shadowfall.com/researchservic…
ShadowFall Fund is short BooHoo Plc (£BOO).
Since 2014, we believe that BOO has provided a misleading impression of its cumulative Free Cash Flow (FCF) by 67%. Most recently, in FY20, we believe BOO’s FCF was misrepresented by 65%. 1/5
Two weeks ago, BOO made a £198m cash call. We see a risk that BOO doesn’t use this for M&A, but instead combines it with its considerable £241m net cash, just to be paid to BOO’s Chairman’s son, through material dividends and a potential PrettyLittleThing (PLT) NCI buy-out. 2/5
We question if PLT’s profit is boosted by another BOO entity “wearing” some of its costs. We calculate that this effective “profit boost” could result in an additional £193m paid to PLT’s NCI. We suppose, if not used on M&A, BOO’s recent £198m cash call could support this. 3/5
Meanwhile, BOO had better look out. The competition is heating up. BOO’s Chairman’s brother is the major shareholder in ISawItFirst. ISIF seems to have a virtually identical product offering to a same demographic. Key BOO & PLT personnel have even joined ISIF. 4/5
In 2017, PLT led ISIF by a ratio of 26:1 on Google searches in the UK. That lead has rapidly narrowed. If BOO buys out the Chairman’s son’s equity in PLT, then maybe ISIF is next in its cross hairs? After all, it did say it wanted to do more M&A. 5/5
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