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Clumsy Rick

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  • Tablets Should Provide a Powerful Sales Boost for RadioShack [View article]
    A smart analyst at MKM Partners agrees with you on MMI. They recently published a report showing Xoom completely sold out at BBY now. Tablet market will have more than one winner.
    Mar 30 09:41 AM | Likes Like |Link to Comment
  • Zumiez: Fishy Accounting, Dangerous Valuation [View article]
    Earnings growth was indeed less robust when you consider the accounting change, but there is no news here and no need for "digging" in footnotes. The company highlighted the change on their conference call a year ago and had it clearly in all their 10Q SEC filings since then. Not sure how the company could have been more transparent about the change.

    The issue was also already pointed out on seeking alpha previously (seekingalpha.com/artic...) almost a year ago, although the author acted as if he/she had "uncovered" something. If you don't follow the company, I guess its news, but every analyst out there and anyone else who owns or follows the stock closely knew about this. It was built into all forecasts.

    Curious about the $310 mm off-balance sheet though. I see no number to correspond to it. There are nearly $350 mm in operating leases commitments, which is maybe what the author is referring to. That would certainly not be a red flag as its the normal course of business for all retailers.

    Valuation is rich, true. As for 20 years at 10% growth, not sure about the calculation but I'm bet it would look a lot different if you started with 20%-25% growth the next several years before falling back to a steady, longer term growth rate.
    Mar 30 08:46 AM | 3 Likes Like |Link to Comment
  • Office Supply Retail: Entering a New Crush Zone [View article]
    This article caught my attention because it referenced ACCO Brands (ABD). However, your comment on ABD seems to be a mistake. Unless I somehow missed it, they didn't report earnings last friday. They report in about three weeks and actually have been doing fine. Nice article though.

    "Last Friday, Acco Brands (ABD) missed its earnings estimate. "
    Mar 30 07:43 AM | Likes Like |Link to Comment
  • Best Buy: Muddled Message on Conference Call, But Path to Upside Is Clear [View article]
    Not that this explains it all by far, but traders are looking for a short to pair Gamestop and RSH long right now and BBY is easy to pick on.
    Mar 29 07:01 PM | Likes Like |Link to Comment
  • Best Buy: Muddled Message on Conference Call, But Path to Upside Is Clear [View article]
    You are making statements that just don't agree with the facts. Consumer electronic sales have been flat or declining for the last four months and have been decelerating since July. It was stronger earlier in the year, which is exactly when BBY's sales were stronger, but has been very weak and getting weaker each month lately. It will probably improve now that we are past peak TV season.

    So, despite how it may appear to you, the facts are that the overall cycle has been weak, exactly when BBY;s sales were weak
    Mar 29 06:36 PM | Likes Like |Link to Comment
  • Best Buy: Muddled Message on Conference Call, But Path to Upside Is Clear [View article]
    Just a pt of factual clarification on: "we have had a massive CE product cycle over the past few years, in smartphone-- but BBY is getting less and less of the business."

    BBY is getting more and more of the business, albeit off a small base. Ended year with 6% of the market vs. 4% the year before. They didnt disclose 4Q sales growth, but 3Q was up 30%
    Mar 29 06:02 PM | Likes Like |Link to Comment
  • Nintendo 3DS Should Be a Winner for Best Buy, GameStop [View article]
    My numbers only assumed BBY's market share as it stands today, implicitly recognizing that other retailers are selling it as well. As for whether families shell out $250, only time will tell. NY Times seems to think so (not that they are the authority on gaming!). And certainly the market has shown that consumers will pay for innovative products (ipad good example, but even Motorola Xoom is sold out at BBY in a day this week) that are even more expensive.
    Mar 29 09:39 AM | Likes Like |Link to Comment
  • Rex American Resources: More Positives Than Negatives for Closing Underperforming Plant [View article]
    Update: This morning, Rex announced has sold a portion of its investment in LH and wrote down the rest. The impairment was a few million more than I expected, but the company still has 49% interest it can sell off. More importantly, my initial glance at the 4Q press release suggests very good results. Pro forma EPS (ex-charges for LH) are $0.70- far better than the $0.55 I thought they would achieve and the $0.35 (?) the consensus had. This is very good news.
    Mar 29 09:31 AM | Likes Like |Link to Comment
  • Will Eddie Lampert's Next Big Purchase Be in Retail? [View article]
    I don't know ESL appetite for more deals right now, but I think you are spot on with the retailers you've highlighted. These are some of the best buyout candidates in retail (i'd add BBY- seekingalpha.com/artic... but maybe not for ESL).

    I think the key question is not whether ESL is interested because clearly private equity is still swirling around the space. I'd rather like to know which company would consider selling themselves right now. If any one of these retailers announced it was hiring a banker to consider strategic alternatives, its stock would be up 5%-20% (depending on which one we are looking at) over a short period of time.

    I particularly like RSH from your list for Eddie. Sear's best products are Kenmore and Craftsman. RSH is really the best company to distribute these. Besides, with the outlook for CE products strongest in mobile products AND the Internet becoming more of a factor, a very large network of small stores is starting to look like an asset.
    Mar 27 09:45 AM | Likes Like |Link to Comment
  • Best Buy: Muddled Message on Conference Call, But Path to Upside Is Clear [View article]
    I'd see this for more on that
    seekingalpha.com/artic...
    Mar 26 11:37 PM | Likes Like |Link to Comment
  • Best Buy: Muddled Message on Conference Call, But Path to Upside Is Clear [View article]
    Very good point. The model wouldn't be sustainable otherwise. Will be interesting to see how it plays out.
    Mar 26 11:36 PM | Likes Like |Link to Comment
  • Best Buy: Muddled Message on Conference Call, But Path to Upside Is Clear [View article]
    You repeat yourself but haven't refuted any arguments.

    "Today, flat panel displays are much easier to ship, meaning that Amazon competes. There's no particular advantage to buying an easily shipped flat panel from BBY, and lots of disadvantages."

    As i have said before, there are millions of people that won't buy a tv online. I'm one of them because unless you have seen two side by side, its very difficult to compare models even with the same specs. You may disagree, but there are millions of people who don't. And this is in a down cycle with no new technologies to drive people to stores. Another TV upgrade cycle will certainly come. So at best this is a cyclical, not secular, issue.

    Besides, as i also said before, BBY is going to offer 300 additional sets online and compete against AMZN and others on price. I seriously doubt there "lots of disadvantages" buying from BBY online. In fact, I am sure there are a very large number of people that would welcome buying online from them over some no-name online retailer and probably some that would prefer them over Amazon.

    "Digital Cameras- Was once a huge segment for them. While cell phone cameras aren't going to compete with Canon EOS, for many folks, they're "good enough" and sales in this segment have collapsed."

    Not sure where you get your data from, but digital camera sales have not "collapsed" this year. if you do some research you'll see that 3D cameras are on the way and getting high interest from consumers surveyed. Like I keep pointing out, CE is about innovation. New products rise up to replace old and BBY keeps selling them.

    As for the size of the box, I already addressed that throughly in the original article. Shrinking the box over time is a big opportunity. Any announcement regarding that would be bullish for the stock.

    I see you left off your argument on digital media this time. I hope shorts read this and do the same as its the most often cited reason to bearish. A little math instead instead of blind fear shows how overdone the whole argument is.
    Mar 26 11:34 PM | Likes Like |Link to Comment
  • Best Buy: Muddled Message on Conference Call, But Path to Upside Is Clear [View article]
    I sort of agree, but I still like RSH too. The AT&T/T-Mobile merger is going to result in hundreds of corporate store closures and the third party, mom and pop kiosks/stores will be hurt even more. There's plenty of room for both BBY and RSH in mobile right now. Its a hot category getting hotter. I also like the new displays and expanded mobile devices RSH is testing in a few stores. As long as the product cycle favors small, mobile products, RSH has a chance to compete if it can get its act together.

    BBY the better buy though, I agree.
    Mar 26 10:04 PM | 1 Like Like |Link to Comment
  • Best Buy: Muddled Message on Conference Call, But Path to Upside Is Clear [View article]
    BKS, Blockbuster, Borders, Hollywood Video- they all sold media. Media is largely going digital and therefore the majority will be sold on line.

    CE devices are not media- you can sell them online cheaply (less so if they are taxed properly or expensive to ship), but its not like downloading a book or music. As Chris says below, some people will always want to have their hand held through a purchase (a lot more when there are newer technologies), have a place to return merchandise, want to take it home with them (immediate gratification), want to browse for impulse purchases (or see what's new). The size of the store, level of services, the percentage of its total sales a brick and mortar retailer does online and lots of other things can and will change over time, but buying CE products at stores is not going away and BBY, as a strong operator and the industry leader, isn't either.

    Funny you should mention BKS. If one is worried about retail store sales going to online retailers, clearly books and media are further along and BKS a much higher risk than BBY. And yet, BKS trades at 5x EBITDA, well above BBY at 4x EBITDA. Just more evidence that irrational fear and negative momentum have created an incredible opportunity for investors in BBY.
    Mar 26 05:45 PM | 1 Like Like |Link to Comment
  • Best Buy: Muddled Message on Conference Call, But Path to Upside Is Clear [View article]
    I agree with most of Bill's response to your questions. BBY has been successful with exclusives, especially for an introductory period in categories like handsets. Also, adding exclusive content for DVDs and other packaged media. I think they are looking to grow this (i.e., special content for games like GME does) but its easier in some areas than others. This one way BBY can continue to compete, but not the only answer.

    On the private label, again, they are always looking to expand where they can. This is an old strategy, but one that continues to gain momentum as it takes time to build brands.

    On the major increase of online SKUs BBY is making, I think it will be largely third party branded products, especially the ones selling well on Amazon and other places it currently doesn't carry. BBY already sells most private label SKUs online. The idea is to go head to head, SKU-by-SKU, on pricing with Amazon and others. If a consumer does a price search online for a TV, BBY wants to come up competitively for virtually all important TV models. Also, its SKUs they won't be carrying in BBY stores. That way BBY can price very aggressively, without the store overhead factored in, and not worrying about cannibalizing in-store sales. Finally, the expansion of online SKUs is going to be, to a large extent, working capital free, with most new SKUs shipping directly from manufacturers or third parties.

    I think many analysts have ignored or overlooked how big a deal this online expansion will be. BBY will be capturing sales from a very different, tech savvy but hyper price conscientious consumer that they are missing today. It should be a decent margin as the overhead is low. Companies in other retail channels have done this quite successfully the last two years. I think Internet could grow to 10% of sales from its current 5% over the next two years, adding $2.7 BN in revenue and $0.40-$0.50 to earnings.
    Mar 26 09:18 AM | 4 Likes Like |Link to Comment
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