Retail Ventures, Inc. (RVI)

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.