1) close under-performing stores/markets - they did not do that. Miami and Chicago are challenges.
2) cut advertising gross from 10% of sales to 5% of sales. Net goes from 6% to 1%.
3) gotta cut payroll by 20% - and change how the compensate.
not a good combination. They are using a 1970s comp format.
only burning about $1.5B a year - have at least 2 years left...maybe more.
Aug 14, 2015 BERKOWITZ BRUCE RBeneficial Owner (10% or more) 61,450 Indirect Purchase at $24.83 - $24.99 per share. 1,531,0002
Aug 14, 2015 BERKOWITZ BRUCE RBeneficial Owner (10% or more) 61,450 Indirect Sale at $24.77 - $24.95 per share. 1,528,0002
wouldn't color them done yet - problem is that they need to pack 6 years on not making needed changes into a very short time period. And yes, historically that formula has meant death.
can smell the cashburn from here.
They will need to monetize these properties early in 2016 to fund the 'cash burn', which will likely be $1.5B next year - not counting any Pension Fund make ups.
think they need to directly address the planned changes in the 8/6 earnings (or lackthereof) call. gotta close under-performing stores/markets, gotta cut marketing costs by 50%, and gotta cut payroll by 20%. and the comp system for sales associates must be customer friendly.
wonder if the Freeman Spogli guys will show up - the $900MM decline in Market Cap cost them $450MM.
geez - this was never about a retail turnaround. name one retailer, ever, that has lost this kind of market share and survived, let alone thrived. this is a 'monetization of retail assets' play - and things appear to be going according to plan.
Jun 3, 2015 LUXOR CAPITAL GROUP, LP
Beneficial Owner (10% or more) 146,667 Indirect Sale at $38.84 per share. 5,696,546
Jun 2, 2015 LUXOR CAPITAL GROUP, LP
Beneficial Owner (10% or more) 750,000 Indirect Sale at $38.42 - $38.43 per share. 28,819,0002
Jun 1, 2015 LUXOR CAPITAL GROUP, LP
Beneficial Owner (10% or more) 58,729 Indirect Sale at $36.39 per share. 2,137,148
They do not have to 'sink'. They have delayed change to the point that the transformation change could kill them, but as long as Freeman Spogli stays patient they can probably survive. Again, need to close under-performing Stores/Markets, cut Marketing expense in half (reducing the net from 6% to 1%), and cut payroll by 20% (hard to do but necessary). And I would recommend a change in how they compensate Sales Associates. Need to move to a move 'customer friendly' approach.