How low can it go?, page-6

This is a very simple story, your (and my) bet is totally on the direction of like store sales in FY25.

From a pro-forma EBITDA loss (after rent - the $9.3m they quote is pre-rent and BS) of ~$20m in FY24, the $11.5m reduction in the cost base and a their target GP of 62% vs 56% in FY24 (impacted by clearance activity) get us to breakeven. There will not be much more to squeeze from these two key variables.

Cycling an in-store LFL sales decline of 20% (almost unheard of) and on-line declines of 35%, every 1% increase in like store sales = ~$0.8m all else equal by my calculations. If we can get 8% LFL growth we get ~$6.0m EBITDA, so back to a sustainable business, 15% and we have a cheap business ($12m or ~4.0x EBITDA), anything negative and we are out of business.

I like the risk/return, particularly with BB in the background. He may not pay-up but he may have no choice but to take it on.

DYOR