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Tuesday, June 18, 2019 6:39:31 PM
First, the Disney deal was a pure distribution deal only for the UAE. Anshu would never disparage Disney on a public call, but I think it's fair to surmise that the margins aren't anywhere close to what they can achieve with BLF and on a dollar basis with their other distribution deals (ie. the beef order; low margin, but fast turns). Second, the company was and honestly still is capital constrained. Consequently, they have to make tough choices as to which product lines to support until additional funding comes through. I'm sure Anshu has looked at product line profitability and decided that Disney, for now, just doesn't warrant the use of scarce capital. Frankly, it's hard to argue with that.
Abandoning the Disney deal raises no red flags if you understand the context. It's just a reflection of a company that has to prioritize and allocate scare capital responsibly.
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