Reitmans Ord Shs V.RET

Older Plus Sized Canadian Women Share of Wallet

[TheCount11]

This deserves it own post. 

According to the 2015 Canadian Health Measures Survey, more than one in three adults in Canada has obesity.  There are hundreds and hundreds of millions of dollars just waiting to be scraped up by serving older plus sized Canadian women.  Build 10,000 sq ft stores that they love, price the 3rd party brands like Levis competitively and PENN becomes a half billon dollar business.  PENN is already doing well but the new stores can be THE place.  100 stores doing $500/sq ft (includes online revenue)

[TheCount11]

And don't forget the two big drivers of stock price are EPS and NCIB.  NCIB enhances EPS when price relative to earnings is low.  Add a little growth to the equation and PE multiple expands.   If Reitmans starts firing on all cylinders and management doesn't do anything too self serving we are off to the races. 

[TheCount11]

One thing to note:  Managements communication with shareholders needs to improve.  Concepts like PENN are less risky but less reward as gross margins are lower on 3rd party sales. This means reported gross margins will decline as PENN 3dr party revenue increases. Department stores in the US like Dillards, Kohl's and Nordstrom currently have PE(FY1) around 8.  PENN is a more

[Mephistopheles3]

RET  will never command a P/E of close to 8.  Nordstrom/Kohl's are large public co's and while also operate in the retail industry, keep in mind that RET is an illiquid microcap stock coming out of bankruptcy.  There is not great communication with external shareholders as you've pointed out which doesn't help - very little institutions would invest here when the

[TheCount11]

I hear you.  Reitmans has to prove itself again. For some historical context on Reitmans REITMANS 2011 2010 2009 2008 2007 EARNINGS PER SHARE 1.3 0.98 1.21 1.531 1.461 DIVIDENDS PAID 51895 49351 50885 46930

[tomperns]

I agree with you, but the part that has me scratching my head is the "not acting in the best interest of shareholders". When management has no skin in the game, you often see that conflict of interest. But in this case, Steven Reitman owns 51 percent of the voting shares, so anything not "in the shareholders' interest" is also not in his best interest. He is also in his 70s

[Mephistopheles3]

This is one thing that confused me when the share price tanked below $1.  If I was management and I had access to two months worth of data  (they would have closed at least two of the months prior to the blackout period after the Q) - the data would have shown that they would have a blow out quarter and they would have been able to capitalize on the weakness of the share price.  So

[tomperns]

Agreed. No insider buying is a mystery other than they obviously have no balls.

[nedstar71]

Freshly emerging from ccaa I think it would be bad optics to be doing any transactions, whether it be insider buying or share buybacks, other than concentrating on running a successful business. The stock price should theoretically take care of itself. For insiders to be trying to profit by buying even more shares would look bad imo. Or even share buybacks which benefit shareholders, would be in

[tomperns]

 Ank didn't eat a cent. They owed nothing. Some suppliers and landlords took it on the chin

[nedstar71]

Sorry I just looked at the long list of creditors and you are correct. That being said, looking at that huge list my point stands even moreso. Enriching themselves or shareholders thru share buybacks would be in extemely bad taste so soon after screwing over so many suppliers and creditors, and not good for business relationships moving forward. It would piss off the hundreds of creditors on that

[tomperns]

Wouldn't hoarding cash have the same optics? They will definitely not "reimburse" those creditors even if they hoard $100M in cash

[nedstar71]

No I don't think it would. A combination of building up cash and spending some money on upgrading the business wouldn't be looked upon anywhere near as bad as buying back shares, paying dividends etc, both of which do nothing for the business and would purely look like a company that is enriching shareholders shortly after screwing creditors. Not trying to argue here but I understand why

[TheCount11]

Just so we are on the same page. Did shareholders vote to go into CCAA? What % of shareholders actually get a vote? Did shareholders decide how much to pay creditors? MANAGEMENT was involved in that process.  If there was a bad look it was management paying cash bonuses and a giant stock option plan. Shareholders got screwed. How much equity was there before Covid? How much now? NCIB is

[CarefulSpec]

This is exactly right. It's absurd to claim that capital optimization has a bad look, but self dealing doesn't. 

[TheCount11]

Yeah definitely a head scratcher!