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Bob Evans Farms, Inc. Message Board

  • leadenhallcapital leadenhallcapital Jul 29, 2014 8:08 PM Flag

    Steve Davis must GO!!

    Steve Davis and his group of old-time, self serving Directors must GO!! I have been a shareholder of BOBE for nearly 20 years. While my stake in the Company is small, it has been one of the worst performers in my portfolio. Shame on me for not selling years ago. I did believe however, in the intrinsic but unrealized value of the Company's brand name and assets. I still do.

    Recently, prompted by the Sandler proxy fight, I have delved deeply into the Company's 10-K, proxy statement, comments from management and industry peers. I have reached an unwaivering conclusion that Steve Davis is terribly inept. While not perfect, the recommendations set forth by Sandler hold much greater merit than staying the course with existing managment.

    For instance, why not consider a long-term sale leaseback of a portion of existing owned real estate? Why not use those funds for a share repurchase. Given historically low interest rates (and by extension lease rates), would not a sale/leaseback of some existing real estate not only provide a source of capital that would hedge against future interest rate rises, but also be a low cost of capital. At least it SHOULD be lower than the Company's overall WAC or targeted Return on Equity. My guess is lease rates would be sub 4%; I would hope the ROE expectaion is greater.

    Mismangement by Steve Davis and his team is terribly evident. Note that BOBE consistently underperforms guidence (once is bad; multiple misses is horrific and destroys WS credibility). Same store sales likewise are down, which is an obvious sign of mismangement for a restauarnt or retailer. The Company's stock performance has underperformed its peer group. Further, as a customer as well as shareholder, its stores have lost the warm, friendly, homespun feeling that caused me to buy the stock originally.

    Conclusion: Steve Davis in my opinion is incompetent and needs to be removed before he can destroy any more shareholder value.

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    • agreed...and if someone doesn't agree, they should read Sandell's presentation. It's publicly available.

    • Repeated reduction in earnings guidance
      Missed consensus earnings in 14 of the last 24 quarters
      Consistently poor and declining same store sales
      Bloated corporate overhead
      Inordinately high SG&Aexpenses
      Abysmal returns on invested capital
      Failed ‘Farm Fresh Refresh’ remodeling initiative
      Industry worst margins

      You have to remember the terrible situation that Davis inherited. When someone as educated and connected as Davis is, comes in to take over a troubled company, the shareholders must give the new management time. Davis is implementing strategies that are forward thinking, inclusive, and revolutionary. They take time for the old guard that was entrenched at BOBE to buy in and make the change to Davis's way of doing business. Like staying open all day on Thanksgiving. Just think of where BOBE would be today, if Bob and Dan Evans had the vision and foresight to have done this back then, how much the shareholders would have benefited?? Imagine if Davis had been brought in back in the mid 80's, just think of the marvelous results could have delivered. Give Davis more time. It's kind of like Obama taking over for Bush.

    • Yes. This is a layup.

 
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