No, you are not alone. But it looks like it
may be a while before investors rush back into this stock.
I have only begun following this stock recently. There is much
uncertainty surrounding the corporate repurchase of all individual franchises. In the short term, this seems certain to shift much of the losses previously sustained by individual franchisees squarely onto the ENBX books. The latest 10Q clearly says that this will result in a net loss in 1998.
This is a bold move by ENBX, as it eliminates the steady stream of franchise fee and royalty income, replacing it with a
direct tie to bottom-line store performance -- which has been abysmally poor. Apparently, Wall Street is not crazy about the prospects, or maybe they are just playing wait-and-see, hoping to jump back in if profitability is acheived again.
I agree that something will have to be done to make the individual stores profitable: possibly increased advertising, possibly "streamlined operations" as management calls it. Certainly, analysts seem justified in questioning the wisdom of opening another 200 stores, when the existing ones are already losing a ton of money.
Still, if management can take the model of the outlets that ARE profitable, and apply it nationwide, this could be a major turnaround story. This is obviously what they are pinning their hopes on. I'm sure many franchise owners have not been running their stores as cost-effectively as possible, so maybe the corporate bosses can do it better. I hope so--I love those bagels.... |
