Seeking Alpha

Retail Geeks'  Instablog

Retail Geeks
Send Message
Retail Geeks is a blog providing institutional investors unbiased retail/consumer industry commentary and data. http://www.retailgeeks.com/
My company:
Retail Geeks
View Retail Geeks' Instablogs on:
  • The Award for Most Ridiculous Top-Line Excuse Goes to… TUES

    Most savvy buy-side professionals get a chuckle when companies use excuses to account for top-line shortfalls.  But, Tuesday Morning (TUES – $5.00) may win this year’s prize for the most ridiculous excuse.

     

    Last week, when discussing the prior quarter’s sales trends, the company’s CEO and COO pulled the “mid-term election” card.  Yep, TUES management suggested that sales in the quarter were negatively impacted by the “record” voting turnout related to the mid-term election in November 2010.

     

    We’ve heard some clever excuses before, but this one takes the cake.  If management honestly believes that the mid-term election materially hampered sales in the quarter, investors in TUES have some serious reasons for concern. 

     

    In addition, the company has provided fairly aggressive EPS guidance for the back half of the fiscal year that ends in June 2011.  We’re lower than the company’s annual guidance (click here), as it appears that TUES management is betting on a materially improved sequential comp store sales result in 2H.

     

    Yes, TUES’s valuation is cheap on many levels.  But, investors are stuck with a management team that appears to not fully grasp the dynamics of their top-line trends.  

     

    Here’s the transcript of that particular exchange on last week’s conference call: 

     

    Mark Montagna – Avondale Partners – Analyst
    Okay. Looking back at the second quarter, was there a particular monthly promotion that maybe did not go as well as you had
    hoped? Because you had comped nicely for four consecutive quarters. Was there something that might have been a miss that
    was just an aberration?

     

    Kathleen Mason – Tuesday Morning Corporation – CEO and President
    I think our November Green Card coincided with the election. And normally, we do well in a mid-term, and it isn’t a factor. And that certainly was a factor this year.

     

    Michael Marchetti – Tuesday Morning Corporation – COO & EVP
    This year was a record turnout.

     

    Mark Montagna – Avondale Partners – Analyst
    Say that again?

     

    Michael Marchetti - Tuesday Morning Corporation – COO & EVP
    This year was a record turnout in terms of voting.

     

    Mark Montagna – Avondale Partners – Analyst
    Oh, right.

     

    Michael Marchetti - Tuesday Morning Corporation – COO & EVP
    So, because of the heavy participation, sales weren’t as good as they are regularly at this time.

     

    Mark Montagna – Avondale Partners – Analyst
    Okay.
     

    But, it gets better.  Take a look at this exchange below (we’ve even provided you a recording).  Classic! 

     

    TUES Q2 2011 Conference Call Excerpt

     

    Ali Montagne - Boston Partners – Analyst
    I’m wondering what you think is the reason that your stock trades below net working capital.

     

    Kathleen Mason – Tuesday Morning Corporation – CEO and President
    The magic question. Perhaps exposure. We’re really a bit baffled.

    Ali Montagne - Boston Partners – Analyst

    But do you use it as — obviously you’re not doing something right. I mean, wouldn’t that be a fair assumption off the bat?

     

    Kathleen Mason – Tuesday Morning Corporation – CEO and President
    And what do you think we’re not doing right?

     

    Ali Montagne - Boston Partners – Analyst
    I don’t think you have a good process of shareholder communication. I don’t think you present the Company well. I don’t sense a belief from you — I mean, most other companies that are guiding to a positive comp and making $40 million a year and you could liquidate and walk away with a buck more than the Company is worth. It doesn’t really exist, and yet, it is what it is. But, you should be looking very critically at your processes with regards to shareholder communication, because they are not working. I mean everybody in the stock market wants to make money. If this is — so their eyes are out there. But something you’re doing is turning them off, besides the operating of the stores. And that’s from a communication perspective. So, I hope you’re being self-critical, because the market is boding that you should be. And that’s it, I guess.

     

    Michael Marchetti – Tuesday Morning Corporation – COO & EVP
    We certainly will be self-critical.

     

    Ali Montagne - Boston Partners – Analyst
    I think you have such a lack of enthusiasm in presenting the Company. I listened to some of your presentations you made at the — we’re a shareholder. Like I said, I feel you could liquidate and walk away and make 20% here. But I listened to some of those presentations you just made on your two investor days, and it was just so boring and so lacking of enthusiasm. And I just felt like I didn’t even want to listen anymore. And it just was shocking to me. And you would think that if you really believe the comps are positive, you could come out and explain. This is the first time you’ve said, for example, the mid-term election, and you had an event, and it was a promotion, and it didn’t work. I mean these types of things.  You could go out and talk about your balance sheet. You could talk about your lease book. You have a lease book that turns over every five years. You have leases from 2006 coming on, and you should be able to move those stores or reevaluate them.

     

    It should comp positively. You have so many drivers in the business that I see. And maybe I’m delusional, but that I see. And it doesn’t seem you guys do a very good job of addressing them.

     

    Kathleen Mason - Tuesday Morning Corporation – CEO and President
    I’m sorry, I wasn’t at the presentation, the investor presentation, but we’ll certainly look into it. And we’ll take your lead. We’ll certainly look into our presentation and what we can do better. Thank you for sharing that.

     



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Feb 01 11:05 AM | Link | Comment!
  • CMG Should Scrap Current Plans for a New Asian Concept and Just Buy Sushirrito

    Recently, Chipotle Mexican Grill (CMG – $218.20) management has been discussing plans to develop an Asian concept with a ‘model’ similar to Chipotle (fresh ingredients, transparent prep, etc.). 

    Why waste time developing a new concept when there appears to be a proven winner in operation today?  Sushirrito (www.sushirrito.com) is located in San Francisco in SOMA bordering the financial district.  It’s getting rave reviews (click here).  We’ve never seen lines so long!  Ironically, it’s right across the street from a current Chipotle location (comp store sales are likely imploding at this particular Chipotle store).

    Something tells us that you’ll be hearing more about Sushirrito in the near future.

    SushirittoOpening

    Jan 26 3:14 PM | Link | 1 Comment
  • When Will Declining Product Margins Become a Concern for Investors in AAPL?

    Apple (AAPL – $348.48) reports Q1 earnings today.  Anything less than $6.00 will likely be a disappointment.  We’re at $6.15 which implies +67% revenue growth, 49 Bps of R&D leverage, 135 Bps of SG&A leverage and a -24.0% tax rate (consensus = $5.39). 

    That said, we’re forecasting a -350 Bps GPM% decline versus LY.  When will the GPM% declines matter?

    Also, take a look at our AAPL Data Packet (see here).  It’s worth noting that each operating segment (Americas, Europe, Japan, Asia-Pacific, Retail) reported an EBIT margin decline in Q4 2009 (September 2010).     

    There are issues worth thinking about beyond Mr. Jobs and his medical leave. 



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Jan 18 12:40 PM | Link | Comment!
Full index of posts »
Latest Followers

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.