You are right, fundamentally, they can survive. But sometimes, when you look deep enough, the controls of manpower, merchandise turn over rate and overhead, are not quick enough to be a super company yet.
They are basically flying by the seat of their pants. A good company has to have better statistics of customer demands. Manpower and overhead at the district headquarters and Conn. headquarters are not adjusted quick enough. I think if some one start doing cash accounting instead of accrued accounting, the top management will get a shock.
On the other hand, Ettore did just that by selling off (discounting 30% additionally)the spring and summer merchandise right now, before going into X'mas merchandise; he can be very close to operate by cash accounting. All the accrued accounts will be paid up, before new merchandise is bought on credit. I made no complaints, the minute I see his hands on approach. Each year I do check up on the number of help he keeps in the summer. By controlling the headcount, AMES can keep their heads above water. Maybe some day they can keep expenses so low that they can walk on water; it is never that hard to do.
The stock is all technically influenced. I am not worried, if the market makers can not buy back cheap then they have to move up. I am sure Johnsons will not sell until the stock moves near or above $20/share.
I hope I answered all your concerns. |
