What's going on?, page-101

This is just my anecdotal view from having done 3-6 month shopping for a sofa. Nick scali has a strong moat for this price range and for sofa. Call it luxury or high end but they definitely are not selling you ikea grade sofa or lounge. They have largest range of recliners and their stores are very accessible location wise. You don’t have to travel far andl o if you want lounge and happy to drop 3-5k they will be on your hit list. Their competition is more your King’s, freedom for some range, and westelm. Ppl who have those budget would be on good income or wealthy migrants, which we will be getting plenty more of in next 2-3 years. They also don’t sell alot of accssories or home decor, like freedom, sticking to what they are good at. They also started doing more online sales from covid, another high margin channel of revenue. However, you will still be more inclined in most case to see the item in person, where they can upsell you more addons. This is different to retailers like baby bunting where you can almost buy everything they have from Amazon or online without needing to touch or try, even prams, most of the time you buy the one your friends bought. BBN doesn’t really have a moat, and having a physical store is more of a disadvantage in terms of higher cap ex and lease. Listening to the conference call. The mode is they spend the money up front, setting up the DC and all the logistics, then all the new stores after that doesn’t require alot ore fixed cost to get it up and running. Benefit of economy of scale. More store they open the lower the fix expenses in proportion to store network. Stores are also profitable after 3 month in most case. Pure cashflow generating machine. Freight cost is back to pre covid lows, I notice this too with my family import business too. They have more cash most case than they know what to do with. The plush acquisition was first time they took out a corporate loan in many years. FCF will easily allow them to pay it off and CEO has already said they want to get it down asap. Overall it’s very solid founder led business with good yield and growing 6 stores a year.