Audio is here, and on podcasts.
Apologies for being late this week (Monday, instead of weekend) - it felt like a chore, and I needed a rest over the weekend.
Monday 28 Nov
Superdry (LON:SDRY) - aired my worries here over bank refinancing. S.Times article suggested existing lenders don’t want to renew, so they are looking at alternative lenders. Potentially an existential crisis, as SDRY relies on these facilities for peak seasonal stock financing. Close to striking a deal apparently. Really worrying - fallout from collapse of Joules, lenders might not want sector exposure. Same conversations probably at trade credit insurers, who often have more exposure than the main banks. I’m worried. Could turn out to be fine, might seal a deal, but cutting it fine, for end Jan 2023 expiry of bank facilities. In normal circumstances, SDRY would have no trouble renewing, but banks worried about macro picture. SDRY looks too risky at the moment. Also revelations in SDRY’s Annual Reports over several years, over serious accounting failures, sloppy controls. This could be why the banks don’t want to renew facilities. So elevated risk, and every now and then you get hit with a nasty loss. If SDRY does lose bank facilities, it might have to do a desperate, last minute discounted placing, or even end up in administration (as happened with Joules). Trade creditors, and equity holders get wiped out. It’s possible SDRY could be a wipeout for equity. Maybe 20-30% risk, at a guess? I’ll avoid SDRY until it’s refinanced.
ASOS (LON:ASC) - also a question mark over survival? Starting to look wobbly, lost another CFO. I’m wondering could it end up going bust? Also has accounting problems - used accounting sleight of hand to avoid making a big stock provision, using a technicality in last accounts. Looking increasingly precarious. These struggling mid-market brands are best avoided. Retailers doing well are value-focused.
Nick Searle’s podcast series, A Different Perspective (excellent) - a recent guest said his no.1 tip to investors is to read the Annual Report - full of “inside information” - key disclosures that investors need to know, and are not in the preliminary results put out on RNS. But hardly anyone actually reads annual reports! So my key theme this week is that we all need to download & read the annual reports. You can skim through a lot…
