The more you talk, the more you make the case for them. Yeah. They can sell brands to raise money. They have plenty of options. The biggest fear for ANYONE is bankruptcy, but you're not laying out a roadmap to get them there. You just keep saying "Debt" and that's it. I'm not saying these guys are a great company - far from it - but again, I just don't see how their viability is in question.
To say that the existence of the company is at stake due to debt levels is too narrow a view. Way too narrow. Other elements at play here. It’s not just about the amount of debt, it’s also when that debt is due and are you a good credit risk. You go Pfizer or AT&T and demand that they pay up all the debt they currently have, they can’t do it. It’s the same here. They’ve got 300 million due in 2016 and a combination of refinancing a little bit, paying some off with cash on hand, they’re okay. Then you work on next lump sum debt due. If the FCF numbers come anywhere close to what they are saying, the viability of the company is really not in question. Anybody could get a loan with that kind of FCF… while the accounting errors gave them a bit of a black eye, they are not a bad credit risk.
That said, I'm not sure they are all that great a company – seems like the brands should generate more than they are (openly admit to ignorance on licensing), some of the cash on the books would have to be repatriated (taxes) so cash on the balance sheet isn’t quite as good as appears, I would certainly review the viability of brands like OP and Sharper Image (bleh) - but again, if the FCF numbers come anywhere close to what they are saying, this is a screaming value at 2X FCF. Next question, will they make the FCF number? Obviously, plenty out there who don’t believe they can. This one is a bit of a puzzle. Essentially, the sellers should be gone because the shares outstanding have turned over in the past few days so, the downside risk seems low short term anyway. I'm in for a small amount.
By and large you pegged it although you weren't bearish enough on the comps call. -3.9%. Whew... and now 1.40-1.50 vs. 1.80-1.90 earnings. Although $200 million share buyback. Here's their chance to grab them.
I don’t want to buy shoes/clothes through Amazon because I am touchy feely and always afraid that if I order size 12’s, when I get them, feel like 11.5’s and so will start about 2 weeks of hassle. Let me go to the brick and mortar and buy em. This is hopefully just a fairly consistent grower whose stock gets bought up or thrown to the scrap heap based on emotion. At 10X earnings excl cash, while I suppose it could get cheaper, the stock has been tossed aside.
My observations are very similar to yours. I live around DC and the one I go to is always busy with plenty of people in the checkout line… haven't really shopped anywhere else for shoes since my wife introduced me to it a few years ago. While Amazon might be a fear, it’s not showing in the sales. Economy a fear? Sure. But I don’t see too many people walking around work barefoot unless they are a lifeguard. People have to buy shoes and I'd rather go with the seller than a single shoe designer here.
Not going to put a price target on this – that's just a big guessing game. Feels like the downside risk is minimal and plenty of upside optionality with that pristine balance sheet.
Free cash flow (FCF) – Money left over after all the bills have been paid. Normally the shorthand computation is Net Profit + depreciation – capital expenditures. When you do that, you get 140-145 million. Changes in inventory must be material enough (plus whatever else I am missing) to push that number down. At any rate, growing sales, 500+ million in cash and investments on the book (BECAUSE they generate a lot of FCF), 3% dividend, and NO long term debt is worth more than 13X earnings (10X if you back out cash and investments) for me. They’re planning to use some of their cash to buy the rest of Town Shoes that they don’t own and even after that, they could declare a special dividend of a dollar/share and not really chew into their cash cushion too bad… or they could buy back $100 million of stock. Lots of options here IMO.
- PS has a seat on the board (1 of 7).
- Hope not.
- Not initially, no, but you'd have a hard time convincing me that some of the recent drop isn't VRX related.
- Was nearly successful killing JC Penney,.
I'm hopeful that the Barrons piece doesn't provide too much of a bump on Monday. I'd like to get some in at this price. Seems pretty cheap after looking at the numbers. Anybody here have the FCF numbers they'd like to share? I came up with about 140 million of 12 month trailing FCF. Barrons piece says about 100 million. Kind of like to know where I went wrong on that.
I do agree with the other poster that said this is an Ackman issue although had things been going well, the CEO wouldn't be retiring. Next CEO hire is going to have to be well-thought out. Hopefully (H)ackman doesn't try to install Ron Johnson in the position... buying anything where this guy is involved has proven to be a mistake.
Death spiral? Come on... please. A bit overstated there. Law of large numbers? Yeah and down energy market.
Yes. To himself. Each dollar drop is a dollar closer to him taking it private. Don't know that it would do shareholders that bought at 40 or probably even lo to mid 30s, but I think it's becoming possible.