@armsThanks for the link. Seems we are listening simultaneously. Unsurprisingly it is the Peter Nathan Q&A show. But when he did get called on I thought David was pretty good on the details given how new he is to the role.
Clearly there has been an inventory issue and it has hampered daigou pricing to the extent that it slowed daigou recovery (although it seems that recovery is truly underway). The explanation for inventory issue is half-plausible (i.e. they cannot see some of parts of the daigou chain where inventory ends up) but you could argue that they've been too slow to get the traceability system in place. That said, they reckon the system will be up and running by end of this month. Going forward it appears they will constrain English label supply to help daigou pricing.
I guess the silver lining of daigou and CBEC being so interlinked is that one could expect a recovery in daigou to gradually lift CBEC.
Couple of other interesting things in the call
- Marketing spend in second half will be higher than the first half and higher than 2H20 so may help underpin their expectations of sales improvement.
- They seemed particularly bullish on MBS China label - no issues with the higher pricing, expect FX impact to margins to be temporary, strong growth to continue into 2H21. They even suggested at one point that 2H21 may be stronger than 1H21 though I'm not sure if this was a misinterpretation of the question e.g. grwoth vs. 1H21 or growth vs. 2H20. Either way they said it would definitely be above 40% over pcp.
- They are still not willing to participate in social e-commerce channels in which they have less control over preminum pricing etc. (e.g. Pinduoduo) which I do agree with if the underlying issues are more to do with overstock rather than issues with brand itself.
- David B didn't commit to targeting 30% margins in the medium term but flagged he was reviewing their growth strategies & would update later.
I'd be interested to know if you heard the same things or if I misinterpreted any of that. I should also add that the call is well worth listening to for anyone wanting to make up their own mind about the company. The questioning was on the money and much needed.
(20min delay)