I think the one thing that this post has not yet confidently discussed is... 'is this going into voluntary administration'.
Yes... it sounds negative, but I think it is worth at this point having the discussion.
In closing 300 stores - why now? cash flow seems to be not weak and holding steady
- why havent these stores been shut as they became underperforming? Wouldnt that have been the best thing for shareholders? Possibly because the lease liabilities would have had to be realised at that point (as opposed to HVN which shovels these into an off-b/s holding company if the AFR is to be believed).
- what will the impact on morale be for the stores which are closing?
- will there be inventory 'horrors' as the stores are closed?
Closing 40% of their stores is not a simple task and will be very expensive. I also doubt it will be cash flow positive. Undertaking this activity at this precise juncture when they had over 8 years to do it could be interesting... especially if a capital raising is required.
I did see this as a turnaround situation but given managements lack of disclosures I cant help but feel that there is something larger and much uglier at hand. I would be watching insiders sales very closely.
I am also interested to see whether any suppliers start to change terms.
Please - constructive posts would be appreciated on this topic to help me clear my thinking...
SFH Price at posting:
11.5¢ Sentiment: Hold Disclosure: Held
