover. Anyway, I really like both companies as they both have unique business models run by an intelligent fanatic founder.

UPGS are a brand owner and rejuvenator, often buying heritage brands for close to zero and relaunching them.
SUP have a vertically integrated distribution platform model for fast moving consumer goods.

On balance I prefer UPGS, but its close.

Founder led companies with at least a decade or two of growth to come!
I have doubled up my Supreme position as the share price is close to a golden cross. Always a tad dangerous going early, but I am confident long-term in Sandy Chadha.

Posted at 08/12/2022 09:08 by gb904150
DanB48 - totally agree with that. If SUP wanted to boost margins and revenues I believe they could do so at the drop of a hat.

SUP have confirmed on calls before that the 10ml product makes up the vast proportion of sales for the category.

10ml is about a week's supply for a moderate vape user. It varies a bit depending on how often you vape and nicotine levels etc....but let's say a week.

So 1 week supply for £1!
A pack of 20 cigarettes is about £14. So 5 packs would be £70 for the week for a regular smoker.

Yet still getting the same nicotine hit and the same action/habit.

The beauty of the SUP model is how easily they can snap up a vape start up that has won market share, integrate it into the vertical platform, find loads of efficiencies and strip out costs, but still serve those customers.

Liberty flights / Cuts ice / Flavour core are all examples of that.

Lots of acquisitive companies destroy shareholder value - they overpay, they buy at the top of the market, they integrate badly, they pay millions in earn-outs.

SUP integrates consumer brands quickly. They know the right price to pay based on the market share they've built up and the quality of the brand and product.

They are a consolidator in a huge margin, growth business.

I see their competitors 2 main camps.

1. Speculative start-ups. Creating a vape business is pretty easy and cheap - but as soon as you've built up a few hundred thousand customers you'd be happy to sell the business on to somebody like SUP.

2. Old tobacco. Massive, slow, huge costs. Desperately looking to diversify into vaping and heat-not-burn products. But decades of baggage and all their vape businesses are loss making.

I think i've said it before but SUP is a bit of a consumer champion. Stripping out costs and passing them on to consumers.

I think their pricing strategy is too aggressive but it's like that for a reason - it limits the power of their competitors. e.g. those tiny startup vape co's. They never get big enough or powerful enough to cause much of a problem.

all imho of course.

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