Many thanks for sharing your insights.

First 13 Last

Share
Profile

Follow
MTV

1,756 Posts.

596

13/11/23

23:36

Post #: 70879032
Share

Originally posted by SethKlarman: ↑

Hmm. I know Dick Smith well and know people who worked in the Finance team.

Let me provide a history ...

1. Dick Smith was built on rebates. DSK is not.

2. Gross margin was only 27% not 63% like Dusk had zero flexibility and was in electronics with sub 15% Gross Margins. Go ask Katie Page what she thought about Dick Smith pricing.

3. Dusk is vertically integrated Dick Smith was not

4. Payables went to 110 days for Dick Smith. Dusk is sub 40.

5. Dick Smith managed the business on a rate to sales basis (i.e. %) not on $. Dusk manages on gross margin $. You must run a retail business on $ to know operational leverage and your buy rate to protect the downside. John Joyce is ex ALDI if you study the company history you understand.

6. Dick Smith did fair value adjustments on the positive side to inventory in 2012 that were write-backs. This is crazy and a que before it blew up. Dusk does not.

7. Dusk operates with near negative working capital and a 80% ROFE. Dick Smith did not have this as its ROFE was 4% which was below its debt cost.

8. Dick Smith was rolling out space fast (like Eddy Grove learning centres! Remember him!). Dusk is going slow at 8% p.a. the ALDI zone approach. Land and expand.

9. Debt – Dick Smith gearing was out of control. Dick Smith had $130m Equity but $300m of Debt. Dusk is doing 50% ROE and has net cash of $32m (not $16m) because the cash flow and P&L do not match for Dusk because they provision tax ahead of time

10. Lease Liabilities – Dick Smith pushed out lease liabilities terms to improve cashflow with milestone payments at the end of term. DUSK does not do this.

11. Required Capital – Store fit-outs for Dick Smith were capital intensive with a 3-year payback. The store payback for Dusk is 9 months

12.Inventory Turn – Dick Smith Inventory turn was 2-4 times year. DUSK inventory turn is 8-14x.

13. Dick Smith was flying Executives to Las Vagas with Panasonic etc. for parties. Dusk operates with less than 50 people in H/Q. It is a very lean organization. The people inside Dusk are long tenure.

14. Dick Smith was run by Bankers not retailers. Plus the CEO was ex-Lion and had not run operations or commercial, he was out of his depth.

15. Anchorage – has form with liquidations and boosting of profits and changes in inventory with Burger King, Dunlop, Grosby and Julius Marlows. Anything from Anchorage is avoid.

could go on .....

and yes retail has been in my DNA a long time .... i ran retailers

Expand

Many thanks for sharing your insights.

DSK Price at posting: 94.5¢ Sentiment: Buy Disclosure: Held
1 Upvote

0 Great analysis

Reply

Top Stories

Super PITch gold sponsor RSM Australia: Can Diggers & Dealers 2024 be key to reinvigorating IPO activity?

NWH

NRW Holdings voted Wealth Within's hot stock tip

AIZ

Air New Zealand ditches 2030 emissions targets – right as ASIC's Scope 3 reporting changes kick in for FY25

MTL

Mantle Minerals' Nick Poll talks to HotCopper on finding gold grades up to 3.57g/t at Mt Berghaus

KSN

Mineral Hill transition kicks off for Kingston, gold and silver ramp up to follow

There are more pages in this discussion • 11 more messages in this thread...

First 13 Last

Add DSK (ASX) to my watchlist

(20min delay)
Last 84.0¢		Change 0.005(0.60%)		Mkt cap ! $52.30M

Open	High	Low	Value	Volume
83.0¢	86.0¢	80.5¢	$82.73K	99.73K

Buyers (Bids)

No.	Vol.	Price($)
3	44025	83.0¢

Sellers (Offers)

Price($)	Vol.	No.
85.0¢	9901	1

View Market Depth

No.	Vol.	Price($)
3	44025	0.830
1	500	0.820
1	3600	0.810
1	28571	0.805
3	25250	0.800

Price($)	Vol.	No.
0.850	9901	1
0.860	10293	2
0.865	1000	1
0.870	1807	1
0.885	16418	2

Last trade - 16.10pm 30/07/2024 (20 minute delay)

DSK (ASX) Chart

Many thanks for sharing your insights.

Super PITch gold sponsor RSM Australia: Can Diggers & Dealers 2024 be key to reinvigorating IPO activity?

NRW Holdings voted Wealth Within's hot stock tip

Air New Zealand ditches 2030 emissions targets – right as ASIC's Scope 3 reporting changes kick in for FY25

Mantle Minerals' Nick Poll talks to HotCopper on finding gold grades up to 3.57g/t at Mt Berghaus

Mineral Hill transition kicks off for Kingston, gold and silver ramp up to follow

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News

Many thanks for sharing your insights.

Top Stories

Super PITch gold sponsor RSM Australia: Can Diggers & Dealers 2024 be key to reinvigorating IPO activity?

NRW Holdings voted Wealth Within's hot stock tip

Air New Zealand ditches 2030 emissions targets – right as ASIC's Scope 3 reporting changes kick in for FY25

Mantle Minerals' Nick Poll talks to HotCopper on finding gold grades up to 3.57g/t at Mt Berghaus

Mineral Hill transition kicks off for Kingston, gold and silver ramp up to follow

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News