Latest / What the Flux / Cettire's share price plummets 50% | Myer's major expansion | Prezzee gifted a $79m loss

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Cettire's share price plummets 50% | Myer's major expansion | Prezzee gifted a $79m loss · What the Flux

• 0:05
  Speaker 1: This is what the flux.
• 0:06
  Speaker 2: I'm Brandon and I'm Justin and it's Wednesday, the twenty
• 0:09
  Speaker 2: sixth of June.
• 0:09
  Speaker 3: Toll the boy.
• 0:10
  Speaker 1: You know something's up in the economy when Colonel Sanders
• 0:12
  Speaker 1: is complaining. Get this, Customers have been cutting back on
• 0:15
  Speaker 1: KFC spending in May and June this year, and the
• 0:18
  Speaker 1: Colonel reckons it's all about costs of living.
• 0:20
  Speaker 3: Would have thought KC would have been up when cost
• 0:22
  Speaker 3: of living's up?
• 0:22
  Speaker 2: Flux, a'am, this is the time of the year when
• 0:24
  Speaker 2: everyone starts scrambling to find their seeds making friends with
• 0:27
  Speaker 2: their accountants.
• 0:28
  Speaker 3: But we've got the best investment you can possibly make
• 0:30
  Speaker 3: in yourself.
• 0:31
  Speaker 2: We're giving away an annual subscription of flux Proofer fifty
• 0:34
  Speaker 2: percent off for an end of financial year sale.
• 0:36
  Speaker 3: Wow. So if you want to invest in yourself.
• 0:38
  Speaker 2: And build your financial future, make sure to click the
• 0:40
  Speaker 2: fifty percent off link in the show notes.
• 0:42
  Speaker 1: Three bargain basement worthy stories today, Dozzy boy, let's do
• 0:46
  Speaker 1: it for our first satire. The luxury fashion retailers share
• 0:50
  Speaker 1: price plummeted by fifty percent earlier this week after announcing
• 0:53
  Speaker 1: a twenty percent drop in its earnings forecast.
• 0:56
  Speaker 2: Not like Setire didn't have enough problems already, be Man,
• 0:58
  Speaker 2: So what is going on here?
• 1:00
  Speaker 3: Well?
• 1:00
  Speaker 1: Setire is obviously the online luxury fashion retailer that started
• 1:03
  Speaker 1: in twenty seventeen and listed on the ASX in twenty twenty,
• 1:07
  Speaker 1: and since then it's.
• 1:08
  Speaker 2: Been known for its juicy discounts on a high end
• 1:10
  Speaker 2: luxury brand.
• 1:11
  Speaker 1: Thinks dulch In, Gabana, Saint Laurent, Valentino, Versaci.
• 1:15
  Speaker 2: But be Man, investors and customers have always been a
• 1:18
  Speaker 2: little slush, a lot fishy about the Satire business and
• 1:20
  Speaker 2: does it way?
• 1:21
  Speaker 1: The plot only has thickened because Setire has broken news
• 1:24
  Speaker 1: to investors that it's earnings for the twenty four financial
• 1:27
  Speaker 1: year are going to be around twenty percent below expectation, and.
• 1:30
  Speaker 2: This sent set our share price down by a massive
• 1:32
  Speaker 2: fifty percent. It whips four hundred million dollars off its
• 1:35
  Speaker 2: market cap in.
• 1:36
  Speaker 1: Just one day, and Setire share price has dropped seventy
• 1:39
  Speaker 1: five percent in just the last three month.
• 1:41
  Speaker 2: I got to say, b Man, it is not often
• 1:43
  Speaker 2: you see in earnings down grade a week this much
• 1:45
  Speaker 2: havoc on a company share price.
• 1:47
  Speaker 3: So what is the key learning here?
• 1:48
  Speaker 1: When investors are skeptical about a company's future. A small
• 1:51
  Speaker 1: bump can have far reaching consequences see b Man. A
• 1:55
  Speaker 1: twenty percent earnings down grade is pretty bad news, but
• 1:58
  Speaker 1: it's not exactly lose fifty percent of your value in
• 2:00
  Speaker 1: a day level bad news.
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  Speaker 2: Especially when fashion retailers across the country struggling with sales.
• 2:06
  Speaker 3: So Setai is not the only one in this boat.
• 2:08
  Speaker 3: Jazz boy.
• 2:08
  Speaker 1: Seti has been the subject of a fair whack of
• 2:11
  Speaker 1: controversy recently.
• 2:12
  Speaker 2: We're talking controversies around its treatment of import taxes as.
• 2:15
  Speaker 1: Well as its tax registration status in the US, and.
• 2:18
  Speaker 2: Don't forget its poor complaints handling and be man. This
• 2:21
  Speaker 2: is part of the reason why more than six percent
• 2:23
  Speaker 2: of Setaire shares have been shorter.
• 2:25
  Speaker 1: Investors just don't trust these fashion forward guys and.
• 2:28
  Speaker 2: Gow So for investors that are already on the fence
• 2:30
  Speaker 2: about Setire, this poor earnings update was enough to get
• 2:33
  Speaker 2: them to put their chips down.
• 2:35
  Speaker 1: For our second story, Maya has announced new plans to
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  Speaker 1: acquire other retail brands like Just Jeans and JJ's from
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  Speaker 1: premier investments, and investors are like what they hear.
• 2:45
  Speaker 3: That's a little bit incestuous. This one, isn't it? So
• 2:47
  Speaker 3: tell me everything.
• 2:48
  Speaker 1: Well, we all know Maya, the Australian department store that's
• 2:50
  Speaker 1: been selling men's and women's clothing since nineteen hundred.
• 2:54
  Speaker 3: Yes, we're talking pre Australia's Federation.
• 2:57
  Speaker 1: But boy Well Meyer and David Jones were both pretty
• 2:59
  Speaker 1: in vincible back in the day. The last ten to
• 3:01
  Speaker 1: fifteen years haven't been as kind.
• 3:03
  Speaker 3: Yeah.
• 3:04
  Speaker 2: Maya listed on the ASEX at a valuation of two
• 3:06
  Speaker 2: point two billion bakarunis in two thousand and nine.
• 3:09
  Speaker 1: And had you invested at the time of the listing,
• 3:11
  Speaker 1: you would have lost more than eighty four percent of
• 3:13
  Speaker 1: your precious money.
• 3:14
  Speaker 2: But b Man, Maya is now working hard to claw
• 3:17
  Speaker 2: back its relevance after announcing it has plans to acquire
• 3:20
  Speaker 2: Premier Investments apparel brand's division.
• 3:22
  Speaker 1: That's brands like Just Jean's, JJ's, Portman's, your very favorite
• 3:26
  Speaker 1: dotty brands and be Man.
• 3:28
  Speaker 3: All these brands aren't so sexy.
• 3:30
  Speaker 2: They're still generating eight hundred and forty five million bucks
• 3:32
  Speaker 2: in revenue last financial year.
• 3:34
  Speaker 1: But rather than giving cash and exchange for these brands,
• 3:37
  Speaker 1: Maya would issue new Maya shares to Premier Investments shareholders.
• 3:40
  Speaker 3: And be Man.
• 3:41
  Speaker 2: The interesting part of this is that Premier Investments already
• 3:44
  Speaker 2: owns around thirty one percent of Maya and jes Away.
• 3:47
  Speaker 2: Both Maya and Premier Investment share prices boomed off the
• 3:50
  Speaker 2: back of this news because despite Meyer's growing sales, it's
• 3:53
  Speaker 2: EBIT margin is awfully there.
• 3:55
  Speaker 1: Interesting interesting, interesting, So what is the key learning here?
• 3:58
  Speaker 2: You can sell as many products as you like, but
• 4:00
  Speaker 2: if your margins are tight, your business is on unstable.
• 4:02
  Speaker 1: Footage see jusi boy. Meyer generated three point four billion
• 4:06
  Speaker 1: dollars in sales in its most recent financial year, but it's.
• 4:09
  Speaker 3: EBIT margin was a pretty thin six percent.
• 4:11
  Speaker 2: That means, for every one hundred dollars that Maya generated
• 4:13
  Speaker 2: in sales, it only made six dollars in earnings before
• 4:16
  Speaker 2: interest and tax.
• 4:17
  Speaker 1: But jazi boy. For companies that have their own labels
• 4:20
  Speaker 1: and source their own products, the EBIT margin is generally
• 4:22
  Speaker 1: a lot higher.
• 4:23
  Speaker 2: In fact, mcquarie reckoned that the apparel brands like JJ's
• 4:27
  Speaker 2: and Portman's they have an EBIT margin of over fifteen percent,
• 4:30
  Speaker 2: and this is why Maya's investors are keen to make
• 4:32
  Speaker 2: this deal a reality. For our third and final story, Prezzi,
• 4:36
  Speaker 2: the Australian gift card company, has reported a seventy nine
• 4:40
  Speaker 2: million dollar loss over the last eighteen months after it
• 4:42
  Speaker 2: lost a major partnership with Amazon.
• 4:44
  Speaker 1: That is a very big loss for a private company.
• 4:46
  Speaker 1: So Jazi boy, tell me everything you know about it.
• 4:49
  Speaker 3: Well.
• 4:49
  Speaker 2: Prezzi was launched back in twenty fourteen with the idea
• 4:51
  Speaker 2: of selling digital gift card.
• 4:53
  Speaker 1: As opposed to going to your local JB high fire
• 4:55
  Speaker 1: and getting dem physical cards.
• 4:57
  Speaker 2: And by twenty twenty Prezzie launched in the UK, the
• 4:59
  Speaker 2: US and his over one million eight gift cards sold.
• 5:02
  Speaker 1: But since then things have taken a bit of a turn.
• 5:04
  Speaker 2: They lost their CEO, their CFO, their CEO, their CMO,
• 5:07
  Speaker 2: the head of HR as well as founders.
• 5:09
  Speaker 3: Which does boyd.
• 5:10
  Speaker 1: Despite all this, for the eighteen month period ending December
• 5:13
  Speaker 1: twenty twenty three, Prezzie still sold a heck of a
• 5:15
  Speaker 1: lot of praises.
• 5:17
  Speaker 2: We're talking three point four billion dollars in card sales.
• 5:20
  Speaker 1: But on that amount of sales they copped a seventy
• 5:22
  Speaker 1: nine million dollar loss.
• 5:23
  Speaker 3: Here's the thing, They'll be man.
• 5:24
  Speaker 2: Prezzi claims that their results are actually much better than
• 5:27
  Speaker 2: your accounting lead brain might believe. How so well, they
• 5:30
  Speaker 2: blamed Australia's accounting standards for their unflattering financial results.
• 5:34
  Speaker 1: Don't you hate those Australian accounting standards just a boy?
• 5:37
  Speaker 2: Go on, Well, they don't allow Praisy to book breakage
• 5:39
  Speaker 2: up front. So what is the key learning here?
• 5:41
  Speaker 1: Breakage is the dollar value of unused card balances, and
• 5:45
  Speaker 1: this is where gift card companies make a lot of
• 5:47
  Speaker 1: their money.
• 5:47
  Speaker 2: In fact, they made eighteen percent of Australians have lost
• 5:50
  Speaker 2: out after a gift card that they held expired before
• 5:53
  Speaker 2: they used it.
• 5:53
  Speaker 1: That's according to Finder. So Josey boy, when gift card
• 5:56
  Speaker 1: companies and retailers issue gift cards, they kind of rely
• 5:59
  Speaker 1: slash hope. Yeah, some customers will never redeem because that
• 6:02
  Speaker 1: is free Muller for them.
• 6:04
  Speaker 3: But ominous.
• 6:05
  Speaker 1: Under Australian accounting standards, the value of the gift card
• 6:08
  Speaker 1: is treated as a liability until it is used, so
• 6:11
  Speaker 1: even if a customer doesn't use it for years, it's
• 6:13
  Speaker 1: not considered a revenue just yet.
• 6:15
  Speaker 2: So be Man, with so much turmoil within this company.
• 6:18
  Speaker 2: Only time will tell where these numbers can.
• 6:20
  Speaker 3: Actually stack up.
• 6:21
  Speaker 2: Flex fam there is no better deal than fifty percent
• 6:23
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• 6:25
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• 6:27
  Speaker 1: Unprecedented times Juzzy Boy for.
• 6:29
  Speaker 2: An unprecedented time of the year, Flux fam. This offer
• 6:32
  Speaker 2: is only live until the thirtieth of June, end of
• 6:34
  Speaker 2: the financial year, so make sure you hit that link
• 6:36
  Speaker 2: in the show notes to get fifty percent off Flex Pro.
• 6:38
  Speaker 2: Thanks for listening and we'll see you on Friday.