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$2.74 -0.41 (-13.02%)
10/15/2008 4:06 PM

Retail Ventures, Inc. (RVI)

CAPS Rating:
**

A holding company operating retail stores in four segments: Value City, Filene's Basement, DSW and Corporate.

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Avatar NetscribeRetail (56.61) Submitted: 12/19/06 9:32 AM : Underperform Start Price: $19.05 RVI Score: 49.41

Retail Ventures is a holding company operating retail stores through three subsidiaries namely Value City, DSW and Filene’s Basement. Value City, a full-line retailer, carries men’s, women's and children's apparel, accessories and seasonal items. DSW is a specialty branded footwear retailer, and Filene’s Basement offers stylish, high-end and better-branded merchandise.

The recent performance of the company has been very bleak with a meager rise in same store sales. DSW is the sole performer for the company with an almost 10% rise in same-store sales. The company has not been very aggressive on store openings and for some time now, not a single store has been opened for Value City, which contributes significantly to the topline.

Besides, the company has been constantly in the red for the past few quarters. Management is pessimistic about the remaining part of the year and predicts negative same store sales and operating margins. Additionally, seasonal, electronic and house wares businesses of the company are softening. To add to the woes, the company is reeling under a heavy debt burden. Albeit some action is taking place in Filene’s Basement, management feels that it will take over three years for this subsidiary to become a real driver. Recently, there was an upswing in the stock price over the news of management mulling over the issue of selling Value City, which contributes much to the losses. However, the likelihood of this event is not known. With expected pressure on same stores sales and gross margins, the company is expected to lag behind.

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Avatar NetscribeRetail (56.61) Submitted: 4/16/07 5:24 AM

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Retail Venture (RVI) has just not been able to venture profitably in the highly competitive apparel and accessories market of the United States. Going forward, RVI do have plans to open stores in the famous shopping areas like Tysons Corner and Maryland to name a few. However, the likes of dominant player like Century 21, which has won accolades for its business in the same region means no free lunch for RVI.

Once again, the retailer cemented its place in the kingdom of bears by displaying a trend of incurring huge losses. DSW, the sole segment that runs in the black, is definitely adding some luster to the ailing business by opening stores in the appropriate locations and driving sales. However, Value City, the largest contributor to the revenues continued to play the spoilsport. This segment has significantly contributed to the losses, and in the fourth quarter of 2006, management has blamed weather for being jealous in Value City’s success. Albeit, management is exploring options for selling Value City, the possibility of this event is still not certain.

Looking ahead, RVI has no major action plan to revamp itself apart from increasing their private label penetration. To make the matter worse, the same- store sales could take some beating in the coming quarters on account of the closure of one of the larger stores in the Downtown Boston area. Looking at all these factors, the scrip fails to impress its shareholders and venturing at the current levels is fraught with risks.

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