bleonard

Build-A-Bear Workshop: A 'Sure Thing?'

Saj,

You are missing a few points.
1-The cash balance will be much higher after Q4, probably 60-70mm. Remember the have spent about 20mm in capex so far this year, 13mm on buybacks and another 3mm invested in Ridemakerz.

2- Capx going foward will be much less than D&A. Probably at least 20mm less for the next few years.

This means the company could essentially operate at a negative 20mm in EBIT and still throw off cash.

EBIT (20)
TAX 7.5
W/C No change
D&A 30
Capx (10)

FCF 7.5mm

They could do this for the next 2 years and still grow the cash balance. The stock is nearly trading for year end cash balance. Nowhere to go but up.

Defense, Diapers, Appliances and Dollars

I agree with your analysis, the company is dirt cheap. I like to use EV/NOPAT for companies that have this much cash. On this basis in trades for less than 6.5x fully taxed 2007 operating profits. I also own this and am hoping the market will eventually figure it out.

Sears Play for Restoration Hardware: Believe in Lampert's Strategy

I think his average price on the earlier purchases is more like 4.30/share. Unlikely he bought much below 3.

Sears Play for Restoration Hardware: Believe in Lampert's Strategy

I think his average price on the earlier purchases is more like 4.30/share. Unlikely he bought much below 3.

Is Crocs Doomed For Failure?

I think you are right on. The margins are unsustainable. As these shoes have become more popular, it has attracted more knockoffs. Many of the eary knockoffs were of poor quality and sold through WalMart, Target, Walgreens, etc. Now may of the larger shoe companies and retailers are making a very similar product that sells for 1/3-2/3 the cost. You can buy a competing product from Sketchers(DSW, Kohls, JC Penneys, Famous Footwear, Shoe Carnival, etc), Airwalk (Payless), Lands End, LL Bean, etc.

To answer the other comment on this thread about which style is a fad, I would answer that what the company refers to as there "Classic" which makes up about 30% of the revenue in the latest quarter and much more on a TTM basis.


I also think the your growth rate of 25% a year for the next five is extremely generous if not laughable.

One day, the stock will get hit with massive warning of slowdown in orders. When is the only question.

The Crux of Crocs' Valuation

I agree with your analysis. There is no way that Crocs can grow enough to justify the valuation. I believe that this year will be peak earnings. I believe that Crocs will warn sometime in the next 6 months. They are already sold everywhere in the US, Big Box, mom & pops, Hallmark stores, grocery, marinas, etc. Knock offs are coming out in droves at a fraction of the price, can already buy on EBAY for below retail price. This is a fad that will fade.

Build-A-Bear: Earnings Not So Cuddly

Herb-While comps were bad, you are confused on your comments. The oldest stores still comped the best, a negative 5.2%, and the youngest had the highest sales per sq ft, at 592.

Sales/sq ft of 572 is still very strong. Many retailers would love to have a "fad" like this.

Try Crocs' PEG Rate on for Size: You May Have to Grow Into It

Does it concern you at all the CROX has a larger Market Cap/EV than Sketchers, Timberland, Wolverine Worldwide, StrideRite, etc.

Also, there material is not patented, according to there filings. It is proprietary and a guarded secret, but not patented.

Sketchers is coming out with a very similar line this spring. Plus you can buy knockoffs at every Target and Walgreens in the country.

Bad News REITs: Unsold Housing Exerts Downward Pressure on Rents

Vincent- I agree with you. I just listened to a EQR presentation from 12/06. The CEO seems to think that the private equity people have it right and that the street/public are hung up on traditional yeilds and multiples. They think that even though the initail NOI's on deals are very low, they still make sense because they are buying below replacement cost! I question whether they should be buying at all. Or why would anyone want to buy these with them all trading around 25x FFO. Plus FFO is overstated due to maintenance capx, which seems to run around 40-50% of depreciation. If you look at it that way, the numbers are much worse.

I find it hard to believe that declining home prices won't hurt rents.

The Short Case On Jo-Ann Stores

Your article is well written and mostly factual, although I have a few things I would like to point out.

1- I believe they have made great strides in the turnaround in Q3. Inventory was down 18% and GM was up 180 bp's on a negative 5.4% comp! You claim they have significant inventory that needs to be cleared. I disagree with this totally. You must think they are lying.

2- They have dramatically reduced debt levels.

3 - Superstore comps were hurt by less seasonal, less clearance and fewer inserts. The sales were artificially boosted in the prior period by all of these. Once they get past this y/y problem, SS will do better. I will admit that the superstores are not performing as well as expected or hoped.

4- Your claim that D. Webb whose " background was in groceries, where sales are not driven by changes in trends and tastes" is also faulty. What industry has gone through a more difficult period than grocery. What do you think Wal-Mart has done to this industry over the last decade? Or Target, Costco? How about Whole Foods, Wild Oats, Trader Joe's, Fresh Market, etc. Grocery stores have been squeezed on both ends. Losing the low income shopper to WMT and the high end shopper to the organic/natural food stores.

I do agree that the stock has already priced in a lot of this, maybe all of it. I believe it is likely that JAS will earn near 2/share in 2007. Estimates will be raised quicly, probably after the next call. If JAS can only get to 2/share, it is fairly, maybe fully valued. But if they can continue to improve margins, which is a big question, the stock will move much higher. WMT exiting the cut fabric business, will certainly help. Sales may only benefit 3-5%, but margins may benefit much more.