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Cache Inc. Message Board

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  • jtmaimi jtmaimi Jan 17, 2010 9:26 PM Flag

    Sell company or Replace management!

    Rammi, Thank you for showing me the link. I was able to listen to the call again. It helped me to listen to it again. Thanks.
    I agree with you about chasing competitors that are doing well now. It is to late now that there stock prices are up 4 to 5 fold since the march lows. I guess some deserved this kind of appreciation and others do not. I’m just surprised that Cache was not rewarded much for the prudent steps they have taken.
    I’m not to sure about their new strategy of becoming a fully integrated company. From now on they will design and produce the majority of their products. This means that they will have to use American workers to produce all the products. The sad fact of this is that American workers haven’t been able to compete with foreign workers for the last thirty years. It is not economical to even try to compete with them. The main disadvantage is labor costs. In America the average hourly cost might be $18 while overseas the cost is $2. There are many other expenses that American companies have that foreign companies do not have. For example, Health care costs, insurance, higher taxes. This is why most textile factories have moved overseas. It a simple fact, American textile factories can’t compete with overseas factories. Sure they got a 7% increase in gross margins for one quarter, but how long can that last? It will not be long before the high costs of operating a factory inside the USA enter into the picture.
    I’m like you, I’m not an expert on women’s fashion, I just know retail in general. I simply go by the numbers. It really is not that important because the experts get it wrong much of the time. The proof is, if the experts got it right all the time they would not have staggering losses.
    It is encouraging to see the founder still buying shares at these levels.
    One comment you made I take issue with is “even if retail environment stays soft they should be able to stay in black”.
    They may be in the black on strictly a cash flow basis and that is fine but in reality they are in the red. If things remain stable for the next three years they will have a stock holders equity loss of 12 million a year totaling around 36 million. That would only leave about 25 million in net tangible assets. It might even be hard to keep their doors open.
    This unfortunately is very possible. The economy before was based on false profits provided by a housing bubble and home equity loans. Americans used their houses as ATM machines. That is history and now banks are cutting peoples credit. There is no more free money here in America. People are not in the same position they were in over the last decade. I don’t see what will bring a recover in the future.

    On the other hand, if the general economy is to improve dramatically and Americans become rich again then Cache will do very well. I guess the true issue we face is the state of the overall economy.
    I bought 25k shares last year for an average price of around $2. I’m holding them for a while to see what happens. I think this company could be bought out by another company for much higher prices. It would make sense economically. It is a very good candidate in my opinion.

 
CACH
0.65-0.05(-7.31%)Oct 24 4:00 PMEDT

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