1 00:00:05,200 --> 00:00:06,560 Speaker 1: This is what the flux. 2 00:00:06,600 --> 00:00:08,960 Speaker 2: I'm Brandon and I'm Justin and it's Wednesday, the twenty 3 00:00:09,000 --> 00:00:09,559 Speaker 2: sixth of June. 4 00:00:09,600 --> 00:00:10,000 Speaker 3: Toll the boy. 5 00:00:10,080 --> 00:00:12,600 Speaker 1: You know something's up in the economy when Colonel Sanders 6 00:00:12,640 --> 00:00:15,480 Speaker 1: is complaining. Get this, Customers have been cutting back on 7 00:00:15,560 --> 00:00:18,279 Speaker 1: KFC spending in May and June this year, and the 8 00:00:18,320 --> 00:00:20,439 Speaker 1: Colonel reckons it's all about costs of living. 9 00:00:20,480 --> 00:00:22,200 Speaker 3: Would have thought KC would have been up when cost 10 00:00:22,239 --> 00:00:22,800 Speaker 3: of living's up? 11 00:00:22,800 --> 00:00:24,520 Speaker 2: Flux, a'am, this is the time of the year when 12 00:00:24,520 --> 00:00:27,440 Speaker 2: everyone starts scrambling to find their seeds making friends with 13 00:00:27,480 --> 00:00:28,240 Speaker 2: their accountants. 14 00:00:28,440 --> 00:00:30,680 Speaker 3: But we've got the best investment you can possibly make 15 00:00:30,840 --> 00:00:31,640 Speaker 3: in yourself. 16 00:00:31,680 --> 00:00:34,479 Speaker 2: We're giving away an annual subscription of flux Proofer fifty 17 00:00:34,560 --> 00:00:36,840 Speaker 2: percent off for an end of financial year sale. 18 00:00:36,880 --> 00:00:38,839 Speaker 3: Wow. So if you want to invest in yourself. 19 00:00:38,520 --> 00:00:40,600 Speaker 2: And build your financial future, make sure to click the 20 00:00:40,640 --> 00:00:42,440 Speaker 2: fifty percent off link in the show notes. 21 00:00:42,560 --> 00:00:46,199 Speaker 1: Three bargain basement worthy stories today, Dozzy boy, let's do 22 00:00:46,280 --> 00:00:50,080 Speaker 1: it for our first satire. The luxury fashion retailers share 23 00:00:50,120 --> 00:00:53,279 Speaker 1: price plummeted by fifty percent earlier this week after announcing 24 00:00:53,320 --> 00:00:56,320 Speaker 1: a twenty percent drop in its earnings forecast. 25 00:00:56,000 --> 00:00:58,560 Speaker 2: Not like Setire didn't have enough problems already, be Man, 26 00:00:58,800 --> 00:00:59,800 Speaker 2: So what is going on here? 27 00:01:00,000 --> 00:01:00,160 Speaker 3: Well? 28 00:01:00,200 --> 00:01:03,840 Speaker 1: Setire is obviously the online luxury fashion retailer that started 29 00:01:03,840 --> 00:01:07,080 Speaker 1: in twenty seventeen and listed on the ASX in twenty twenty, 30 00:01:07,200 --> 00:01:08,160 Speaker 1: and since then it's. 31 00:01:08,040 --> 00:01:10,520 Speaker 2: Been known for its juicy discounts on a high end 32 00:01:10,680 --> 00:01:11,720 Speaker 2: luxury brand. 33 00:01:11,480 --> 00:01:15,200 Speaker 1: Thinks dulch In, Gabana, Saint Laurent, Valentino, Versaci. 34 00:01:15,200 --> 00:01:17,880 Speaker 2: But be Man, investors and customers have always been a 35 00:01:18,040 --> 00:01:20,760 Speaker 2: little slush, a lot fishy about the Satire business and 36 00:01:20,800 --> 00:01:21,200 Speaker 2: does it way? 37 00:01:21,240 --> 00:01:24,360 Speaker 1: The plot only has thickened because Setire has broken news 38 00:01:24,360 --> 00:01:27,040 Speaker 1: to investors that it's earnings for the twenty four financial 39 00:01:27,120 --> 00:01:30,319 Speaker 1: year are going to be around twenty percent below expectation, and. 40 00:01:30,280 --> 00:01:32,720 Speaker 2: This sent set our share price down by a massive 41 00:01:32,720 --> 00:01:35,840 Speaker 2: fifty percent. It whips four hundred million dollars off its 42 00:01:35,880 --> 00:01:36,640 Speaker 2: market cap in. 43 00:01:36,800 --> 00:01:39,399 Speaker 1: Just one day, and Setire share price has dropped seventy 44 00:01:39,400 --> 00:01:41,280 Speaker 1: five percent in just the last three month. 45 00:01:41,280 --> 00:01:43,000 Speaker 2: I got to say, b Man, it is not often 46 00:01:43,000 --> 00:01:45,200 Speaker 2: you see in earnings down grade a week this much 47 00:01:45,240 --> 00:01:46,760 Speaker 2: havoc on a company share price. 48 00:01:47,000 --> 00:01:48,440 Speaker 3: So what is the key learning here? 49 00:01:48,520 --> 00:01:51,760 Speaker 1: When investors are skeptical about a company's future. A small 50 00:01:51,760 --> 00:01:55,000 Speaker 1: bump can have far reaching consequences see b Man. A 51 00:01:55,200 --> 00:01:58,040 Speaker 1: twenty percent earnings down grade is pretty bad news, but 52 00:01:58,080 --> 00:02:00,800 Speaker 1: it's not exactly lose fifty percent of your value in 53 00:02:00,840 --> 00:02:02,760 Speaker 1: a day level bad news. 54 00:02:02,600 --> 00:02:06,080 Speaker 2: Especially when fashion retailers across the country struggling with sales. 55 00:02:06,240 --> 00:02:08,239 Speaker 3: So Setai is not the only one in this boat. 56 00:02:08,360 --> 00:02:08,760 Speaker 3: Jazz boy. 57 00:02:08,800 --> 00:02:11,200 Speaker 1: Seti has been the subject of a fair whack of 58 00:02:11,280 --> 00:02:12,400 Speaker 1: controversy recently. 59 00:02:12,440 --> 00:02:15,720 Speaker 2: We're talking controversies around its treatment of import taxes as. 60 00:02:15,639 --> 00:02:18,400 Speaker 1: Well as its tax registration status in the US, and. 61 00:02:18,360 --> 00:02:21,280 Speaker 2: Don't forget its poor complaints handling and be man. This 62 00:02:21,400 --> 00:02:23,480 Speaker 2: is part of the reason why more than six percent 63 00:02:23,560 --> 00:02:25,280 Speaker 2: of Setaire shares have been shorter. 64 00:02:25,480 --> 00:02:28,359 Speaker 1: Investors just don't trust these fashion forward guys and. 65 00:02:28,320 --> 00:02:30,840 Speaker 2: Gow So for investors that are already on the fence 66 00:02:30,840 --> 00:02:33,680 Speaker 2: about Setire, this poor earnings update was enough to get 67 00:02:33,680 --> 00:02:34,880 Speaker 2: them to put their chips down. 68 00:02:35,000 --> 00:02:38,560 Speaker 1: For our second story, Maya has announced new plans to 69 00:02:38,639 --> 00:02:42,200 Speaker 1: acquire other retail brands like Just Jeans and JJ's from 70 00:02:42,200 --> 00:02:45,079 Speaker 1: premier investments, and investors are like what they hear. 71 00:02:45,280 --> 00:02:47,360 Speaker 3: That's a little bit incestuous. This one, isn't it? So 72 00:02:47,520 --> 00:02:48,240 Speaker 3: tell me everything. 73 00:02:48,320 --> 00:02:50,880 Speaker 1: Well, we all know Maya, the Australian department store that's 74 00:02:50,919 --> 00:02:54,280 Speaker 1: been selling men's and women's clothing since nineteen hundred. 75 00:02:54,360 --> 00:02:56,840 Speaker 3: Yes, we're talking pre Australia's Federation. 76 00:02:57,240 --> 00:02:59,840 Speaker 1: But boy Well Meyer and David Jones were both pretty 77 00:02:59,840 --> 00:03:01,880 Speaker 1: in vincible back in the day. The last ten to 78 00:03:01,919 --> 00:03:03,840 Speaker 1: fifteen years haven't been as kind. 79 00:03:03,960 --> 00:03:04,160 Speaker 3: Yeah. 80 00:03:04,200 --> 00:03:06,560 Speaker 2: Maya listed on the ASEX at a valuation of two 81 00:03:06,639 --> 00:03:09,120 Speaker 2: point two billion bakarunis in two thousand and nine. 82 00:03:09,040 --> 00:03:10,959 Speaker 1: And had you invested at the time of the listing, 83 00:03:11,080 --> 00:03:13,240 Speaker 1: you would have lost more than eighty four percent of 84 00:03:13,280 --> 00:03:14,440 Speaker 1: your precious money. 85 00:03:14,480 --> 00:03:17,080 Speaker 2: But b Man, Maya is now working hard to claw 86 00:03:17,120 --> 00:03:20,240 Speaker 2: back its relevance after announcing it has plans to acquire 87 00:03:20,320 --> 00:03:22,880 Speaker 2: Premier Investments apparel brand's division. 88 00:03:22,919 --> 00:03:26,600 Speaker 1: That's brands like Just Jean's, JJ's, Portman's, your very favorite 89 00:03:26,680 --> 00:03:28,280 Speaker 1: dotty brands and be Man. 90 00:03:28,360 --> 00:03:30,120 Speaker 3: All these brands aren't so sexy. 91 00:03:30,160 --> 00:03:32,919 Speaker 2: They're still generating eight hundred and forty five million bucks 92 00:03:32,919 --> 00:03:34,440 Speaker 2: in revenue last financial year. 93 00:03:34,520 --> 00:03:37,040 Speaker 1: But rather than giving cash and exchange for these brands, 94 00:03:37,160 --> 00:03:41,360 Speaker 1: Maya would issue new Maya shares to Premier Investments shareholders. 95 00:03:40,800 --> 00:03:41,280 Speaker 3: And be Man. 96 00:03:41,360 --> 00:03:44,280 Speaker 2: The interesting part of this is that Premier Investments already 97 00:03:44,320 --> 00:03:47,240 Speaker 2: owns around thirty one percent of Maya and jes Away. 98 00:03:47,280 --> 00:03:50,000 Speaker 2: Both Maya and Premier Investment share prices boomed off the 99 00:03:50,000 --> 00:03:53,240 Speaker 2: back of this news because despite Meyer's growing sales, it's 100 00:03:53,280 --> 00:03:54,960 Speaker 2: EBIT margin is awfully there. 101 00:03:55,120 --> 00:03:58,240 Speaker 1: Interesting interesting, interesting, So what is the key learning here? 102 00:03:58,280 --> 00:04:00,120 Speaker 2: You can sell as many products as you like, but 103 00:04:00,160 --> 00:04:03,520 Speaker 2: if your margins are tight, your business is on unstable. 104 00:04:02,960 --> 00:04:06,240 Speaker 1: Footage see jusi boy. Meyer generated three point four billion 105 00:04:06,480 --> 00:04:09,320 Speaker 1: dollars in sales in its most recent financial year, but it's. 106 00:04:09,200 --> 00:04:11,560 Speaker 3: EBIT margin was a pretty thin six percent. 107 00:04:11,680 --> 00:04:13,880 Speaker 2: That means, for every one hundred dollars that Maya generated 108 00:04:13,880 --> 00:04:16,719 Speaker 2: in sales, it only made six dollars in earnings before 109 00:04:16,720 --> 00:04:17,440 Speaker 2: interest and tax. 110 00:04:17,520 --> 00:04:20,040 Speaker 1: But jazi boy. For companies that have their own labels 111 00:04:20,040 --> 00:04:22,920 Speaker 1: and source their own products, the EBIT margin is generally 112 00:04:22,960 --> 00:04:23,760 Speaker 1: a lot higher. 113 00:04:23,760 --> 00:04:26,960 Speaker 2: In fact, mcquarie reckoned that the apparel brands like JJ's 114 00:04:27,040 --> 00:04:30,120 Speaker 2: and Portman's they have an EBIT margin of over fifteen percent, 115 00:04:30,160 --> 00:04:32,480 Speaker 2: and this is why Maya's investors are keen to make 116 00:04:32,520 --> 00:04:36,520 Speaker 2: this deal a reality. For our third and final story, Prezzi, 117 00:04:36,680 --> 00:04:39,880 Speaker 2: the Australian gift card company, has reported a seventy nine 118 00:04:40,080 --> 00:04:42,560 Speaker 2: million dollar loss over the last eighteen months after it 119 00:04:42,600 --> 00:04:44,720 Speaker 2: lost a major partnership with Amazon. 120 00:04:44,760 --> 00:04:46,839 Speaker 1: That is a very big loss for a private company. 121 00:04:46,839 --> 00:04:49,040 Speaker 1: So Jazi boy, tell me everything you know about it. 122 00:04:49,080 --> 00:04:49,240 Speaker 3: Well. 123 00:04:49,240 --> 00:04:51,320 Speaker 2: Prezzi was launched back in twenty fourteen with the idea 124 00:04:51,400 --> 00:04:53,120 Speaker 2: of selling digital gift card. 125 00:04:53,040 --> 00:04:55,279 Speaker 1: As opposed to going to your local JB high fire 126 00:04:55,279 --> 00:04:57,400 Speaker 1: and getting dem physical cards. 127 00:04:57,080 --> 00:04:59,320 Speaker 2: And by twenty twenty Prezzie launched in the UK, the 128 00:04:59,440 --> 00:05:02,120 Speaker 2: US and his over one million eight gift cards sold. 129 00:05:02,200 --> 00:05:04,800 Speaker 1: But since then things have taken a bit of a turn. 130 00:05:04,880 --> 00:05:07,640 Speaker 2: They lost their CEO, their CFO, their CEO, their CMO, 131 00:05:07,680 --> 00:05:09,960 Speaker 2: the head of HR as well as founders. 132 00:05:09,520 --> 00:05:10,080 Speaker 3: Which does boyd. 133 00:05:10,080 --> 00:05:13,200 Speaker 1: Despite all this, for the eighteen month period ending December 134 00:05:13,240 --> 00:05:15,919 Speaker 1: twenty twenty three, Prezzie still sold a heck of a 135 00:05:15,960 --> 00:05:17,040 Speaker 1: lot of praises. 136 00:05:17,440 --> 00:05:20,440 Speaker 2: We're talking three point four billion dollars in card sales. 137 00:05:20,080 --> 00:05:22,000 Speaker 1: But on that amount of sales they copped a seventy 138 00:05:22,080 --> 00:05:23,320 Speaker 1: nine million dollar loss. 139 00:05:23,360 --> 00:05:24,280 Speaker 3: Here's the thing, They'll be man. 140 00:05:24,360 --> 00:05:27,360 Speaker 2: Prezzi claims that their results are actually much better than 141 00:05:27,400 --> 00:05:30,560 Speaker 2: your accounting lead brain might believe. How so well, they 142 00:05:30,640 --> 00:05:34,440 Speaker 2: blamed Australia's accounting standards for their unflattering financial results. 143 00:05:34,440 --> 00:05:37,040 Speaker 1: Don't you hate those Australian accounting standards just a boy? 144 00:05:37,200 --> 00:05:39,680 Speaker 2: Go on, Well, they don't allow Praisy to book breakage 145 00:05:39,880 --> 00:05:41,920 Speaker 2: up front. So what is the key learning here? 146 00:05:41,960 --> 00:05:45,120 Speaker 1: Breakage is the dollar value of unused card balances, and 147 00:05:45,160 --> 00:05:47,359 Speaker 1: this is where gift card companies make a lot of 148 00:05:47,360 --> 00:05:47,799 Speaker 1: their money. 149 00:05:47,800 --> 00:05:50,279 Speaker 2: In fact, they made eighteen percent of Australians have lost 150 00:05:50,320 --> 00:05:53,080 Speaker 2: out after a gift card that they held expired before 151 00:05:53,120 --> 00:05:53,599 Speaker 2: they used it. 152 00:05:53,640 --> 00:05:56,320 Speaker 1: That's according to Finder. So Josey boy, when gift card 153 00:05:56,360 --> 00:05:59,360 Speaker 1: companies and retailers issue gift cards, they kind of rely 154 00:05:59,520 --> 00:06:02,480 Speaker 1: slash hope. Yeah, some customers will never redeem because that 155 00:06:02,640 --> 00:06:04,279 Speaker 1: is free Muller for them. 156 00:06:04,240 --> 00:06:05,279 Speaker 3: But ominous. 157 00:06:05,480 --> 00:06:08,200 Speaker 1: Under Australian accounting standards, the value of the gift card 158 00:06:08,279 --> 00:06:11,080 Speaker 1: is treated as a liability until it is used, so 159 00:06:11,240 --> 00:06:13,320 Speaker 1: even if a customer doesn't use it for years, it's 160 00:06:13,400 --> 00:06:15,440 Speaker 1: not considered a revenue just yet. 161 00:06:15,520 --> 00:06:18,120 Speaker 2: So be Man, with so much turmoil within this company. 162 00:06:18,200 --> 00:06:20,520 Speaker 2: Only time will tell where these numbers can. 163 00:06:20,320 --> 00:06:21,240 Speaker 3: Actually stack up. 164 00:06:21,279 --> 00:06:23,760 Speaker 2: Flex fam there is no better deal than fifty percent 165 00:06:23,800 --> 00:06:25,560 Speaker 2: off flex Pro and b Man just quietly, I don't 166 00:06:25,560 --> 00:06:26,839 Speaker 2: know if we've ever done a sale before. 167 00:06:27,000 --> 00:06:29,120 Speaker 1: Unprecedented times Juzzy Boy for. 168 00:06:29,160 --> 00:06:32,000 Speaker 2: An unprecedented time of the year, Flux fam. This offer 169 00:06:32,160 --> 00:06:34,560 Speaker 2: is only live until the thirtieth of June, end of 170 00:06:34,560 --> 00:06:36,680 Speaker 2: the financial year, so make sure you hit that link 171 00:06:36,720 --> 00:06:38,760 Speaker 2: in the show notes to get fifty percent off Flex Pro. 172 00:06:38,880 --> 00:06:41,160 Speaker 2: Thanks for listening and we'll see you on Friday.