Dressbarn, Anne taylor, Chico's all doing well now. The stocks are way up. I think this company should put itself up for sale or get someone in there that knows what they are doing.
100% agree.........actually Chs with their WH/BM stores would be an ideal candidate to buy them out......interesting also that Cache just pinched one of WH/BM merchandisers to improve their selection...
Chico’s would be a great company to buy Cache, the management is clearly stronger at Chico’s. Cache’s management team just keeps making the same mistakes over and over again. They discount the merchandise 50% and then complain that they don't make any money. It's ridiculous! Someone needs to step in and take charge of this company. I’m surprised that big shareholders have not been more proactive.
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.
Hey guys I kind of agree, Cache is just to damn cheap but they frustrate me with some of the things they do. Dismissed prior designers(?) for 2.5 million? I mean that is criminal to me.
Mgm does have ownership which is important.
They beat on revenues, missed on EPS. Still, they have about 2.80 per share in cash. Inventory should be lean for new stuff so if they are finally getting it right then better times should be ahead.
Now I have to get back in. I bought today and will try to buy on any weakness this week. A year from now pretty sure you wished you would have bought at anything under 5 but here is hoping for another shot under 4 first.
With repect you are missing a very valid point regardless of how much cash they have. 3 Years ago they had a niche market, slightly more upmarket, good quality and clothes for women from 25 to 45, particularly the more mature woman who wants to look younger(don't we all?)and doesn't mind paying for it by buying quality to go along with contemporary styling.They decided early last year to invest in cheaper fabrics and therfore have lower selling points and it shows. They have lost a loyal crowd and White House/ Black Market(owned by chico's who have done a tremendous job over the last 18 months) are eating their lunch. They also made a terrible mistake by going heavily into prints and gawdy dresses and it hasn't paid off.
Unless they change in the Spring and revert back to their roots, they will continue to have a serious problem. jmho.
p.s. They might have cash, but they have lost some cache.
Your English is very good! I understand you completely. I agree with most of what you have said.
I like the fact that they are conservative too. They are doing some prudent things. Thanks for pointing out the inventory status. I guess that could help eventually in the future if the economy turns around.
On the other hand they bought most of the stock back at high prices and stopped buying it back at low prices. I believe they bought a lot at around $14 a share!
They bought back very little at low prices.
They invested very little of their own money in the company. They have little skin in the game. They leave it up to the generous compensation plan.
They were so quick to discount at Christmas the missed the major shopping done in the last two weeks of December.
I guess you are right about nobody being perfect. It is just tough to see their competitors like Chico’s, Dressbarn, Ann Taylor, J Crew doing so well in this environment.
imd85: …”Dismissed prior designers(?) for 2.5 million? I mean that is criminal to me.
Mgm does have ownership which is important.”
I understand your frustration well. Many would say that, “hey, it is only $2.5 million, who care's?”, but company at this size it really matters. Every out flown dollar should be utilized only when you can get reasonable risk adjusted return for invested capital. It is sad to realize that priority number 1, was to keep AVD people happy, rather than create wealth for shareholders (buybacks). There have been lots of this kind of one / two time tricks in last two years, but I think at least I really hope that finally we can put these issues behind and we can turn new page.
minbran: …”They have lost a loyal crowd and White House/ Black Market(owned by chico's who have done a tremendous job over the last 18 months) are eating their lunch. They also made a terrible mistake by going heavily into prints and gawdy dresses and it hasn't paid off.
Unless they change in the Spring and revert back to their roots, they will continue to have a serious problem. jmho.
p.s. They might have cash, but they have lost some cache.”
Yes, this is legitimate point and I have to admit, I don’t have competence (or ability as foreigner) to analyse this kind of issue. They may have lost some market share.
I considered they did quite well before that financial crisis started and reasons we didn’t see profit in bottom line was in those “one time” items and corporate overhead (sg&a) costs which have ballooned in last years.
But if you look their cost structure today, you would agree that; they have potential produce good numbers per share basis, even their top line have taken hefty haircut. It’s difficult to predict, where sales will stabilize over time, but I would say that they will be some what higher than year when country was in recession. We should also keep in mind, how their accounting practises have been more conservative, than industry in general.
jtmaimi: ”I understand you completely. I agree with most of what you have said.”
Thanks for the kind words.
jtmaimi: “On the other hand they bought most of the stock back at high prices and stopped buying it back at low prices. I believe they bought a lot at around $14 a share! They bought back very little at low prices. “
This is biggest disappointment for me, what current management team has done.
I think average buyback price is around $10 share and that’s still accretive for long term owner (below intrinsic value). Of course there is million more corrupted ways to use cash than reduce share count ~20%. That’s why I’m not complaining those buyback prices what they have already done.
What comes to situation where they are willing to buy something at $14 and they stays idle when market place is selling same stuff (I would say slightly better) at $2-4 prices, that’s the case, where is no good excuse. Only if management team is to pursue maximization of self-interest; legitimate reason can be found, all other viewpoints to this looks somewhat ridiculous. Definitely they not were acting like value investors.
There is no question, the priority number one for management team should always be create wealth for long term owners not transfer wealth from shareholders to management team and directors pocket. Not buying-out some owners exclusively at inflated prices. And before someone argue that, it is not fair for those poor owners collect their shares back at these (deeply discounted) levels.
I would say, this was legitimate argument in times of great depression 1930´s, when companies bought back their deeply discounted shares from owners without notification/disclosure. But that’s not the case these days when companies have to have buyback plans on place.
In fact, times when there is selling pressure (in this case last 1.5 years), it would be best interest for everyone that management team is ready to take every step to correct that gap between price and value. Those owners who are forced or willing to sell, buybacks would give precious liquidity for ex-owners to get out. Of course it would be very accretive for owners who have chosen to stay.
Finally I would say to you fellow shareholders and other readers, I appreciate your comments.
It’s interesting to see what management team has to say today’s conference.
I will continue my monologue to give just quick comment related yesterday’s conference presentation.
No single word of buybacks, maybe they are progressing in their untapped plan? It would be good reason to be silent.
They have controlled inventory even tighter manner what I first estimated. $ 16.5M and that’s amazing. You have to go back years 1995 – 1996 to be as low at dollar terms, and of course Caché’s sales potential is doubled – tripled from those days. I have all reasons to believe, in next two years they will be successful in their objectives, turn inventory much faster.
Like I said, even I disagree some capital allocation decision with management team and there is some unanswered questions (like, why buy high $ 14 not low $ 2 – 4?) I still repeat my statement, I like management team and I think, that we Caché’s owners are in good hands. They have long proven track record.
It is still some what difficult to understand this disparity, between price and value. How Mr. Market can be so blind over longer period of time. I agree 2008 capitulation for owners was rough blood bath, and many would still shy away?
I would estimate that, when we break out 7.8$ levels we would be back on the radar (+100Mcap), when peoples are trying to find some undervalued investment opportunities.
Predicting future can be dangerous. If I have to place bets like I definitely have done, I would predict that next two years Caché will be one of the best performer retail stock, by wide margin. You understand the point, it is not best company in industry, but disparity between price and value is so huge.
warning: fasten your seatbelts, this rollercoaster is ready to fly upward.
Thanks for your comments. I like hearing your thoughts.
Just to play devils advocate. They have had very low inventories for the last year and still lost 12 million dollars. It doesn't seem to have helped much. They have either the wrong product or they discount it to quickly.
I was interrupted yesterday when trying to listen to the presentation. I thought I heard them speaking about more one time charges again. Seems like they have had one time charges every quarter for the last few years. I would like to listen to the presentation again but can't find a replay of it. If you know of one please let me know.
It seems like folks commenting on the product mix are right. It seems like this management team can not provide a product that customers want to buy. However, cache's competitors seem to be thriving. I hope they can provide a good product soon.
The conference presentation seems to be again online: http://investor.shareholder.com/icr/2010/eventdetail.cfm?eventid=76135
jtmaimi: “Thanks for your comments. I like hearing your thoughts. Just to play devils advocate.”
I have seen that negative arguments are much more valuable for investor than bullish cheering. I really appreciate when you are trying to poke holes on my investment thesis.
jtmaimi: “They have had very low inventories for the last year and still lost 12 million dollars. It doesn't seem to have helped much. They have either the wrong product or they discount it to quickly. I thought I heard them speaking about more one time charges again. Seems like they have had one time charges every quarter for the last few years.”
If you look on competitors in general, first reaction would be, they are doing lot better, but if you take hard look on financials you would realize, it’s not true in many cases.
And when I’m talking that Caché have been very conservative in accounting, I mean the difference is that they have taken losses so quickly as they can rather than just kicking the can along the road (cwtr etc). You cannot find so tightly controlled inventory or as pristine balance sheet from most competitors. Now we have all reasons to think that major part of losses from inventory, goodwill write downs and other one time charges are history.
It is always good to analyze what have happened in past, but you cannot do investment decision from rear window view, that’s history. Investors should concentrate to analyze what kind of assets we have left after the recession. I would say, none of vital assets haven’t gone through permanent impairment. Couple stores less, lot more cash, lower inventories.
And what comes to enhanced earnings power, I think you cannot find other company from this industry where there has done so huge improvement by cost cutting (relatively). More than dollar per share cost take outs means simply, they have huge leverage produce significant profit to bottom line if sales improves, and even retail environment stays soft they should be able to stay in black.