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Non-Tech : Claire's Stores (CLE) NYSE
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To: Brad Bolen who wrote (478)12/8/1997 7:24:00 AM
From: Al Morford  Read Replies (2) of 619
 
There has been some great discussion on this board comcerning Claire's. ( Generally, most people on these boards are uninformed and unsophisicated investors.) I am an independent investment broker with over 25 years in the business. I have been following Claire's for over 20 years and have owned and traded the stock 7 times in the last 20 years. All trades have been sucessful and the last time I sold was a 4 bagger. I was a heavy buyer in the stock in Jan & Feb of 97. I know this company very well and here are my general thoughts about the company and stock price:

1. The biggest challange and risks for Claire's is inventory obsolence . Teenagers are a very fickle group of consumers. What is hot today may not be so hot tomorrow. Over the last 4 years or so Clair'e has done a great job with inventory. However, in the past the company has
had periods in which they lost tons of money because they didn't have the right goods in the right amount for the right price. The stock was hammerred because of this. REMEMBER THE BIGGEST RISK IN OWNING THIS STOCK IS INVENTORY RISK BECAUSE ALL OTHER THINGS BEING EQUAL, THIS WILL HAVE THE GREATEST IMPACT ON PROFITS. 2. Claire's is very volitale and the stock often has irratic moves on a slight changes of perception. For example, the move from 23 to 19 was related to some institutions correctly noting that same store sales for November were flatening out. This cost 4 points on the stock and should not be viewed as unuasual for Claire's. It has been my perception over the years that institutional holders of the stock are as fickle as Claire's customers. 3. With the exception of invetory control, Claire's business is rather simple to execute, and this concept works. Long term, new growth will come from acquisitions. Claire's has capacity of 2000 stores and they now have about 1700.... For long term investors the current price of $19 may be a bargin. Upside, looks like 30 in two years if the inventory is right.

AL Morford at almo1@visi.com
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