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Non-Tech : SME(svcdq) has it bottomed out yet? Or will it hit bottom? -- Ignore unavailable to you. Want to Upgrade?

To: christopher who wrote (235)	1/4/2000 11:12:00 PM
From: Arthur Tang	Read Replies (1) \| Respond to of 305

SMC jewelry is a quality jewelry but not perfect jewelry nor highly stylized. Profit margin is 600% same as furniture business. Business is seasonal occurring mostly on anniversaries, wedding seasons and occasions. Not a bad business when income per capita continues to rise. It is not discounted heavily. Promotion cost and lack of turns is expensive. However, the stores are capable of generating $10 million revenue per year based on catalog sales. Properly managed, the earnings could reach 3% return on revenue. Currently, business is in chapter 11. Overhead of $410 million in nine month after closing 100 stores; shows that turn around artist Bettina Whyte has not cut deep and fast. That problem came from the fact that business model of turn around plan did not use accounting models. The plan was based on stores that did not perform, without oversight of corresponding headquarters' expenses. In reality, 1998 losses were only $27 million after X'mas. Store closing in 1999 cost $267 million in nine month. Cheaper not to close stores at all, and work hard this x'mas for breakeven. This year, after possibly more store closing, the belt has to be tightened severely. Store closing is very expensive. It is always cheaper to work out the problems of traffic and morale by using management consultants for each store on a quarterly basis(or rotate SMC's top performing store managers into difficult stores). Radio Shack rotates a great deal for their 7000 stores. AMES has the bad habit of closing and reopening their stores. Eats up a lot of their profits each year. But AMES thinks they have tax benefits, instead of maximizing their profits. On Yahoo board, most of the employees never talk about SMC rotations.