A time to reflect A message of hope is always a crowd pleaser at this time of the year. But what can be said of Futura? That I have to post this, instead of doing my annual Boxing Day shoppig routine shows I'm still concerned and still have hope at the same time.
The breakdown can be pinpointed during 2012. Maybe some can go back even to 2011. The final downtick was on May 3 through to May 8th, With the latter date being the defintive downtick day with 13.7 million shares traded. Up to this point the OBV and AD were doing ok. The buying in May 2011 was still exerting its positive influnce. It took one news release to sink the ship, although on relatively mild volume as OBV indicator is still holding up, better that I had expected. (It did not bottom out as the stock did).
All because of the May 2nd news release when the fiscal 2011 year end results were published. There it shopws and incremental gross margin revenue from Aeroplan of $209,220 for the WHOLE year. ($833,430-624,209=$209,220). Operating expenses were $2,072,094 for 2011.
It took $10 of expenses to earn $1 gross margin and being a reseller of Aeroplan. Something very wrong here. In addition, those expenses did not count the almost million dollars of interest charges.
David Campbell in that news release goes on to say: Quote: "I see many opportunities to partner with established industry players to really accelerate our growth and timeline to profitability." I suppose this is still possible, but have to seriously trim costs to get a better footing. Unfortunately some of the key partners are owed money like both Co-Autos, Aeroplan and Points.com. The Co-Autos were to be Futura's sales leads generators, rather important players if want to expand business.
So the news release continues saying David Campbelll was to lead the company.."into its next growth phase". We can't see into the head of the CEO and any future plans for the company, but we can see the financial statements. They see the 130 car dealer sign-ons as evidence of success, but the bottom line number says something else. A loss of $2.2 million. Seems like opposite ends of a spectrum. Something is out of sync. Either someone knows something shareholders don't or there's a refusal to acknowledge the true situation.
There's hope in what David says about attaining profitability, but he won't share the details yet. I still think they are working on the restructuring. Let's hope for the best in the next 3 weeks. That's all they have to work with.
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As for car dealerships (a difficult industry category to crack), keep on going. The parts/service is doing well. It's the car sales which needs attention. Mnay still only offering 2,500 or 5,000 Aeroplan miles on a big ticket purchase. It's these big numbers which could be the stumbing block. Normally Aeroplan's business comes from small dollar amount purchases. Hotels, gas stations, grocery stores, etc.
Offering 1 mile for $2 spent is acceptable, but when it come to buying a $50,000 car 2500 miles doesn't cut it. Compounding the trouble is that the car dealers already have a stable of good promotions which are superior to anything Aeroplan has. But As Graham Farrell once said (June 1, 2011) "I have my work cut out from me in educating automotive retailers what a real loyalty program is and does". Well then show us I say.
Has Aeroplan slipped to the category of being a "promotional tactic" and not a true loyalty program? I'm saying that if it was a true loyalty program there shoud have been many more dealers signed on by now.
Maybe could use Futura's software to issue special offers to their Aeroplan customers. Each dealer could customize their offers and better target Aeroplan card holding customers. Say next time for repairs get 4X miles, or on the next car purchase receive 30,000 miles instead of 5000.
The messages would for Aeroplan members who made a purchase at a specific dealership and not the general public. Now some loyalty is being built, a step beyond being simply a promotional tactic. Each dealership has to nurture its own Aeroplan customers in their own way. No ads in paper or on TV. Personal mailings only with a data bank in the computers to track each customer. A customer may lose the coupon offers over time, so it's nice to have a computer reminder handy.
For example, I bought a car this year and two years later maybe trade in for a new car. What you know, I get 30,000 Aeroplan miles I had forgot about on my second purchase. The salesperson has the information on their computer. Maybe it''s not that simply as I have illustrated, but whatever Graham Farrell was talking about, has merit--"what a loyalty program really is and what it should be used for by auto dealerships"
It appears by his statements, that cashback incentives, employee pricing, factory rebates, free trips to Vegas, win a car purchase are promotional tactics. Whereas Futura can offer more... a true loyalty program. But has time run out for the company to prove it?