Arden Group, Inc. (NASDAQ:ARDNA)

CAPS Rating: 5 out of 5

A holding company that owns certain real estate properties through its indirect wholly-owned subsidiary, Mayfair Realty, Inc.


Player Avatar NetscribeServcs (< 20) Submitted: 2/15/2007 7:31:06 AM : Underperform Start Price: $94.76 ARDNA Score: +17.61

Arden Group Inc through its subsidiaries Arden-Mayfair Inc and Gelson’s Markets, operates supermarkets in Southern California and also owns certain real estate properties. The company operates 18 supermarkets, carrying perishable and grocery products, of which 17 are operated under Gelson’s brand name and the remaining under Mayfair brand. The target audience includes people mainly from elite class, who value superior products.

The retail grocery market in US is highly competitive with business in supermarkets dependent upon quality and price of merchandise products, store location, service, brand awareness and supply chain management. Many of the biggest super market chains are highly organized. The stores of the national and regional chains are generally larger than Gelson’s stores which, in some cases, enable them to offer more products. Further, the slow down in the US economy could also adversely affect the retail industry.

Gelson is highly dependent on its largest supplier United Western Grocers for all its supplies. Almost 18% of purchases are made from this supplier. Any loss from Unified is likely to impact the revenues and profitability of the company. A few of the company’s stores offer in-store banks and pharmaceutical products. However, most of the company’s stores are not large enough for such additional facilities. The stock price for Arden Group seems to be fully valued at current levels. In absence of any major triggers in near term and with lack of earnings visibility, the stock is losing investor’s attention.

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