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Cache Inc. Message Board

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  • ranni.malmsteen ranni.malmsteen Jan 12, 2010 1:34 PM Flag

    Sell company or Replace management!

    No problem, Just quick comment to add something to my previous messages:

    You know, i like management team. They have been very conservative and you see that when you look their balance sheet and other actions they have taken. Many of their competitors have over expanded their store base last years, and lock up to rent rates, what was in many cases uneconomical.

    They have managed company somewhat different manner, they have utilized last three years almost $40M stock buybacks (75% today’s Market cap), quite attractive prices and that will give huge boost in future, for company’s intrinsic value per share basis.

    Of course there is something what I don’t like in this company, like modification of compensation plan what went throught in last meeting, changes (deeply downward revised exercise prices) was more than generous, it was gift. And slower pace on share buybacks, in times when there should be more opportunistic and collect all shares what Mr. Market gives away for free. But no one is perfect.

    And like I said; in earlier message:
    “Ranni: Don’t let accounting earnings mystify your judgement. You should look cash flows.”

    If you listen last 3Q conference call carefully, it will give you clue:

    (38:50) Analyst asks: “House keeping question, how much your inventory was down per square foot and how much you planned to be down in Q4?”

    Caché’s CEO: “We don’t have those calculations right here, but like Maggie said earlier: it will be pretty consistent. The levels won't change significantly… we are very excited to keep them lower… err we are not excited about it, but I think its right thing to do… “

    I’m excited too what comes to inventory levels ~$19M (Q4). You have to go back, more than decade (1998) to be as low at dollar basis. I think "leverage" to generate sales couple next years is almost twice what it was 1998. One would say, they have been more than conservative what comes to accounting. ;) But I like that.

    Who knows what will happen in future, but if you look their:

    Balance sheet & cash pile (68% of Market cap).
    Reduced share count with buybacks +16M -> 12,7M.
    Cost cutting actions +1.14$ (per/sh).
    Inventory levels are lower than ever in this decade (dollar basis).

    To put it simply; I would say, they have better days ahead.

    Disclosure: To give some clarify, for my earlier "load up the truck" comment, i have to say this is not just talk the talk; at this point I have accumulated more than 31k shares. I think its very rare opportunity to buy so well managed company like Caché at these prices.

    I hope you understand, i have some difficulties to write english.

    Please, feel free for comment.

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