even though it has on its book 96 days worth of inventories? That was more than 3 month's supply!!!
Was gmcr kept producing junks instead of those few items that were selling???
The share price is so high because the stock is being bought by people that believe the past rate of earnings growth will continue into the future. They fail to account for:
1. Patent expiration will bring competition, squeezing profit margins.
2. The distribution channel is close to saturating retail stores.
3. The company is very short on cash, hampering organic growth and making further acquistion growth impossible.
Much of this thread is related to item 3. They say they are low on cash because it was put into inventories that keep rising. This is inconsistent with claims that the company cannot keep up with demand.
You are correct, all that matters in the end is the price of the stock. And time is on the side of the shorts. Two years from know it's doubtful wether GMCR will have any earnings at all. When the bagholders finally realize and accept this, the stock price will be far lower.
This probably will not work but at least I will have tried. In Q4 GMCR has $1,000,000 in cash. They use that money to produce 4,000,000 kcups at $.25 each so that cash has now become $1,000,000 in inventory in Q1. In Q2, they ship out those kcups at an average of $.45 each with a due date sometime in Q3. So in Q3 those kcups have now become $1,800,000 in receivables. That money comes in during Q4 and has now become $1,800,000 in cash. And the cycle starts all over again.
Of course this is an oversimplification.
Yes, I agree. Retail store inventory in January may be huge, but that’s k-crap that GMCR considers as sold back in December or earlier. It’s the store’s inventory, or the distributor’s inventory, but it’s long past being GMCR’s inventory. But according to kamaccnn, you and I “have absolutely no sense of inventory timing or how GMCR's business model works with the demand”. You see, kamaccnn is an expert on GMCR’s business model and inventory timing, and dolts like you and I need him to explain why January inventory on retailer shelves is going to show up on GMCR’s 1QFY11 balance sheet.
FOB is just a shipping term - who pays for the shipping (prepaid, collect, etc.) and at what point either party is responsible for damaged or lost product.
At what point companies book sales depends on accounting, the law and how liberal or conservative their financial behavior. A common procedure to cook the books if that is your aim.
I think this is part of the problem that caused the SEC to start an investigation, that is, GMCR does not have a "set" rule they follow, and this maybe used to "pad" sales or inventory....
you must wait and look at the December quarter's numbers. Every year GMCR "builds" inventory in Septemebr quarter in anticipation of the seasonally strong December quarter. Last year, in the Decemebr quarter sales jumped to $350 million and inventory dropped to $124 million. This year, analysts are expecting sales to jump to $540 million. Inventory will drop slightly from the Sep year end number, just like it did last year (inventory went from $132 million on Sep 30 down to $124 million on Dec 31).
I hate to keep asking the same question over and over, but you bagholders just aren't making any sense. Let me quote you:
"last year (inventory went from $132 million on Sep 30 down to $124 million on Dec 31)"
Your own numbers say that GMCR had no problem keeping up with demand during Christmas 2009. Typically consumer-seasonal manufacturers finish the Christmas quarter with near zero inventories. Anything left over after Christmas is a sign that production overestimated demand.
How do you reconcile the huge post-Christmas inventory with reports, from people like rhfil that KNOW retail, that GMCR is unable to keep up with demand? One possible explanation is that the inventories don't actually exist. I'm waiting to hear a better explanation.