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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: James Clarke who wrote (10455)	4/28/2000 1:00:00 AM
From: peter michaelson	Read Replies (1) \| Respond to of 78984

Surprised to read that "During Fiscal 1999, approximately 42% of Elder-Beerman's total sales were private label credit card sales. Cash sales and third party credit cards accounted for 33% and 25% of sales, respectively. " and "All phases of the credit card operation are handled by Chargit except the processing of customer mail payments, which is performed pursuant to a retail lockbox agreement with a bank. Decisions whether to issue a credit card to an applicant are made on the basis of a credit scoring system." Allowance for doubtful accounts of $2048 on a total of 140,536 does seem tiny off-hand. I might worry only that sales are based on easy credit, and that without it, comp sales actually would have declined, along with lower gross margins. Nonetheless, no question the price is very attractive.

To: James Clarke who wrote (10455)	4/28/2000 2:55:00 AM
From: Paul Senior	Respond to of 78984

Okay, I'll take the other side of SLE argument. Just how long can this company continue to do it to the duck? I mean when sales growth is 14%, 5%, 6%, 1%, and 0% (1995-1999 year over year)and the last 9 months (ended 4/1/00) a measly 2.4%, how long can reported earnings keep growing "8-10%" (per J. Clarke)? Looks like they reduced shares out. by over 100M sh since '94. That might have been a good move. But debt's gone up quite a bit too. D/e ratio is 1.5, higher than in most past years. How about ringing manufacturing efficiencies out of their operations? Here I defer to the 10K readers. I recall a couple of years ago that SLE decided to (and did?) outsource as much of their operations as possible. Created quite a stir in the media as the scope/extent of it was unique. But if they don't own their production how can they competently improve it? I see SLE as an absentee owner and so I'm not surprised even when quality problems (SLE's food recall) show up. Maybe SLE is a screaming buy for somebody who knows the businesses, but for anybody else - they don't get book value back up, they don't get a great price/sales, and they don't get a great dividend (although on a relative basis it looks good). They do get a company holding diversified brand names - the stock of which could revert to its mean value of the last few years (which would be a good gain, imo). But they could also hold a company where(like P&G), the disjoint between sales and earnings will suddenly show up to crater their $15/sh investment. Paul S.