Share buyback averaged $46/share this last quarter....
Not a good deal considering they should have seen this coming since they are the ones running the company that they are buying stock in. And to borrow money to do it seems ridiculous! They must feel like idiots having a 33% loss already on a $84million purchase that they are borrowing money to pay for. I hope they can turn things around this winter with a good quarter and pay the debt back down to $0. I sold some last year for a small profit and bought some back between $38 and $52. I dont know whether to take my loss and sell or to buy more? Its tempting to average down. If they can buy back a bunch around $30 or less and turn things around over the next year or two they might be able to make this turn out well. Just have to wait and see.
My advice: DON'T AVERAGE DOWN! If this were a company, brand, that one could PROVE had lasting brand appeal, yes, by all means, take advantage of such a big decline! But don't forget what you're dealing with here: 48% short interest, "girls fashion"--fickle at best, a CEO and board who borrow money to buy over-priced stock, a CEO who spent $459,000 to buy shares on the open market at $45.90-ish, missed projections quarter-after-quarter! Come-on now, I'm not saying to "not hold" and try to recover some of your $$$ (that's my hope!), but to average down here, is folly, even if it were to prove profitable, simply b/c of the massive un-certainty of their market and their #1 product!
Don't forget Sam Poser, who told us about the inventory build, soft pricing and discounting---all true! Now he's saying the "worst could be yet to come"! I still don't believe his "falling-out-of-fashion" stance, but I sure wouldn't gamble by throwing more money at this thing!
They should have known? Now they have a 33% loss? They first off couldn;t have known where the stock price would go because A) even those who run their own companies don;t know the values of such companies according to the market and B) nobody can call a bottom and this stock was cheap already at $70 and $46 and now its even cheaper. So kudos for managemen for buying as much as they can at these prices. I hope they borrow even more.
I couldn't agree w/ you more. Stock buyback is 200 million. I haven't read yesterday's report yet, but if they only spent 84 million so far, there is a lot of room to average down. Again, in 5 years, the fickle short term memory folks will be calling Martinez a genius.