Ann: ADH Trading Update and Stores Re-opening, page-113

@daicosisgod

maybe- always good to think about risks. I think it’s a significantly more resilient business than 2 years ago- they have a number of boutique designers, cater to different demographics, have core + expansion products, good online and retail channels. I have been watching this range pretty closely and they seem to have a lot of products that cater to very different demographics - eg:
1) lots of pet type products
2) new floral range
3) bright colour range
4) random stuff that must be very high margin(I mean I literally saw what looked like rocks selling out at $20 a pop)
5) Australian range
6) Mark Tuckey range
7) Adventureland kids range

it seems pretty improbable to me when you have such diversified categories with such different design elements that you will get everything wrong. They also have Mocka at low price point now and geographic resilience (all states + New Zealand running profitably).

In short - I really cannot see that type of problem occurring ever again.

2) yes stuff can go wrong but they have done this in the lowest risk possible way. You cannot make better decisions than this in my opinion. It is the quality of the decision making that adds value.

3) Mocka
the earn outs, from what I saw, do not include FY20 results and Mocka may have significantly added to the bottom line this particular year. It really doesn’t matter in the sense that I’m sure the earn outs are reasonable based on the already disclosed information, and the optionality of having a lower price point brand actually serves a very important purpose.

Wracking my brain to see if I’ve done some sort of analytical error but still can’t see any. One of my larger positions now so don’t want to be wrong!