I am not sure about how the stock will go up. But it should stabilize with a firm dividend, and buying back shares helps - if they have the cash flow to pay the dividend.
I am happy with the price move today. There was no major move, it could have been worse. Seems like .50 was a good pick. I do think the price should stabilize now, all other external factors staying equal.
Its obvious that with the stock price so devalued, they are going to use the extra $ that would have been paid out in 3rd and 4th quarter to shareholders (.25 cents a share) to buy back shares (or make an acquisition, but buying back is a better play). With the growth in other countrys and the Walmart checks that will roll in soon, the stock is going to go up
The company is now trading for around 4X revenue, Normally management has said in conference calls they like to pay 4 to 6x to acquire brands. In any event 4X revenue seems very cheap for this business. Especially since their major contracts go out several years. Obviously buying a good brand at a good price is attractive, but repurchasing shares is also very attractive right now. To be honest, I hope they buy back at least some stock, it would help the share-price, or at least support it at the current level and provide very good long term value. Acquisitions might be more risky but I trust managements judgment on that one.
TAZMANN, where would you place the acquired brands?
The company's model is "licensing" to retail. Retailers in this economy are not doing well neither willing to take on the risk of bringing in additional brands inside their stores.
BUYBACK is the way to go.
I am not sure what this will do to the stock price over the next 3 months. I think the stock price is already discounted thinking the div would be reduced, and the current economic issues. They noted the increase in international to offset US issues. The concurrent news the strategic review is lifted and that stock repurchase may occur is good. But it seems to me the stock will continue to drift down without the free cash flow to provide a solid dividend. The idea of major growth is not going to come into play here short term, so dividends are key.
It is hard to value this company. I bought for the dividend over 2 years ago, and have held due to the dividend. But now I question it, and will watch my holding closely. I expected a really long term buy and hold for this stock and soak up the dividend for conservative but steady return. Now I am afraid the dividends even over the long haul will not recoup the loss in share price. I have to believe the management owns enough shares they need to keep this balance in sight and make it the goal for thier own investment -again this keeps me holding the shares. Tomorrow should be interesting.
The "For Sale" was also taken down, which was probably the reason for the drop in price.
Russell J. Riopelle, CFO of Cherokee, added, “As a result of the general slowdown in M&A activity, and the recent decline in our stock price, although inquiries still continue, we have ended our strategic alternatives process with Goldman Sachs. During that process the Company was advised not to, and did not, repurchase any shares under its existing share repurchase plan. Now with the strategic alternatives process ended, we can once again repurchase stock under our previously authorized stock buyback program, subject to applicable legal requirements.”