Spifflicated at Richmond

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Spifflicated at Richmond

I got spifflicated at Richmond. I only note it by way of completeness. However, we can all make mistakes as did for instance HH Munro, who wrote as Saki (if you have not read his stuff you have missed out) who found himself in 1916 instructing some soldier to “put that bloody cigarette out”. For his pains he was immediately drilled in the brain by a German sniper. He was 43.


I have been sent a long set of notes covering BooHoo (LON:BOO) which at 120p is capitalised at around £1.4bn. This company is furiously giving off red flags and looks wildly overvalued – it should perhaps be around half its current price. It may be engaged, inter alia, in channel stuffing. This dramatic but unbeautiful phrase covers the practice of selling at longer and longer settlement dates simply to put a sale in the tin. I do not need to brief readers of the origin and consequence of this practice.

Some will compare BOO to ASOS (LON:ASC). But the same laws of gravity apply.


Plus500 (LON:PLUS) collapsed yesterday as Cysec, the Cyprus regulator, a body that I had dismissed as soporifically inclined, seemed to have woken up and put PLUS in the crosshairs. PLUS has cost me dough historically. But I suspect I’ll get it back.


Finally, I see that PwC yesterday disclosed that it is estimated that the pension deficit in aggregate of UK occupational pension schemes dropped by around £50bn in November simply through the rise in yield on gilts. This underlines the point already made here that these deficiencies are in a very real sense phoney. This continues to bode well for Molins (LON:MLIN).

Comments (5)

  • andrew says:

    Please forgive my ignorance, but I thought BOO bought from contract manufacturers and sold to the public – and as such there is no channel to stuff?

    • Andrew,

      Channel stuffing is an inelegant term which those of us who ponder its meaning must inevitably touch upon aspects of sexual intercourse when, as far as I am aware, nothing of the sort has been going on at BOO. At least not during office hours to the detriment of the company.

      The channel stuffing my informant highlights is the lengthening of DSOs (debtor sales outstanding). He advises me that this figure has risen from 6 days in 1H14 to 16 days in 1H17.

      However, I thank you for highlighting that BOO buys in supplies from subcontractors. My informant reckons that the margins achieved are not credible. If so, one is obliged to wonder whether BOO’s management are somehow subsidising these supplies. Seemingly, there are quite a number of operations based at BOO’s HQ.


      • Andrew says:

        Evil, apropo nothing, what are your current thoughts on Churchill? Went to AGM on Thursday and the directors are ‘quietly confident’

  • Paul Scott says:

    I imagine the reason why debtor days is increasing at BOO is because they have diversified into wholesaling. Whereas previously the business was almost entirely website sales to the public. So you can now buy BooHoo clothes from other retailers, including Next & Asos, who buy the stock from BOO on a wholesale basis, and probably pay for it after c.45-60 days.

    Therefore as this wholesaling activity has grown within BOO in the last couple of years, from almost nothing, it stands to reason that debtor days would increase.

    I think shorting BOO is dangerous. Yes the shares are expensively rated, but as we saw with Asos over many years, that is not an impediment to them getting increasingly more expensive! Also BOO is in a positive cycle of beating expectations, as all areas of the business are doing very well.

    Another reason BOO is expensive is due to international growth. In particular, the company is making good inroads into the USA. Imagine how much the business would be worth if they conquer that market. Management are talking about getting to a £5bn valuation in due course, and given their legendary shrewdness, I wouldn’t put it past them!

    Regards, Paul (currently no position in BOO)

  • Mark says:


    Still not sure how DSOs can increase – all items sold on their website have to be paid for at time of ordering by credit card or paypal. Maybe it’s the credit card companies or paypal who have changed the time they take to pay over the money to Bohoo?? If so, and assuming that you accept that the major credit card companies and paypal are not major credit risks, then how much of a problem is this? According to the company’s last set of accounts they have plenty of money in the bank and are trading profitably so it’s not as if they are in desperate need of faster cashflow.


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