I think I know why Debenhams hit the buffers.

[WOM]

That Wings place just screams money laundering the way WOM describes it

I've been trying to find a way to write that without opening myself up to litigation. But yes. Exactly.

[ursus arctos]

I'm quite unconvinced.

[WOM]

The most suspicious thing, for me, is the volume of inventory. I really can't do it justice. These stores are the size and shape of a double-wide high school gymnasium, and every square foot of wall space, floor to ceiling, is (best guess) 20 to 30 items deep on a peg. And at any given time, at high season, there are three or four families plodding about the place buying a few t-shirts. It's as if someone had to spend great gobs of cash on something 'hard' that left a trail of invoices.

[WOM]

I should really go back there for two weeks in September to see if they slowly start drawing down their inventory, with bare pegs and plenty of white wall space for the October to May slow period.

I can surf a bit if I get bored...

[WOM]

Interestingly, in previous years, all of the grocery-store / retail summer help has been lovely, friendly kids from Lithuania, Russia and Poland. This year, all Chinese.

[Guy Profumo]

I still go down to Debenhams caff once a week for my lunch though.

Because the people there are lovely.

[ursus arctos]

WOM, it really isn't cost effective to operate a just-in-time supply chain for beach tat.

At the very least, you never want to break a container.

[Felicity, I guess so]

The only times I've been in Debenhams in recent years is on the way through from the car park to the rest of the mall. Can't imagine stopping.

That’s the set-up in Sunderland, too.

Tho I do sometimes spend my Xmas/birthday money (mother-in-law) on a jumper or a shirt in the sale

[Ginger Yellow]

The most suspicious thing, for me, is the volume of inventory. I really can't do it justice. These stores are the size and shape of a double-wide high school gymnasium, and every square foot of wall space, floor to ceiling, is (best guess) 20 to 30 items deep on a peg. And at any given time, at high season, there are three or four families plodding about the place buying a few t-shirts. It's as if someone had to spend great gobs of cash on something 'hard' that left a trail of invoices.

Montgomery Brewster?

[caja-dglh]

The most suspicious thing, for me, is the volume of inventory. I really can't do it justice. These stores are the size and shape of a double-wide high school gymnasium, and every square foot of wall space, floor to ceiling, is (best guess) 20 to 30 items deep on a peg. And at any given time, at high season, there are three or four families plodding about the place buying a few t-shirts. It's as if someone had to spend great gobs of cash on something 'hard' that left a trail of invoices.

But isn't it just 70 different designs of "OBX", various towns "OBX", 50 different types of car magnet "OBX", 30 different rash guards with "OBX' etc? There proposition doesn't really change except for the wall of extremely amusing to kids t-shirts as things like Fortnite and Minecraft ebb and flow.

[caja-dglh]

So the stores are basically their warehouse, because - why not? The pricing is all so dependent on massive orders and the audit / stock-control on the business is so transparent... there has got to be a better way to be pulling a fast move. Like something with little inventory that gets disposed at the end of day for example (ice cream, hot dogs etc).

[Nefertiti2]

I heard the other day that Amazon uses shops as storerooms. Most local stationers sell via amazon. meaning that they take all the warehousing costs for Amazon,

[WOM]

But isn't it just 70 different designs of "OBX", various towns "OBX", 50 different types of car magnet "OBX", 30 different rash guards with "OBX' etc? There proposition doesn't really change except for the wall of extremely amusing to kids t-shirts as things like Fortnite and Minecraft ebb and flow.

Yes, by and large. It's the volume of inventory that amazes me. My contention is that they could stop taking delivery of boxes tomorrow and they'd still have adequate stock in 18 months. I don't know how you carry that volume of stagnant stock and make the numbers work. And this isn't a 12 month-type operation, but a four-month golden period and then bupkis.

[Lang Spoon]

You just sell the same stock the next year. I worked in a "fashion" warehouse that put out the same shite for January sales in their stores for nigh on a decade.

[WOM]

I was looking at the carrying costs rather than the evergreen nature of the merchandise. Most definitely it would sell year after year.

[Ginger Yellow]

Sports Direct have finally published their much delayed results. It's... quite something. Puts even Tim Martin's rants to shame. I think my favourite bit is when he drops in a suggestion of drug tests for CEOs, a propos of nothing, I'm sure.

[Ginger Yellow]

Also, this is what I believe they call putting lipstick on a pig:

Sports Direct is a special case when it comes to our position in the retail market and our relationship with third party brands. We cannot be compared with any other retailer and thus trying to fit our judgements into the norm is completely illogical. There is no black and white supporting evidence or historic analysis that supersedes our knowledge and experience which indicates that a level of provision is required that is not fully quantifiable through normal methods. We hold a consistent provision within the boundaries of our analysis and judgement, which means higher inventory levels will mean a greater provision and lower inventory levels mean a lower provision, inherently this is a logical position to take before going into any further detail. We have no wish to manipulate an inventory provision year on year because there is no definitive piece of paper to support the provision level.

To give more clarity on the judgemental elements of our inventory provisions highlights the brand pressure we are under from some of our key suppliers.

A number of years ago our key third party suppliers said that the Sports Direct group had to elevate its offering away from a traditional discount model of 'stack them high sell them low'. As has been well documented in our annual reports and in the media in recent years we have been on a program of serious investment in our elevation strategy including the purchase and superior fit out of freeholds. Even though our third party brand partners by their own admission think we have done a superb job of elevating our stores, we still do not receive as quickly as we would like the premium product we feel the stores deserve. This, combined with our competition getting stronger, increases the risk of us being cut off completely by these suppliers. When we are not providing the right product at the right time at the right price the consumer will not visit our stores and thus ancillary purchases will not be made, hence a greater risk against our remaining inventory.

As another example with some inventory that we have been allowed by the third party brands, we are purchasing significant levels of inventory cover to ensure we have sufficient product to drive footfall in the future, with greater inventory cover there is greater risk of the products going out of fashion. This is not quantifiable with supporting pieces of paper hence a judgement needs to be and has been taken. These relationships also come in an increasingly difficult, and indeed unpredictable retail market hence an historic view cannot be considered on its own to be a useful indicator of future outcome.

[Ginger Yellow]

Also, for some reason not mentioned once in Ashley's 9,000 word statement:

The Group has been the subject of a tax audit in Belgium and, on 25 July 2019, received a payment notice from the Belgian tax authorities in the amount of €674 million (including 200% penalties and interest) and requesting further information in relation to, amongst other things, the tax treatment of goods being moved intra-Group throughout the EU via Belgium. The payment notice is not a formal tax assessment but a "proces verbal" whereby the Group will enter a "fiscal mediation" in order to respond to the tax authorities questions and provide them with documentation. Accordingly, there could be no immediate recovery action. Sports Direct will investigate further alongside its tax advisors though it believes that it will be able to address the points raised and information requested which Sports Direct believes it maintains as part of its routine books and records keeping and, accordingly management believe, as at the date of signing of the financial statements, that it is less than probable that material VAT and penalties will be due in Belgium as result of the tax audit.