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Leland Wykoff

Leland Wykoff
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  • Saks Is Overvalued By 56% [View article]
    Saks has extremely valuable real estate holdings. Recent published reports suggest the flagship Fifth Avenue store may be worth between $600 million and $1 Billion dollars.

    Any analysis which fails to fully value the real estate holdings undervalues the company.

    Saks should not be in the landlord business. The real estate should be spun off to shareholders in a REIT. That would allow the markets to value both the operating company and real estate assets appropriately.
    Jun 27 04:41 PM | Likes Like |Link to Comment
  • Cedar Fair Growth Hits A Snag [View article]
    Originally Posted 04 December 2012 - 03:02 AM at http://bit.ly/RjuniH

    Cedar Fair presented for the first time on December 3rd at the 40th UBS Global Media and Communications Conference. Matt Ouimet with 18 total months service, and near his first anniversary as CEO, expressed his firm belief Cedar Fair would close the year with a third strong record setting season.

    Revenue guidance up 4% was confirmed, as was average guest per capita spending up 4%. Attendance flat, inline with previous year record attendance. Caution was suggested against focusing on simple attendance figures, rather the revenue generation per turn-style click was emphasized as the key metric.

    Revenue management practices from the cruise line, hotel, and broader amusement industry were identified and evaluated as valuable management tools. More season pass sales can result in less per capita income as incremental admissions are essentially discounted. However, season pass revenues are captured up front and are resilient to downward pressures affecting daily admissions, such as adverse weather conditions.

    Essentially strong revenue gains are being somewhat masked by the downward pressure of season pass sales which have the effect of discounting some marginal admissions. Given this reality, it is better news than it may appear at first glance, per capita spending was up a healthy 4%.

    The staycation was identified as a permanent fixture rather than a short term trend limited by the recent economic downturn. Ouimet spoke again of the "genetic vacation behavior" where by what you did as a youth on vacation will have influence over those activities you enjoy with your children on vacation. Ouimet identified positive amusement park visits as an experience worth repeating as an adult. The pipeline feeding such legacy family visits was judged superior.

    The importance of the Dinosaurs Alive attractions were explained as having the education component necessary to justify and capture the school market. The capital investment is low as it is a partnership in which the DA folks split the up-charge gate fees with Cedar Fair.

    The defining nature of large rides, such as the new GateKeeper Coaster and Gold Striker Coaster, were highlighted along with the superior returns they earn both at the turn-style and in promotional value. The YouTube GateKeeper video was reported to have generated over two million hits to date.

    Strategic investments in new rides, and corresponding editing out of old rides, was demonstrated by GateKeeper at flagship park Cedar Point. The operating costs saved by removing two older rides provides 75% of the cost of operating the new coaster. Those rides had low ridership and high maintenance costs. Costs are thus limited, and controlled by new rides, while reducing the fixed base costs.

    Evening lighting and music will continue to receive management attention and expansion as they have the power to retain guests on park longer resulting in lucrative dinner sales while simultaneously improving the value perception by guests.

    Promotional activities will rely upon less discounting and more relationship building. Price integrity will be practiced and new pricing models, such as installment season pass purchases, will continue to be developed and nurtured. Dynamic pricing and advance purchase commitments will be the watchwords. Incremental customer acquisition will be guarded to assure pricing and revenue opportunities are maximized.

    "Late to party" revenue opportunities such as sponsorships, marketing partnerships (such as the recently announced Coke deal), front of line passes, dinosaurs, premium parking, premium Halloweekends mazes and haunts, and improved e-commerce options, are and will be expanded and exploited.

    Cedar Fair is committed to spending approximately 9% annually of revenues on marketable capital projects going forward. These investments are viewed as absolutely necessary to promote the value and desirability of the properties to guests. Wise deployment of this 9% capex budget will also have the benefit of trimming, containing, and/or reducing operating and fixed costs as new rides replace older rides.

    The projected 4% annual growth in revenues was identified as coming three quarters from pricing and new products, and one fourth from new attendance.

    Hotel refreshment is primarily driven by the desire to extend the stay by guests and capture the second and subsequent daily admissions as well as increased room revenues.

    Cedar Fair has little interest in developing additional resort hotel rooms at this time. Campgrounds and other niche products may see growth. Ouimet supports the development of outside hotel rooms around or adjacent to Cedar Fair properties but is not interested, at this time, in expanding Cedar Fair hotel room inventories.

    The sale of Soak City in San Diego was disclosed to have sold for "around $15 million." Proceeds will be devoted primarily to fund the hotel refreshment program. Soak City SD was not a primary growth asset and it made sense to redeploy the capital to the hotel refreshment program. Ouimet indicated the company did not have many other assets ripe for sale.

    Cedar Fair will continue to be managed to provide significant returns to unit-holders via a sustainable dividend. Management and the Board of Directors is committed to increasing the dividend as the earnings of the company increase.

    See this Conference Transcript for details and sourcing of information and brief quotes:

    http://tinyurl.com/bsq...

    Leland Wykoff
    Dec 27 02:46 AM | Likes Like |Link to Comment
  • Ruby Tuesday (RT +2.4%) hires JJ Buettgen away from Darden Restaurants (DRI +1.4%) to become its new CEO. The exec will fill the role immediately after serving at Darden as the Chief Marketing Officer. [View news story]
    An excellent CEO hire at Ruby Tuesday. Congratulations to the new board of directors for exercising good judgement and entertaining such qualified candidates as JJ Buettgen.

    No doubt CEO Buettgen will bring his vast knowledge of operations and marketing to the tasks at hand. Given the specialized promotion and marketing skill set honed at Darden and Disney Mr. Buettgen is well suited to address and enhance brand perception and customer experiences positively.

    The strong background in operations of large full service chain restaurant divisions will serve stockholders and customers well.

    Fresh ideas, directions, and leadership are now at the top of the menu. Welcome aboard CEO Buettgen.
    Nov 19 10:29 AM | Likes Like |Link to Comment
  • Ruby Tuesday: Growth In Restaurant Sales Doesn't Warrant A Buy Rating [View article]
    The first quarter conference call was more about Ruby Tuesday's future. Financial reports are *always* a reflection of *historical* data.

    Fresh quarterly reports can often act as guide posts to the trajectory of where things might be going biased upon the recent arc of where they have been.

    In this respect the Q1 report is both positive and troubling.

    Trouble is, after significant Television advertising, same store sales rose only 1.9%. Those sales gains were achieved with higher check averages as a direct result of less coupon/discounting and, tellingly, no significant improvement in traffic.

    Annual guidance projects same store sales increases of zero to 2%. This despite spending upwards of $50 million on television advertising.

    The primary goal of advertising is to drive sales growth upward primarily though increased store traffic.

    The increased revenues being a proximate result of less discounting, coupled with no appreciable new store traffic, is troubling. This suggests TV spots simply are failing to produce.

    We must consider the wisdom of spending $50 million to achieve a forecast zero to 2% incremental differential.

    A second, and to my mind more troubling, possibility exists to explain the apparent failure to drive traffic with TV spots:

    It could be TV is delivering new traffic but those gains are being offset by a corresponding loss of legacy customers. If this is the case, it would be extremely bad news for Ruby's.

    The positive Q1 news is significant cost reductions and effective cost management, same store sales increases, and an ad budget which may be subject to significant reduction and redeployment to improve the bottom line.
    Oct 11 05:41 PM | Likes Like |Link to Comment
  • Ruby Tuesday's CEO Discusses Q3 2012 Results - Earnings Call Transcript [View article]
    Closing 25 to 27 Ruby Tuesday units. Opening 2 (yes, two) Marlin and Ray's Seafood units. Of RT units closing 16 are located within 8 miles of another RT.

    It thus appears the Marlin and Ray's Seafood concept is not up to the conversion challenge. If it were they would not be closing 27 units they would be converting at least 16 (the duplicate units) and possibly more of the remaining balance of 11 units slated for closure.

    While M&R has higher check averages it is not clear if they enjoy higher sales per square foot over RT units. Recall, M&R is only open dinner hours. They loose the lunch revenue.

    One wonders what percentage of the 27 RT units to be closed are recent acquisitions as a result of franchise buy-back activity. If this percentage is high then more bad news may soon be on the horizon.

    With so many questions one wonders how transparent the RT conference calls are intended by management to be. It is exhausting to wade through the calls and attempt to make heads or tails of the selective information.

    Jun 12 01:07 AM | Likes Like |Link to Comment
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