Yeah, I am surprised by the move and hope it's not a dead cat bounce. You're right about the cash conversion cycle. I wish the management would take a page out of the book from competitors. It would free up a lot of capital stuck in the business. However, I guess it's part of the trade off for an off-price business model.
Also, I'm hoping they are managing growth and not biting off more than they can handle. They are adding quite a bit of sqft. I guess we'll get a better sense of how things are going to unfold from the performance of the 20K sqft locations. It's really a judgement call if you think a 20K sqft of shoes is supportable by the surrounding demographic area within the context of competition as well. 10K sqft has worked so I think 20K is reasonable. What's great about shoes are that they are "consumed" pretty regularly, like tires or socks. The market is determined by the rate of consumption (number of shoes bought per year) and the average price. So if they are capturing or creating more of that particular market (off-price) through a bigger selection, then we are in good shape. The sales per sqft of the new locations will give a sense of that.
people want selection when they buy shoes ;) (hint:bigger stores) How many times have you went to the shoe store looking at most of the shoes your size? However this may not translate to as many sales supporting these big stores. Bigger stores also require more upkeep.
Bruce Ross departed as the shoe's chief financial officer on May 30. Perhaps he sold his shares in the company?? The sell off seems to end on May 29th. There was also heavy trading on May 29th, 869,210 shares exchanged that day, perhaps a block trade. And just a day after that Bruce Ross departs?