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

To: Jurgis Bekepuris who wrote (29319)	12/19/2007 1:21:43 AM
From: gcrispin	Read Replies (1) \| Respond to of 78745

With all due respect, Jurgis, my anecdote was not to show how they make a profit. My anecdote was to show how they attract new customers. Believe me, my wife is not your typical Ross shopper, but she was shocked that the service was so poor at Macys and that she could find the same item at Ross. She even said the service was better. If you want to talk about profitability, ROST beats WMT and COST hands-down in operating and profit margins. How do they do it? I don't know. Clearly, they have a model that works and is reasonably priced in terms of their share price, in my opinion. You didn't make a case why they can't continue to make 20% ROE. I believe they probably will because this is a mediocre Christmas season and there will be plenty of close-outs to choose from. Also, a slowing economy will help the close-out stores. When dealing with retail stocks, perhaps it's better not to tie yourself to a particular brand. As Heidi Klum says on Project Runway, "One day you're in and the next day you're out." Purchasing CWTR is a bet that they will be in again. At least that is what this excerpt from the most recent CC sounds like. "To summarize, with clothing playing such an important part in her identity and lifestyle, it is key for Coldwater Creek to offer compelling merchandise not found elsewhere by introducing fresh, new product, designed to keep the brand absolutely relevant to this customer. And as I mentioned during our recent investor day, we are working diligently on new strategic initiatives for the merchandising area. We have identified the opportunities and we are confident in our abilities to deliver compelling, differentiated and exciting merchandise to this customer." Please. Sounds like a shot in the dark to me. In short, I'm not smart enough to know when they will turn it around and attract new customers to their stores. I'll take a close-out store with ROST's numbers any day.

To: Jurgis Bekepuris who wrote (29319)	12/19/2007 8:01:54 AM
From: Mark Marcellus	Read Replies (1) \| Respond to of 78745

Hmmm, it might be time to take another look at ROST. I looked at both them and TJX a few years back and went with TJX because I thought TJX was better managed. At the time I was right, as ROST's disastrous implementation of their new IT systems proved (they actually had no idea what was in inventory for a number of months). At least something like CWTR or CHS or TLB have brands that may be worth something. ROST? ROST is not a brand. It's the same as TJ Max or Marshall's or whatever other closeout discounter you take. It's probably better managed but that's it. I disagree that these retailers don't have brand identity. I assume you're aware that TJ Maxx and Marshall's are owned by the same company (TJX). If the name doesn't matter, why use two names? Branding concepts for ROST or TJX may be different than, say CHS or TLB, but they still matter. When I do look at ROST, the most important thing for me will be their inventory management. This is always extremely important in retail, but I believe it is the key differentiator for discounters. When I last looked at them, their inventory management was very weak, and I thought their extreme reliance on packaway put them at a disadvantage. At a 20% ROE, it certainly looks like they might have gotten past their IT problems and are using their systems to more effectively manage their business.