Reitmans Ord Shs V.RET

Why is inverted yield curve good for Reitmans?

[TheCount11]

Why is high inflation and an inverted yield curve good for Reitmans?  Doesn't that mean we are going into a recession where consumer discretionary gets cut first?

There is going to be a money losing e-commerce washout.  Companies will need to be self funding. Survival check list:
Has cash? Yes, lots of it!
Owns warehouse? Yes, rents sky rocketing.

Labour intensive? No (good luck finding labour for your restaurant)

Capex intensive? No (This is important.  As competition for retail space declines during a recession a company like Reitmans who is in the middle of a rebrand can negotiate bigger spaces with better tenant improvement allowances.  Make PENN the place)
Derisk e-commerce? Fire worst customers.  Free shipping for loyalty members with certain amount of points otherwise $100 minimum.  Don't pay return shipping unless loyalty members with certain amount of points.  This will encourage store returns. 

I don't see any reason why Reitmans is not doing over 1 billion dollars in revenues over next 7 years with a $20 stock price.  

Capex intensive? No

[CarefulSpec]

Those are relative advantages. I don't think an inverted yield curve, high inflation, and a weak economy are good for Reitmans. They are just less bad then they are for other retailers. They are also in a better niche focusing on budget conscious consumers, but I'm pretty sure a roaring economy with low inflation is better for them than the alternative.

[TheCount11]

Thats what most investors get wrong when investing in an apparel company like Reitmans.  From 2010 to 2019 Canadian economy was strong with a very large housing wealth effect.  How did Reitmans do?  

[TheCount11]

If your store costs are mostly flatlining as companies go bankrupt and you sign new leases while shipping costs are increasing what does this mean for an e-commerce only competitor?  We are already seeing omnichannel competitors not offer free shipping on returns. There was way too much stupid money in apparel when rates were low.  If your e-commerce apparel company isn't going to

[CarefulSpec]

Comments like this along with the original one are what scares me about having a position here. I hate looking around and realizing I am investing alongside dumb money. A bad economy and inflation problems are not a tailwind for Reitmans or any other retailer. It's absurd to even have to address a comment suggesting they are. Reitmans previous problems were company specific not macro driven

[TheCount11]

What were Reitmans previous problems?  Whats changed? You don't seem to understand apparel retail do you? I honestly don't care who else owns the shares.  You probably have a new tiny position anyways.  Why don't you sell your shares, beg a VC for money and open a competitor?  Oh right because no one will lend you money... think past the next quarter 

[Torontojay]

I agree with both of you guys. Reitmans is in much better shape than other retailers. They are well capitalized and very much in the early stages of its turnaround story. If they can continue to deliver over $1/share earnings, then $20 may not be much of a stretch. They reached as low as ~ $10 in the last GFC and their earnings today is comparable. They need to prove to prospective

[CarefulSpec]

I agree with this. A better price and better multiple is going to be a function of convincing investors that these are real numbers they can build on rather than a transitory post CCAA bump. I think its been going long enough that it won't take much more to get there. The caution is warranted as there have been other examples that crashed and burned after stellar short term numbers. SSI in the

[Torontojay]

Let me make one additional comment.  The inverted yield curve is signalling a recession is imminent. The average length from the start of the inversion to the start of the recession is 10 months. The 10 year treasury minus 3 month inverted in October and a probable recession to start by Q3. This corresponds with several other leading indicators that I'm following.  In the last