RE:RE:RE:RE:RE:RE:Q4 Book Value estimateAgreed while the stock is on the venture exchange Reitmans will trade at a discount. Right now its a homegamer stock trading at a discount to everything. Price to Sales, Price to Earnings, Price to Book, etc. There is no institutional appetite which is fine by me.
Stock buybacks can often be the best use of corporate capital for a company that has peaked. I hope management runs the company for profit NOT for growth. If revenue does not grow this year I am OK with that as long as gross margin stays at 57% and above.
What should management do wth excess capital generated this year? Order more inventory? Open more stores? More Facebook advertising? Perhaps give themselves huge bonuses?
An NCIB is very shareholder friendly at current prices. Imagine buying shares under $2.00 today that will likely earn well over $1.20 this calander year. My argument is not to go in debt doing this. Use the profits from this year. Manage the company for profitability. Once institutions get involved again there will be pressure to grow. At LULU investor conference yesterday ambitious growth goals were set. They are some of the best in retail with a great growth trajectory ahead. Buybacks dont make sense for them as they trade like a tech stock.
Reitmans IMO doesn't have a growth trajectory ahead. Its a boutique brand with loyal customers.