I hope things come together this year for LOEH. They've laid the groundwork for the turnaround, now it's time to *turn*.
Obviously, the stock price reflects people's fears of imminent BK. People see $140M of debt, weak cash flow, stagnating sales, a tough retail environment, and a fuddy-duddy going-nowhere retailer called Loehmanns.
What do I see?
1999 cash earnings of $1.50, equal to current share price, meaning if you were to buy the entire company at market value, and LOEH had no capex in 1999, you would make back your entire investment the first year from cash earnings, otherwise known as "owner earnings" using the Warren Buffet point of view.
I see 52 men's departments in 68 stores, about 75% of total stores. Greater diversity of wares should retain and increase store sales.
I see gifts now in all stores.
I see margins solidifying.
I see same store sales now rising, and this should accelerate as more people learn of Loehmanns' greater merchandise offerings.
But I also see a possible recession around the corner, and intense competition from other retailers.
LOEH at $1 3/8 seems like a terrific deal, but only if they get their act together and keep it together. |
