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

To: Micah Lance who wrote (59290)	3/27/2017 3:16:21 PM
From: clm5	1 Recommendation Recommended By staring Read Replies (2) \| Respond to of 78476

While I agree that most pure retailers are probably value traps at the current moment, what say you guys about retailers that cannot by replaced by e-commerce sales? By this I mean retailers that sell things like high end furniture, beds, etc... things that people want to touch and see before they commit to a purchase. I think BBBY, which you mentioned, and moreso Williams-Sonoma fit this kind of bill. Specifically about WSM, they are already in the top 10 in the US in e-commerce sales. Over 50% of their sales are online, and I don't believe you can replace the rest of their sales with e-commerce. Correct me if I'm wrong, but I don't think many people are going to be buying high end sofas, dining tables, beds, etc. online. So it seems to me they have already filled the online niche of their products that can actually be sold via e-commerce (cookware, utensils, small appliances...), and continue to be a sought after choice for things you need to buy in person as well. It isn't firesale cheap like a lot of retail, but its price has been thoroughly affected by the current environment. I think its price is trading marginally below what its worth if you're conservatively valuing it, but maybe not a margin of safety high enough considering the outlook of retail in general. Just curious as to what other's sentiments are about these type of situations.

To: Micah Lance who wrote (59290)	3/28/2017 12:50:59 PM
From: Spekulatius	1 Recommendation Recommended By geoffrey Wren Read Replies (1) \| Respond to of 78476

I agree with the sentiment regarding retail. Ecommerce is just 10% of the total spending right now, which means that the pain has probably just begun. I can easily see that more and more produce categories will be dominated by ecommerce (even groceries to some extend) and I am fairly certain that will grow to 50% of the total within 20-30 years. Also, when looking at retail stocks balance sheet, that the main liability are the lease liabilities (for future rent payments), which typically don't show up in abbreviated balance sheet, just in the footnotes. If you add those liabilities back in, the leverage of many retail companies becomes fairly substantial. I agree that cloth designers like RL should find a way to distribute their product even in an ecommerce dominated world, even if their man distribution channel, which are department stores suffer right now. My only buys right now are retail oriented Reits, where I think we have substantial discounts to NAV value and improving balance sheet, but if above scenario of an ecommerce dominated retail becomes true, even those may turn out to be value traps. Most value investors underestimate the discount necessary to account for secular headwinds /melting ice cube business.

To: Micah Lance who wrote (59290)	3/29/2017 8:27:11 PM
From: Shane M	1 Recommendation Recommended By staring Read Replies (1) \| Respond to of 78476

KORS is going through steps of better controlling distribution of their brand rather than degrading it by having it available everywhere, but that means more of their own locations, and I think that likely means more exposure to mall traffic trends. What's odd right now is there are so many of these smaller fashion retailers that talk about challenge of mall traffic and same store sales trends, but at the same time keep announcing store expansion plans. The unit counts in stores can help cover up top line problems for a while, but ultimately if the business is in decline I wish they'd focus more on the store itself, not on increasing units. So many managements in the space seem locked into unit growth and I wonder if it's proper capital allocation decision.