I suspect all that inventory they 'bought' in the lead in to Jun-15 was stuff they couldn't move (i.e. private label product customers don't want to buy) or leftovers from Christmas 2014 which should have been liquidated much earlier. I suspect they had to take on more debt / get cash wherever they could so they had stock people wanted to buy. The revelation that they borrowed $30m from Macquarie Bank to buy Apple stock is concerning.
I think the below table is interesting, provides a breakdown of 12 monthly reporting periods for DSH under Anchorage ownership and following listing. The financials have been broken down to average store level data to (at best attempt) remove the distortions of growth in the store network from the financials (however we all know that newly opened store have different financial profiles to established stores)
Column 1
Column 2
Column 3
Column 4
Column 5
0
Store metrics ($'000)
2H13-1H14
1H14-2H14
2H14-1H15
1H15-2H15
1
Reporting entity[/B]
DSSH
DSSH/DSH
DSH
DSH
2
Stores (period end)
369
377
385
393
3
Sales per store
3,288
3,256
3,336
3,358
4
Gross margin per store
807
817
828
832
5
Overheads per store
799
702
636
650
6
Depreciation per store
32
34
37
38
7
Net working capital per store
8
Debtors
75
124
207
136
9
Inventory
647
673
872
746
10
Creditors
-715
-657
-878
-581
11
7
140
201
300
Whilst the analysis is crude I think it demonstrates that:
• Little improvement occurred with store profitability
• Overheads reduced but was probably thanks to the benefits of scale (though management did seek overhead reductions)
• New PPE acquisitions had little impact on dep'n charges
• Question needs to be asked about whether or not Anchorage left sufficient cash after IPO to fund working capital needs
DSH Price at posting:
35.5¢ Sentiment: None Disclosure: Not Held