LIQUOR STORES NA LTD 4.70 PCT DEBS T.LIQ.DB.B

RE:RE:RE:RE:13 percent dividend ????/ Solo Liquor Store Competition

[Ticker28]

Buyvalue,

No offense but most of your message is sensless dribble.  Try just sticking to the facts and not rhetoric about margin calls and short position fantasy that don't exist except in your mind.  So I will skip that non useful part of your rant.

As for Solo being cheaper that I will have to confirm but I would think LSNA is every bit as competitive.  Don't forget it's a regulated market so a competitor selling for less is unlikely unless they wish to deteriorate their margins and ultimately cash flow.

Lets face it Solo and Rocky Mountain are going to be hit much harder than LSNA due to their concentration risk by having all sales come from Alberta.  Already discussed the market share numbers and it again brings to doubt Solo's advantage.

As for the dividend.  What is so wrong with a dividend they are able to support with current funds from operation?  The 13% is merely a result of the current market price which is incorrect and below intrinsic value.  If you wish to have the market tell you the price and don't actually know what the company is worth then you will be tossed like the wind to and fro.  Oil we all know has bottomed and has since risen about $5.00 bbl so it's not taking a leg lower which bodes well for a stable dividend.

Only fear I would have of them cutting a dividend is them using it as an excuse to fund their cappex and growth program.  I don't think they need to sacrifice it and each great new aquisition like the one just made will add more and more cash flow.  We will get $0.08 cash flow from the New Jersey purchase.  Double this up with SAP and we got a cash spinning machine.

I do agree with you on that they need to batten down the hatches so to say.  I think they are being cautious with the balance sheet and their are no threats financially.  Cash flow remains healthy and honestly same store sales are pretty darn decent given a recession.

It is also the slow quarter for liquor sales traditionally but we just came off the most robust quarter of the year traditionally.  No substance their and it is something you anticipate in the liquor business.

Minimum wage is going to be a challenge to all businesses and one that likely will be passed on through inflation by raising prices.  They have the option also to squeeze competitors by absorbing the rise and supplementing through the power of their international supply chain to gain cost advantage.  Either way LSNA comes out the winner.