+ Watch CPWM
on My Watchlist
The Company is a specialty retailer of casual home furnishings and entertaining products in the United States.
Thinking BK here...
Over last year - the price of the share fluctuated wildly - from under a dollar to $10.
Should be a big loser. Will lose to cheaper more discounted furniture.
Personally I like the store and see that they have potential however their #'s are terrible at the moment. Great value, but low growth, low profit margins,low ROE, Good mngmt efficiency. Giving a thumbs down for now but will check back in a year or so and see if they get thier act together.
I doubt it will outperform foolanthropy but for my 2 cents it'll do.
Trading for .65x book value? That sounds like a good buy, even if they pulloff a weak, short term turnaround or sell it for scrap.
When it has "Plus" in the name, you know you are getting something extra. How could this be worth less than it costs me? Wouldn't they have to call it Cost Minus?
1) Turnaround story with emphasis on operational improvement - looks to be taking root based on inventory management. 2) Short term fear caused by delay in SEC filing - appears to be an issue with accounting for inventory write-down which will not materially affect cash flow moving forward. 3) Trading at discount to book value and less than 1X sales.4) Oh... and PE firms hanging around the hoop.
Cost Plus, Inc. is a specialty retailer of casual living and home entertainment products in the United States and operating through 267 stores as at the end of FY2006. The company's stores offer a large selection of distinctive, value-priced merchandise, both non-consumable and consumable, within four core categories: home décor, gifts and decorative accessories, tabletop items and gourmet food and beverage. Home furnishings accounts for 61% of company revenues, while 39% comes from consumables.Although the $275 billion US home furnishing retail industry is expected to grow at 4-5% per annum for the next 5 years, Cost Plus seems to be having a weaker position in the near term due to continuous operational problems relating to supply chain and inventory flows compounded with ineffective promotional activities.While all companies in this sector are being pressured by a weak housing environment, Cost Plus has more company-specific issues and the turnaround initiatives to date have still not shown themselves to be viable. Further downside risks include the possibility of a weakening economy and the unemployment level, which has remained stagnant at an average of 4.6% for past 6 months.With absolutely no growth in sales and operating margins during the first three quarters in 2007, which was primarily due to a decrease in same stores sales, shift in sales mix to low margin consumables, a poor performance in the margin rich home furnishings segment and an increase of 15% in selling and administration expenses. The financial position of the company seems to be deteriorating inspite of operational changes made by the new management team.
I'm guessing CPWM is at bottom, or so close to it that it will scare them into positive action to correct the situation. One indication that this is true is that they got out of the Real Estate business in Windsor, VA, freeing up cash to get back into the furniture and home decorating business -- where their expertise produces sales and profits.
Store visits- Plano Tx location has been improving from good over the past 3 years.New store opened next to the Galleria, Dallas recently. Great location, road construction will limit sales for next several months- but this store will be solid.Have a long term and a trading position in CPWM.
With the Christmas season approaching, this stock will perform better up to and including the Easter season
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