Pinned straw:
News out yesterday that CFO Sheila Lines is resigning to become a DIrector elsewhere and will be replaced in 6 weeks time by a new CFO Kylie Archer, who is currently with a private construction company.
I have followed NCK closely for the last few years but don't presently own it.
I'd characterize my views now as it being priced for perfection with the UK expansion. If all goes really well you probably do OK at the current valuation. But any surprises or missteps and the price could come down to past PE lows.
What also worries me is that there could be some accounting issues at play here. The previous CFO that Shelia replaced, left with one days notice. She is leaving after the less than 3 years in the job. She was not particularly chatty or willing to engage, when I tried to discuss a few things with her. The incoming CFO has lots of 2 or 3 years jobs on her resume.
In addition, when I queried the previous auditor at the AGM a few years ago about why leases weren't listed as a key audit matter like most other retailers do, they gave a nothing answer. One of the current Director's used to be the audit signing partner for them.
And last but not least the Chair has been there far too long and struggled to run an AGM a couple of years ago. My suspicion is he is not actively applying a magnifying glass to Anthony Scali or the accounts...but I could be wrong of course. He was supposed to have been stepping down for a new Chair but nothing seems to have happened so far.
So, this is all a "smell" but not hard evidence. I'd be concerned if I still owned shares and definitely watching this closely and ideally looking hard at the accounts this year and asking some probing questions at the AGM...
I agree with the general sentiment on this stream. there is , i suspect, a bit of building pressure as the family ages and calls on capital from various angles. i would be surprised if there is anything nefarious in this sell down. one point to keep in mind is that AS spoke on a podcast a few months ago where he was quite constructive on a UK entry. that would entail an issue and have to be funded by the family. maybe that is also in the back of his mind. just speculating. disc held
Anthony Scali, the MD of NCK, is not the founder, he's the son of Nick Scali, who was the founder. And the Scali family have been reducing their position, as the business grows, last sale around 5 years ago I think. That is to be expected, and better to do it when the business is going really well than when it is struggling, both from their point of view and ours - I am a NCK shareholder IRL. I think ARB and NCK are the best run consumer discretionary companies on the ASX - and I hold both. Not too fussed about this. They still have plenty of shareholder alignment.
I think the Scali family block trade announcement yesterday was a good opportunity to top up. Intraday lows were more than 10% lower at around $10.40. A bit extreme when you consider the block trade was underwritten by UBS at $11 per share. I’m not saying it will happen again, but the last time the family lightened off their holdings in 2018 at $7 per share, the shares went on to more than double within 3 years. The family still holds 8% of the business, so there’s still a lot of skin in the game.
Disc: Held IRL (13%), SM (17%)