The requirement for a short-term loan to tide the company through to the end of December is not altogether surprising and not necessarily a cause for alarm.
It is normal for retailers to purchase their entire Xmas season and and a sizeable part of their Jan Sale requirements of DVDs/cds in September on so-called "trade fair" terms.
The largest orders of the entire year are placed with no requirement to pay until after Xmas. This is good for retailers but puts enormous stress on the cashflows of suppliers.
Paradoxically, the more successful the trade fairs are High volumes of purchases) the more acute the problem for suppliers such as destra.
Despite the current poor economic climate this year's trade fair sell in was robust. Retailers are betting that while high ticket items may suffer from spending cutbacks, low-price consumables will hold up as has happened in the past. So the recent announcement can be seen as good news rather than bad.
The big unknown to me is why the destra board has not advised shareholders of this important market characteristic, rather than instead painting as negative picture as possible. One can only speculate!!!?
There is still value in destra, more than the board is willing to admit, for reasons that seem to have more with certain vested interests than shareholders as a whole.
Questions for the AGM to address!
DES Price at posting:
1.6¢ Sentiment: Buy Disclosure: Held
