Near term issues with CHS are apparent, but I think they may be too conservative with their projections at this point. Unless some hurricanes hit the U.S., one would think the year-over-year comparables would not be as difficult to meet. Also, valuation metrics compared with ANN are more reasonable to me at this point.
I was also a buyer of more CHS today, but I don't take the short term issues lightly. After listening to the Conference Call I found them fairly convincing when they were talking about how difficult the second half will be. They are going through some fundamental changes in their core Chico's operation, and much of their future growth is dependent on promising, but unproven, new concepts. It's true that comparisons will be easier next year, but if they screw up they could lose some of their loyal customer base. OTOH, WH/BM does remain a stalwart for them.
Long term I think this is a good buy, but short term I wouldn't be at all surprised to see this go lower, maybe a lot lower. |
