OK... the first thing I will say is that the infromation presented below is of little consequence, however, it is truthful and as objective as possible. Remember, I do not get enamored with companies; I only care what their respective stock(s) are going to do.
Anyway, I visited two Coach stores today. One was an outlet and the other was a Coach store in a mall. Let me first say that I can NOT stand it when some jackass gets on a message board and says, " Wallmart was empty two days before Christmas therefore it is a sell" Stupid, stupid. One store doesn't tell a story so take what I am going to type with a grain of salt.
The good news (for longs)- My wife dragged me to more stores than I can count and the Coach Outlet was EASILY one of the busiest. I would say that this particular store was about 1500 sq. ft. and there was 25 people shopping inside at 10 a.m. on a "work day". I have no way of knowing how many bought anything, but I was suprised by the amount of people. The only stores that were comparable in traffic were Abercrombie & Fitch and Apple (new store for computer, iPhone, iPod purchases). Apple probably had the most people, but it was about twice the size of Coach so take that for what it is worth.
An interesting side note- I hold no position in Abercrombie, but I was really suprised how little was on sale compared to the millions of other stores I ventured into. They were pretty busy too. I didn't expect that. They are getting $35 for a tee shirt in there!!! Man am I getting old because there is no way in hell I would pay that.
The bad news (for longs)- the "full freight" store had one person inside and I went back twice (same thing both times). The outlet store, although very busy had sales going on that my wife said, "I have never seen Coach handbags marked down that much". She said that the standard outlet "markdown" was 20%-40% off (her words not mine). The outlet had two entire walls with 50% off. What does this mean? Hell...I don't know, but it would lead me to believe that margins could come under pressure.
I am very confident that the full price stores are not doing well. I know I was only in there one day, but I just do not think $450 handbags are moving very well. I could, of course, be wrong.
I did enter a new short position at $29.60 based on the large discounts at the outlet store(s) and the low volume of customers at the department store. This is not my attempt to "scare" longs because Gnome, and others, are correct when they say Coach is one of the best. I saw it with my own eyes. I just don't think the outlet can save the full price line- especially with larger than average discounts.
Again, two stores out of hundreds don't necessarily make a trend so take this with a grain of salt. I would be interested to know if anyone else had a similar or dissimilar experience. Peace.
" Remember, I do not get enamored with companies; I only care what their respective stock(s) are going to do. "
There are a lot of really smart investors who feel the only thing that truly matter is how good the company is.
" When we invest in stocks, we invest in companies... companies that we'd want to own forever." Warren E. Buffett
I'd have to agree with him... sorry... not trying to be a dick... just how i feel.
Not sure I understand your message. I am not enamored with companies at all. They are just a vehicle to make money. What I mean by that is this:
Yes, I want to invest in the best companies out there in order to make money (assuming we are talking about investing to the long side). But, a lot of people become enamored with PAST results thinking that their beloved stock couldn't possible fail them- even if the story has changed or the cycle is working against them.
I know I am beating a dead horse here, but look at ANY of the financials. Gnome, they represent the largest portion of the S&P 500 which means that a ton of people have a lot of exposure in this area. Why would anyone hold these? JPM, BAC, GS, etc. are all TOP NOTCH companies that screwed up, yet most "buy and holders" will not sell. Sad. I would sell them all today (except maybe GS) even after their tremendous fall.
With me it is all a matter of two things- capital preservation and future gains. Coach is fantastic, but anyone that bought at $40 or higher is in for a long wait with regards to getting a good ROI. Just my opinion. When the trend changes (I will most certainly miss the bottom) then I will go long. No big deal. I am happy hitting singles with the occasional double. Home run hitters tend to strike out a lot.
As always, good luck. I hope you stocks are doing well- congrats on this "up" day. Peace.
That is a pretty silly post. You took a short position because one full price store was not crowded and one outlet had large markdowns?
First of all, the outlets are a small part of the business. Even if they had larger markdowns than usual, it wouldn't matter much. But outlets are all about markdowns. That is why they exist. You can't tell the real markdown from a sign. They can call the markdown whatever they want just by raising the initial price.
If you are going to short a stock, you need to do a much better analysis than that. You made fun of people for calling Walmart a sell by looking at the traffic in one store and then you did the exact same thing. That makes no sense at all.
Ummm...I think you need to read about the last 20 or so posts of mine before you call that one silly. I have ridden Coach down from $36 to $28. That equates to about a 20% gain. I can almost GUARENTEE that you haven't matched that in this market. Also, take a class in margins, my friend. The outlet discounts (higher than normal) could very well be significant to the bottom line.
Lastly, if the outlet is an "insignificant" part of the business then you made me feel a WHOLE LOT BETTER about being short because the retail stores aren't doing well. Thanks for cheering me up.
2 things strike me:
1) There is so much bad news and low expectations already built into the price of COH and other retailers... sure it can lower... and that represents an opportunity to but more stock.
2) When people make posts about "stores", i think they forget what a virtual,on line world we live in... and that many people go to stores to check out merchandise... then buy it on line. The COH website is very busy, I"M sure..
Everyone loves to shop online, especially girls and women. Have you seen the COH website? It really is brilliant.... and updated constantly.
That's it. LT>
Have a great wknd.
Excellent response. After I finished my post I had the same thought you brought to light. Is the "bad" news already reflected in the price. I think it would be foolish to assume that at least MOST of the bad news had not already been discounted. All of it? I don't know. I am pretty confident that Coach is fairly close to a bottom, but I still think it won't officially happen until the entire market capitulates....if it capitulates.
The web angle I never even considered which is why I love hearing other view points. Yes, I have been to their site and it is quite good. I guess my qustion to you and others would be- What is the benefit from buying from the site?. Is it cheaper? I really would be interested to know. You are right, though, that the web is an unknown when considering sales. I will try and find out their % of sales that are web based. Thanks for the tip.
At the end of the day I hope we can all make money. Also, shorting stocks (which I really love doing) is a loser's game LONG term. You are swimming upstream, however, I am a firm believer in adapting to the market and this is all that is currently working. My goal is 20% annual gains- regardless of what the market does. Being short, lately, is the only thing that will get me to that goal. Happy 4th everyone.