@Strawman , maybe we could get someone from DSK for a meeting if there is interest.

I need to bulk up the schedule so suggestions definitely welcome @tomsmithidg

Leave it with me, I'll see if they're interested.

That'd be great - thanks Andrew.

I’ve been invested in DSK for a while, and one thing I’d add is the seasonality and operating leverage profile.

DSK looks cheap on a trailing PE and cash‑per‑share basis, but the business is structurally second‑half weighted and typically loss‑making outside the peak gifting period. That’s why the cash balance at December isn’t surplus — it’s working capital that gets consumed as they move through the quieter months.

It also explains why the market hasn’t re‑rated it despite the low multiple. The earnings base isn’t stable enough for the PE to mean‑revert without a clear catalyst, and Afterglow alone probably isn’t enough to shift the operating leverage dynamics.

Not saying it’s a bad business — just that the valuation needs to be viewed through the lens of seasonality and cash burn, not just headline PE and cash per share.

Disc: hold in RL

I’ve pondered their product offering since they listed and have always thought the most value adding and durable offering they have is serving as a conveniently located gift shop for that last minute don’t want to think about it too much gift. They should lean into this more rather than fighting it. They focus too much on membership which isn’t really relevant for a last minute gift shop. Better offering gift wrapping and cards in my opinion. Such a strategy (ie. becoming a gift shop rather than a candle shop) may allow them to diversify their product range a bit more and benefit from fads, however this is somewhat limited I imagine by their vertically integrated nature where they manage their own manufacturing.

Good thread, thanks for kicking it off @tomsmithidg

I sold out of dusk a few months ago after holding for quite a while. Afterglow was actually the penny drop moment for me. I was around long enough to remember when it was glow 2.0 upgrades rolling through stores a few years back. And yes the roi looked good, but I guess what I now realise seeing afterglow only a few years later, is that you need to spend on rebranding again and again, just to stand still in a fickle discretionary retail business like dusk.

150 stores at 300k per store is $45m, so roughly speaking the company has to invest its entire enterprise value every 5 years to keep the stores fresh and relevant and essentially defend market position (even if there's a short term bump and then steady slide back as the store ages over the refresh cycle).

You could argue my 45m is a bit high, but even wipe off 50% and that capex puts a serious dent in the long term dcf.

I don't think dusk is bad value here at 80c, but the above is my thesis as to why it's sitting at a low PE and that unlikely to change much. While it could always pop for some reason and deliver a decent trading return (like a viral marketing success - k-pop candles maybe), i think it's likely to revert over the long term.

One thing I’d add to the above discussion is that all three points — seasonality, cash burn, and the store refresh cycle — feed into the same underlying issue: DSK’s earnings base isn’t as “fixed” as the headline PE suggests.

The business has:

• a heavily skewed second‑half earnings profile
• working capital that swings hard through the year
• periodic capex required just to maintain relevance
• and a product category that needs constant reinvention

None of these are fatal, but they do explain why the market keeps the multiple low even when the numbers look cheap on paper.

If Afterglow can genuinely lift the baseline (not just the first‑year ROI), then the valuation case strengthens. But until the earnings profile smooths out, I think the market will keep treating DSK as a trading stock rather than a compounder.

Disc: hold in RL

Thanks @Longpar5 , but credit for kicking off the thread has to go to @rh8178 , I'd never even looked at DSK prior. I do think a lot of the market looks at it and just goes 'candles - meh'. Everyone I've mentioned it to can't believe I'd invest in a candle seller. I think most of what has been discussed applies to most if not all retail, and certainly the fast food market. I have always found how people / 'the market' values companies regularly defies logic. I would see GYG, for example, as much more risky and capital intensive than DSK but people are paying 101 x P/E for it and it barely pays a dividend. Time may well prove me wrong, but in the mean time I'll keep accumulating it and hope it keeps paying me 8% or higher dividends plus franking credits. If we manage to get someone from DSK to do a meeting we should definitely raise K-Pop candles ;D .

The need for ‘constant reinvention’ as mentioned by @Foxlowe is a significant point and DSK has another stable mate in STP (which might well be further down the road to oblivion). When you have no moat, are a fad and are easily duplicatable at a cheaper cost then the future must be contentious. As a baby boomer, I recollect my old man saying ‘yo-yo’s will bounce, until they won’t’ sounded like utter rubbish to me as a 10 year old, but I get it today.

OMG @PortfolioPlus I love that analogy on the yo-yo's and at the time I'd totally agree with you. From memory I think they came back four times, each one with less success to the previous. Thanks for bringing back the memories from my childhood.