I know you didn't ask me, but I don't get the S purchase of Land's End.
Land's End cash from ops (before working capital) last 7 years (fiscal 1996-2002)
$44,114; $66,146; $71,764; $57,807; $76,329; $63,779; $89,693
so measuring from what looks like a trough in 1996 to what looks like a peak in 2002 you have 12.5% annual growth
more interestingly, Land's End spends more than I would have guessed on capex. thus, after working capital needs and capex, LE FREE cash looks like (again, fiscal 1996-2002)
$27,488; $103,314; <$74,591>; $27,510; $94,865; $16,011; $32,991.
so for all practical purposes FREE cash generation is not materially higher in 2002 than it was in 1996. Land's End from what I can tell pretty reliably generates $30-$35mm of FREE cash a year.
now, what would you pay for an asset that generates $35mm of cash a year? apparantly the management group that runs Sears would pay $1.85 billion, or over 50x that free cash generation. let's just say i am in respectful dis-agreement with the management team at S.
Cheers |
