5 year post mortem, page-6

In my own opinion I can only comment as follows:

- predicting specific outcomes is fraught with danger
- as mentioned previously CCX brands historically generated 17% ebitda and therefore should be able to do so again over time, particularly as management has guided it is planning to move gross margins to 62% in the near term. The classic CCX dress range is higher margin product.
- the business is now debt free as you will have read
- the business is typically capital light historically
- Avenue had locked itself into low margin product sales that could not cover the cost of fixed USA warehousing and logistical obligations. Ccx US warehousing arrangements are now variable cost based.
- one would expect ordinary stock overhang to exist by way of Cannacord’s underwritten retail offer depressing the price in the near term (Greenblatt)
- the market lacks trust in the Board and CEO based on their prior poor investment decision making, calamities it will take time to recover from. The Board lacks proper direct executive retail and brand building expertise even though relationships exist with the Lovisa and Cotton On crowds plus indirectly through Blundy now
- ebitda at current levels, all else equal, allowing for published additional savings including planned margin accretion is expected to be some $5-7m assuming no further cost take out which one would expect would not be acceptable if not extracted
- I am unsure about Aus retail individual store loss rentals, but expect them to be manageable
- I doubt the likes of Sphere tipped in millions of dollars without serious consideration of the investment thesis. One can call to ask.

Now the main positive - Management is charged with the singular focus of growing the one CCX brand globally; there is a huge runway available to it, immediately in the US and then further into other international markets as it expands globally.

In my view it would be better time spent analysing the CCX Aus and US retail sites, Instagram and Facebook social feeds to be across developments on those fronts than to be pontificating based on random stock commentary and daily market swings in prices.