Good writing.
The purchase value of the inventory is 50 million, from which, with Duell’s gross margin percentage of ~24%, we get a sales value of ~65 million euros.
There are certainly millions of euros in obsolete goods (not tens of millions), but even that is not worthless, and disposing of those items you mention will not cost a penny.
In the current situation, where we are, the prices of goods and products are unlikely to fall within a 1-2 year timeframe; rather, the purchase prices of acquired goods will rise, benefiting those who have inventory to sell.
Duell also makes inventory write-offs every year, where these values are written down, meaning obsolete goods are constantly being removed. (One can, of course, have different opinions on whether the current write-offs are sufficient.)
I have a small inventory product tracking list, roughly valued somewhere between 5-10 million euros, based on a sample from only a few months since I became an owner. Sales of winter products pretty much stopped dead when spring weather arrived more than a month early. Then again, other products are selling at a steady pace. Winches, log trailers, batteries, oils, etc. Incidentally, Duell used to have availability problems with these just over a year ago, which doesn’t seem to be the case anymore.
The riding gear business is, of course, Duell’s biggest source of income, and it certainly reflects the weak consumer confidence and future outlook the most now. (But weather also significantly affects this.) While a bad winter had a weakening effect, an early spring should boost summer sales as the riding season lengthens.
All short-term debt totaled €19,362,000 at the end of Q1, and correspondingly, short-term receivables and cash amounted to €21,844,000.
Credit losses have certainly increased in the current situation, but on the other hand, individual customer bankruptcies should not significantly alter the picture due to the broad reseller network, where the share of individual sellers is not proportionally large.
And the so-called acting as a bank is a basic principle in wholesale trade. For normal orders, payment terms are 14 days; for advance and seasonal orders, typically 30-90 days.
My view remains that there is fully marketable inventory on the balance sheet many times more than the current market cap.
The most important thing now would be to get losses under control in France, which seems to be a real headache, and to get cash flow moving in the right direction by liquidating inventories, thereby also easing loan servicing costs, which I believe is entirely achievable.