Reason to be optimistic about same store sales?....
Looking through some of the transcripts last night getting ready for Monday's big CC, and noticed this about same store sales....
Q4 2011...they were up 12%. (beginning of 55 color program)
Q4 2012....they were up another 6%....or up about 18% from the Q4 two years prior when you add in the 2011 increase.
Q1 2012...up 22% (55 colors in full swing)
Q1 2013...down -1%....but still up 21% when compared with the Q1 two years ago.
Q2 2012..up 10% (55 color affect winding down)
The most recent quarters, Q1 and Q4 increased 18% and 21% compared to the same quarter two years prior. If they can keep consistent with that performance the last two quarters, that would mean an 8%-10% SSS increase this upcoming quarter.
Seems like a big swing, in SSS momentum, but I guess not when you take out the affect of the 55 colors from last year, and look at 2 years ago.
I realize that you did not ask my opinion on the write down but here is my 2c anyway. It appears to me that management is doing a better job in this area, although I agree they have a long way to go. If you look at 1Q inventory levels over the last 3 years, DOH has actually decreased (1Q 2011 - 8 months, 1Q 2012 - 7 months; 1Q 2013 - 6 months). I don't know how this compares to other companies in the industry. I also think that Marc has mentioned on several occasions that it is a focus of the company to manage their inventory better. They also have the ability to clear the stale inventory through their outlet stores which I believe is why they emphasized the build out of those first. All this is speculation but I would suspect the need for a "huge" writedown is mitigated by these factors. I do agree with your comment that they have previously done a bad job of managing Inventory and this is a key metric of how well mgt is performing. It is definitely something that I will want to see on Monday to see if they can continue the progress or revert to their old ways.
Good points. And I agree, I will be impressed if there is little or no writedown of the 55 colors. We'll see if they say anything about clearing it through the outlet channel. I've always wondered why they decided on 55 colors, when the competition barely had 15? Why not go with 32 or 21? Would it really make a difference in attracting customers if they had "only" 32 colors instead of 55 to choose from? Oh well. On to new things.
Do you think there is a possibility of a huge write-down due to worthless 55-color inventory? It seems to be their MO. Like with their Jeggings in the past. They like to recklessly throw the kitchen sink into new fashion trends, and then write it down when the fad fades. Just one more reason why the street doesn't trust Crossman.