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Design Within Reach公司 Message Board

  • glassman3141 glassman3141 Aug 11, 2004 2:24 PM Flag

    Executive pay

    I looked into this company earlier this year because I like (and own) its products. Most financial data check out, and I like their niche.

    However, I didn't buy the stock because of the huge pay packages DWR's executives dole out to themselves. The CEO alone makes $500,000 a year, which is 15% of 2003 net income!

    The real problem here is that DWR is just not very profitable. A company selling luxury products should make a much higher net margin than 3%.

    Considering that the stock sells at 66 times earnings, there is no margin of safety.

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    • True, the valuation's getting up there, but I'd point out that once this firm finishes putting in new stores it's profit margins should increase dramatically.

      • 1 Reply to dean3033
      • Not sure I agree that the profit margins are going to increase dramatically once the stores are built - most of today's costs are capitalized which will then need to be amortized. The ongoing costs of rent, staff, etc. to open and run these stores will also start to hit the P&L. The only costs that they have today that will go away once the stores are open are travel, prof fees like architects and legal and the mgmt time focused on this rapid build out.