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Non-Tech : Sunglass Hut RAYS- Will it ever breakout?
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To: Bilow who wrote (817)3/11/1998 8:51:00 PM
From: marc chatman  Read Replies (1) of 971
 
In a nutshell, they grew the business mainly through a string of acquisitions, buying out small competitors. By adding stores at a rapid rate, the company gave the analysts a nice growth story -- dominating player, expanding into worldwide markets, accelerating revenues. The model is great for getting its founders rich, but that's about it. Someone ends up holding the bag when the growth slows and the company has to live or die by its performance. I think you could find any number of retailers, restaurant chains, etc., which fit this profile.

After the inevitable crash, it becomes a restructure story. Time to close non-performing stores and slash SG&A, a la Al Dunlop. The problem is that it took these guys about a year longer than it should have to do the deed. Those who were lucky enough to buy in near the bottom and patient enough to wait it out are getting a pretty nice return. The trick will be to know when to jump ship.
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