I've had a read through the presentation as well as listened...

I've had a read through the presentation as well as listened into the management Q and A yesterday and wanted to note down some further thoughts.

I think this is broadly what I was expecting allthough the cautious optimist in me was hoping for a surprise on the upside. When I initially looked at the headline figures before trading started I expected the market reaction to be approximately flat as I also thought this was pretty much priced in.

Thoughts on the result: There's been some better than expected results from Myer, Lovisa and Universal in recent months that had me hoping things might also improve a little quicker at DSK. Unfortunately homewares seems to be mentioned in every article I read recently as being a sub sector that hasn't bounced back as much as clothing and electronics etc.

Online trading has been pretty shocking in the last year down 14.3% percent compared to instore sales of 9.3% and I think this is an area where we can point to management letting us down rather than the softening economy as the growing importance of e commerce has been clear for quite a few years and it's strange it seemed to catch them out in terms of not having the right infrastructure set up.

There was a lot of emphasis on foot traffic outside the stores being significantly down but the conversion rate holding relatively steady when they could actually get someone to come inside a shop. I think this reflects really well on the instore staff who always seem friendly and well trained when I go inside with my Fiancé.

Considering the new stores and previous discussions about positive reactions in new towns that Dusk opens up (I believe Wollongong had one of the best opening days in the history of Dusk and was said to have signed up a load of loyalty members) a real concern was the drop off in overall program numbers and rapidly having to cut back the annual cost of membership from $15 to $10 which to me suggests the members aren't as "sticky" as we thought considering $5 was enough to make a chunk of them jump ship. The more I thought about this though we could also take a positive out of it too in that management recognised they'd make a mistake quickly and changed it rather than stubbornly holding on.

The gross margin being maintained at 65% was a real positive for me as well as cash still sitting at 31.1 million with us at the seasonal peak. The NTA here is pretty amazing at 65 cents (this figure was given in the report yesterday and includes inventory etc.) meaning we're getting close to being worth more "dead than alive" at a 90 cent SP.

I took a look at how much the cash dropped of from H1 to H2 last year and we previously went from 33 million to 16 million at the end of FY23 so let's hope that we can end up with around 14 million presuming sales stay steady around an 8% decline and taking into account 500k less going out the door in dividends (total pay out will be 1.5 million rather than 2 million).

Thoughts on the management Q and A: I tend to agree with one of the previous posters that the vibe from management seems to be that they've pulled all of the obvious levers in terms of cost control and now we're a bit hostage to the economic cycle in terms of the business turning around financially

I'm glad that the new website will launch shortly and that an area of interest for the new CEO seems to be targeting a younger demographic as I reckon that teenage girls love candles and trinkets just as much as 30 plus women do. Neither of these initiatives are going to get us out of jail but they seem logical and well thought out.

I've often had the thought that it seems Dusk don't quite have the hang of being a public company. I understand the whole mindset of worrying about the customers and business first and letting the share price take care of itself (or get smashed in our case!) but it would be nice for them to acknowledge the suffering of shareholders from the perspective of both the slashed dividends and capital losses and take a bit of an "all in this together" approach. There was a poor bloke on the call who said he was a long term shareholder and that it was a "terrible" result for him and I felt they brushed him off a little bit.

It also annoys me that they won't properly explain the lack of a share buy back or other capital management and just keep trotting out the one liner that they'd "need to borrow money" to do it. I'm actually fine with it not happening and the cash being conserved for the moment but do feel they need to go into detail and explain their stance on this properly to shareholders rather than just brushing them off.

Thai Investor: I just thought I would mention that the Thai investors were kind enough to give me some of their time via zoom in early January and at that point (contrary to popular belief) they hadn't sold out and were still sitting on a substantial chunk of the company (they did mention they knew Dusk well and had traded the position since IPO). Keeping in mind this is my account on our discussion and certainly not word for word but they were overall positive on the company and it's niche market position but critical of the board and the capital management in particular. There was disappointment at the lack of ambition around overseas expansion (this seems to be a common view amongst fund managers) and also the lack of interest in a buy back which these guys (who had done amazingly thorough research far in advance of myself) were adamant was financially justifiable.

Overall I will keep holding Dusk as I knew what I was signing up for in topping up a few months ago and overall I've managed the risk by making it a small part of my portfolio. I think it's really a question of whether they can make it out the other side of the cost of living crisis and prove that they can viably grow in a more conventional non lockdown environment before being taken over at a bargain basement price.