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Nitin Gulati

 
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  • Coach - Undervalued Company With A Buyout In The Cards [View article]
    First of all , I never mentioned Bloomberg link in my article. You seem completely oblivious of news/ rumors which are floating out there. Your asking the question Who is trying to buyout COH suggests your attention to detail since it was mentioned in the first paragraph of the article.

    As far as pump and dump goes, I have been writing my opinion on Coach since late last year, and also have been strategic mistakes Coach's management has done to cede the market-share.

    I hope you do your home work next time you comment
    Aug 13 08:25 AM | 2 Likes Like |Link to Comment
  • Coach - Undervalued Company With A Buyout In The Cards [View article]
    I wouldn't characterize it as dejavu because back then everybody underestimated the gap left by upmarket luxury brands for affordable luxury. Those who saw it, capitalized on it ( Michael Kors ). But the industry dynamics have changed. Big brands have realized their mistakes , and sure enough they do not want to compete on price wars, considering the risk involved with brand dilution. Essentially, it is coming down to what they and will do " different" than Michael Kors to attract new consumers.
    Aug 12 11:36 AM | 1 Like Like |Link to Comment
  • Coach - Undervalued Company With A Buyout In The Cards [View article]
    But at that time everybody assumed affordable luxury will not hurt luxury segment - which is not what happened.

    Now with luxury players teaming up, affordable players have more to lose. Coach's management made blunders and stock got punished , they have to steer the company back in the right direction , lay out their strategic plan
    Aug 12 11:32 AM | 1 Like Like |Link to Comment
  • Coach - Undervalued Company With A Buyout In The Cards [View article]
    I have modeled for decline in revenues for the next two years, estimating $4.23 billion for next year, $4.21 billion for the following year, decline in operating margins will stabilization around 28%.

    Issues with PEG ratio is that they do not completely neutralize the effect of growth and its not linearly related. Even though a higher PEG ratio suggests low growth ratio but it also supports the belief that market believes the company can attain growth more efficiently.
    Aug 12 11:19 AM | 1 Like Like |Link to Comment
  • Coach: An Imminent Takeover Target? [View article]
    All in all company needs to make the switch to upmarket as opposed to ceding to the likes of Michael Kors on price parallelism. Management very well recognized the fact that lost the battle to new entrants in affordable luxury but they can the win the war by steering the company in the right direction. I strongly believe it remains undervalued.
    Aug 10 05:51 AM | 4 Likes Like |Link to Comment
  • Whole Foods: Should Gross Margin Erosion Really Matter? [View article]
    I can see your wait and see position, since it will be atleast couple of quarters before street will start to realize the surprise effect from operating margins
    Aug 8 08:41 PM | Likes Like |Link to Comment
  • Whole Foods Is In A Whole Lot Of Trouble [View article]
    Do you really believe Whole Food's is losing it competitive edge , as evidenced by the slowing store growth rate. Since when store growth rate became its advantage. Biggest advantage Whole foods had and it still exists is highest quality standards for its products, diligent selection of store location to match up with intended consumer demographics. Essentially think what Whole Foods does differently that no other retailer does.
    Aug 5 06:24 AM | Likes Like |Link to Comment
  • Ignore The Bears And Buy Amazon [View article]
    Let me mention where in your article, you have essentially contradicted your own thesis.
    First and foremost ;
    "Maintaining high margins in the retail industry is almost impossible. Competition eventually drives them into the ground, and the low-cost provider always wins." - here you are essentially communicating that Amazon will not be able to achieve higher margins, and you are assuming a 5 fold increase in operating margins. That essentially means that they will be stop investing and that money will flow to the bottom line. So if they stop investing, will they be able to capture the global $15 trillion online retail market you alluded to. I would suggest doing a simple math - calculate how much Amazon has invested in last 10 years to generate the additional revenue and then you can use this incremental number to determine how much it will need over next 10 years to grow their revenue by 20%.

    I agree that Amazon has completely revolutionized the online retailing and remains a leader in that space, but if you are assuming it will be able to grow 20 % annually over the next 5-10 years then do not forget the extra investments it needs to make.

    I published an article over the valuation of Amazon some time back , might be interesting to you for putting numbers into perspective
    http://seekingalpha.co...
    Jul 17 09:09 AM | 6 Likes Like |Link to Comment
  • Apple Knows How To Deliver Against Google And Microsoft Into Earnings [View article]
    Major issue with Apple's stock until April earnings report this year was disappearance of growth premium from its earnings multiple. Essentially what last earnings report changed was it reignited the growth expectations - driving stock higher. Company has pulled all the tricks up its sleeve to pump up the price through financial engineering but if it fails to impress of innovation side, investors should embrace for a major disappointment.
    Jul 16 09:22 AM | Likes Like |Link to Comment
  • The Fresh Market Remains An Excellent Short [View article]
    Mr Foodman,

    That's what exactly what my point has been. Under-performing stores will drag the overall sales down as opposed to widely held belief and optimism based on total addressable market. I am in the process of analyzing Whole Foods and I can tell you to prevent its turf from erosion in share, Whole Foods will have to go after smaller retailers.

    Surprisingly no body has bothered to bring this fact to attention and I am glad you shared this opinion
    Jul 9 02:05 PM | Likes Like |Link to Comment
  • Why Whole Foods Is Cheap, Take Advantage Of Mr. Market's Panic [View article]
    Agreed Gary J , then can you please explain why there is a difference between comparable and non comparable stores calculated using conventional method and how the Fresh Market reports it
    Jul 8 09:26 AM | Likes Like |Link to Comment
  • The Fresh Market Remains An Excellent Short [View article]
    Let me reiterate what my core thesis is behind shorting this company. Continued under-performance of new stores will drag the same store sales number down , hit the company with higher store impairment costs. Can you please explain why there is a difference in comparable and non-comparable stores calculated from conventionally used method and how company reports it.

    So far by pooling the sales from new stores into comparable store pool has elevated the sss growth number. Essentially this will translate into higher store impairment costs and drag the margins lower.Hopefully this clarifies why I have used low operating margins.

    Now to your second point of store count- Yes management has said total addressable market is 500 store and equally management mentioned in 10-k that new stores are under-performing. This is not an arbitrary number, I am still giving this company the benefit of doubt that they will be able to growth their store base, sss but will face deceleration in growth. only thing i am modeling for is - under current fundamental circumstances, company will reach saturation in this market sooner than expected.

    You are more than welcome to criticize my analysis but lacking explanation on few key factors negates your worth in commentary.
    Jul 8 09:23 AM | Likes Like |Link to Comment
  • The Fresh Market Remains An Excellent Short [View article]
    Stan,

    My valuation estimate is essentially build on underlying fundamental issues company is going through. Their new stores are under-performing the old stores by a wide margin and so far keeping some of new stores in comparable store pool has helped in posting healthy same store sales. But after you compute for LFL analysis, picture isn't as rosy. I expect this company to be hit with higher store impairment costs, which will drag margins lower. My valuation estimate still rewards the company to enjoy store growth and sss growth. Valuing this company on the basis of total addressable market is completely flawed.
    Jul 8 09:07 AM | Likes Like |Link to Comment
  • The Fresh Market Remains An Excellent Short [View article]
    Stan

    My investment thesis is built upon the deterioration in new store performance, which will force the management to curtail is store expansion strategy. Additionally, company has operating and capital leases on which have been parked as off balance sheet. My valuation estimate reconciles those items as well.
    Jul 8 08:55 AM | Likes Like |Link to Comment
  • Why Whole Foods Is Cheap, Take Advantage Of Mr. Market's Panic [View article]
    First and foremost people who compare Whole foods to Walmart and how Walmart can pull customers away from Whole Food need to take classes in understanding how targeting niche customer with specific demographics work.

    Secondly , agriculture price index ( price index used by farmers) is expected to increase modestly for the next 5 years relative to the previous 5 years which should help gross margins.

    I am currently in the process of reviewing the company's financial and its 10-K and so far I am very impressed with clarity of information which the company has presented in its 10-k.

    I understand management's growth strategy to increase comp sales, expand its store base to grow revenues but to me the performance of new stores relative to old stores is the most critical aspect.

    If new stores are not performing as well old stores that is clear indication of company reaching saturation levels and some times even force the management to curtail its store expansion strategy.

    Unfortunately this well know tale of total store opportunity of 1000 stores reflects unbridled investor optimism.

    As I mentioned, I am currently in the process of analyzing this company and not yet in a position to comment on its valuation levels.

    I authored an article on The Fresh Market last week , which has some serious underlying probelms which investors have totally ignored. New stores opened are under-performing by a wide margin and investors continue to maintain their optimism just based on total addressable market. If interested you can read it ( SA Link Below)
    http://seekingalpha.co...
    Jul 8 08:53 AM | 1 Like Like |Link to Comment
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