Friday, April 03, 2009

Rite Aid Finally Tidies Up

Rite Aide (RAD) announced Q4 results and year end calamities. They are dangerously close to losing their listing on NYSE and the stock has languished for years. Some stores opened, some stores closed, some got a paint job. They finally got around to writing down good will which has puffed up the financial statements. The press release is bland and talks about doing all the usual things; improve revenues, cut costs and reduce debt.

Given the languishing share price and huge over hang of debt all that is needed is a cash buyer who can come in and scoop up all the remaining chips. It should not take much more except maybe a little bit of long term optimism in the economy. Management is not sounding encouraging about anything. Why are they so boring right about now? Usually you buy because of great management. The new buyer would not appreciate the corporate drum beating up the share price. So who is the management group working for at this time?

The shareholders deserve a little bit more enthusiasm at this point.

Thursday, April 02, 2009

CarMax Risk Factors

CarMax (KMX) released their Q4 financial results and of course the numbers are a tough read. Not unexpected given that they are in the automotive retail and finance business. To their credit they are not opening any new stores and seem to be working hard at reducing costs to reflect the new realities.

But take a close read at the risk factors that they identify in the press release. My favourite is the last one which most certainly came from the lawyers. It reads "The occurrence of certain other material events." This is a well known risk that most investors will intuitively understand and facto into their calculations. who could not miss and or account for the proverbial certain other material events. I think we can all agree hat there is too much litigation in the world. But when management agrees to put that one out you have to start wondering just how badly off they really are.

The other risk that they just throw in was "Adverse conditions affecting one or more domestic-based automotive manufacturers." Thanks for the tip. Define adverse conditions and why only domestic based automotive manufactures rs. The Detroit Three are clearly sinking; management feels that there are or will be risks the question becomes what are they doing about it.

Tuesday, March 31, 2009

DR Pepper Snapple Jargon Challenged

Just a few days ago Dr. Pepper Snapple (DPS) released Q4 and year end results. They continued on the corporate auto pilot of jargon and rhetoric. They immediately refer to macroeconomic deterioration and then throw in the proverbial term "market conditions" for good measure. They then proceed to share with investors that they are experiencing weak demand, finding the at home trend to be not working in their favour and their overall value proposition is not resonating the consumer.

The executives are over complicating the issue. times are bad. Its easy to not spend money on a Snapple. So what are you going to do? They make noises about better marketing. fine but what about cost reduction. Can Snapple and Dr Pepper skinny down and become financially attractive. If this management group cannot do it the next one will.