Posts for Ticker ‘CPWM’

The Black Friday Ten: Retailers Who May Not See 2009 (BONT)(DDS)(TLB)(PIR)(CPWM)(WSM)(CHS)(SKS)(EBHI)(RAD)

Angrybear_3A year ago, not many people would have thought Circuit City would be in bankruptcy now. Linens ‘n Things, Mervyn’s, Whitehall Jewelers and Steve & Barry’s have either shut down or are closing huge numbers of locations since they moved into Chapter 11.

The most astonishing fact about the retail industry now is that the environment has gotten much worse than it was when each of these businesses began to fail. Sales at stores across the country will be down this holiday season. Some analysts believe that the numbers will be as bad as for any fourth quarter in thirty-five years.

Adding to the problem of slow consumer spending brought on by the recession is an unprecedented liquidity crisis. Retailers who need access to capital for inventory, rent, and personnel costs are finding that it is nearly impossible to get access to funds without a pristine balance sheet and a history of substantial positive cash flow.

These troubles point to a number of other retail chains going out of business between now and early next year. Sales on Black Friday, the day after Thanksgiving, which is considered the bellwether of holiday sales, will determine the fate of several companies which are now viewed as the weakest operators in the industry.

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Posted on: November 26, 2008 – 5:57 pm in Retail, , , , , , , , , ,

The 52-Week Low Club 8/22/2008 (EXLS)(CNTF)(CPWM)(PSUN)

Sad_clownPacific Sunwear (PSUN) Awful forecast. Drops to $5 from 52-week high of $18.44.

Cost Plus (CPWM) Tough results for last quarter. Sells down to $1.50 from 52-week high of $6.22.

China Techfaith (CNTF) Company warns on sales, cut jobs. Plunges to $1.51 from 52-week high of $9.98.

Exlservice Holdings (EXLS) No big news. Slips to $11.07 from 52-week high of $28.96.

Douglas A. McIntyre

Posted on: August 22, 2008 – 2:53 pm in HI/LOW, , , ,

Big Retails Which May Close Or Downsize (CC)(BBI)(PIR)(CPWM)

CircuitcityIt is now no secret that we are in a very weak economic environment and if it is not an official recession it is for about 80% of the country.  We’ve already seen some retailers collapse entirely or at least fall into the restructuring chapters that protect the company from liquidation.  Among these are Sharper Image, Lillian Vernon, Mervyn’s, Ames, Harvey Electronics, Good Guys, Levitz, Bombay, Movie Gallery, Tweeter, and other former modest-sized retailers which have filed to shield themselves from creditors.

There are several larger retailers that are in real trouble. Some are at risk for bankruptcy and each of them could have to cut operations so much that their revenue would be a fraction of what it is now.

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Posted on: July 30, 2008 – 12:49 pm in Retail, , , , , , , , , , ,

Pier 1 Shows It Doesn’t Deserve Cost Plus (PIR, CPWM)

Pier 1 Imports Inc. (NYSE: PIR) is seeing its stock butchered by more than 16% in the first 30 minutes of trading this morning and it has already surpassed its average daily trading volume.  The company’s losses did narrow from last year but fell short of estimates.  The loss was -$0.37 EPS on a 13% drop in revenues to about $310 million, while First Call forecasts were -$0.15 EPS on $338 million in revenues.  The company’s same store sales were -5.4% for the period on slow March and April traffic.

Pier One also noted that it sees a slight negative to slight positive for its same store sales.  It also said it expects a slight positive earnings for its fiscal 2009, with the caveat of holiday sales living up to the company’s expectations.  Wall Street isn’t a believer, at least it doesn’t seem that way since its own internal track record has been a poor one for some time.   

This should effectively kill its unsolicited proposed buyout offer chances for Cost Plus Inc. (NASDAQ: CPWM) coming under the Pier One umbrella.  If Pier One wants the company they are now likely going to have to come up with a cash component for the merger to where it is as close to a no-lose situation for Cost Plus shareholders.  The 0.6 shares of Pier 1 would barely be $3.05 per Cost Plus share based upon a $5.08 Pier One stock price.

This shouldn’t be interpreted that Cost Plus has done a great job or that it will do a great job.  Much of the issues that hurt Pier 1 are the same issues that hurt Cost Plus.  But shareholders over at Cost Plus are likely going to roll the dice rather than accept a take-under buyout after feeling this much pain.

Pier One shares were at north of $8.00 even in mid-May and shares dropped from $6.67 to $5.26 when it announced its unsolicited offer for Cost Plus.  Cost Plus shares are at $3.40 after today’s open.  Perhaps both companies need to hear the old saying "Physician, heal thyself."

You can join our open email distribution list to hear about other mergers, IPO’s, secondary offerings, restructuring, and other special situations.

Jon C. Ogg
June 19, 2008

Posted on: June 19, 2008 – 9:17 am in Earnings, Mergers and Buy Outs, Retail, ,

Cost Plus & Pier 1 Brace For War (PIR, CPWM)

It hasn’t even been a week, and it appears that the proposed acquisition where Pier 1 Imports, Inc. (NYSE: PIR) wants to acquire the operations of Cost Plus Inc. (NASDAQ: CPWM) is going to go rather hostile.

Early this morning, Cost Plus issued a statement saying the company is unanimously rejecting the Pier 1 offer to acquire the company after determining that the offer is not in the best interest of the company and its shareholders.  Its statement pretty much says it all:

  • We believe that our strategic plan, which is yielding positive results, will provide Cost Plus shareholders with superior and compelling long-term value as an independent company. Despite your statements to the contrary, Cost Plus has significant liquidity to pursue its business objectives and to deliver improvement in our core business metrics…. Your proposal to combine our operations is not attractive from either a financial or a strategic perspective. It is both distracting and ill-timed given the difficult retail environment and the progress we have made investing in and improving our business.

After today’s close, Pier 1 came out swinging on its own and it doesn’t look like they are going to go away no matter "distracting" this may be.  It even notes its terms and conditions as "subject to only limited conditions that are customary for transactions of this type, which are confirmatory due diligence, the negotiation of a definitive acquisition agreement and the receipt of all necessary shareholder and regulatory approvals."  Unfortunately, when you are engaged in a stock for stock merger where the premium has shrunk to a near take-under those are fairly strong conditions.  Pier 1 plans to take this issue straight to Cost Plus shareholders.

Pier 1 goes further and notes that it could yield roughly $50 million in cost savings and give shareholders the chance for upside in execution.  The original offer would have been valued at $4.00 per share based upon the 0.60 shares of Pier 1 per Cost Plus share.  But with a $5.97 closing price today the offer price at a full swap is only $3.58.  Cost Plus shares closed up at $3.46 today and its 52-week trading range is $3.46 to $9.00.

If Pier 1 wants this company, on the surface it is going to take more money or a larger share offer.  Otherwise many Cost Plus shareholders are going to have to use the worst investment strategy of simply crossing their fingers and hoping things get better, because that exchange ratio isn’t going to get too many holders that excited.

Both stores have their niches, and both have their current problems that overlap.  This merger saga is far from over.

You can join our open email distribution list to hear about other mergers, IPO’s, secondary offerings, private financings, activist investors, and more.

Jon C. Ogg
June 16, 2008

Posted on: June 16, 2008 – 5:03 pm in Mergers and Buy Outs, ,

Pier One & Cost Plus Merger; 1 + 1 = 1 (PIR, CPWM)

Pier One Inc. (NYSE: PIR) saw shares tumble today on what some may think as a game changing deal where it offered to acquire rival Cost Plus Inc. (NASDAQ: CPWM), the parent of its direct competing store Cost Plus World markets.

As far as the terms before any dilution, this would have been a 31% premium for Cost Plus before any dilution metrics come into play.  The buyout terms are for 0.6 shares of Pier One for each share of Cost Plus.   

The problem is that Pier One shares have fallen and therefore lowered the potential buyout price compared to any cash offer buyout deal. With a 16% drop to $5.55 per Pier One share, this works out to a mere $3.33 for Cost Plus.

The truth is that a deal of this sort would perhaps allow the company to stabilize the bleeding of the two operations.  Both suffer from many of the same commonalities:

  1. weak consumer
  2. brutal housing markets
  3. weak dollar and dependence on foreign suppliers
  4. poor execution and inability to compete
  5. lack of pricing power
  6. lack of profitability and inconsistent turnarounds

The problem is that while Cost Plus is up on the offer, this is just a stock for stock swap and requires the faithless to take faith into another group that also its legion of faithless behind it.  Pier One did note that Cost Plus was going to soon run into liquidity issues if it does not agree to to a deal.  Unfortunately, that is correct if its books are accurate.

Lastly, this would have made great sense in 2006 before Cost Plus pared down some of its real estate ownership for a sale-leaseback arrangement.  Cost Plus shares are now only up about 7% at $3.28; its 52-week trading range is $2.65 to $9.02.

We have reviewed both Cost Plus and Pier One for our weekly "10 Stocks Under $10" newsletter.  Unfortunately, for now it appears that this merger is the mathematical equivalent of "1+1=1"… or so it seems.

Jon C. Ogg
June 9, 2008

Posted on: June 9, 2008 – 1:33 pm in Mergers and Buy Outs, Retail, ,

Cost Plus, Pier 1, & Tuesday Morning Different Paths (CPWM, PIR, TUES, BIG, SHLD)

When we see a blow-up at Tuesday Morning (NASDAQ:TUES) to the tune of this much, we look at other stores.  The truth is that Tuesday Morning is still a clearance center stock like a Big Lots (NYSE:BIG), although we have noted when we said Big Lots Chart Uglier Than Its Stores that Big Lots is on the lower-end of that quality spectrum.  Big Lots shares are down almost 3% at $16.30 at a new 52-week low in sympathy, although the drop in Tuesday Morning (NASDAQ:TUES) is now over 25% to $4.76 and well under its 52-week trading range of $6.44 to $18.50.
But there are two retail stores that are trading better today. Pier 1 Imports (NYSE: PIR) is seeing shares up some 16% at $3.82 today after competitor Cost Plus (NASDAQ: CPWM) made two consecutive runs.  Shares of Cost Plus Inc. (NASDAQ: CPWM) were just covered by us pre-market Monday in our "10 Stocks Under $10" that we noted favorably.  It isn’t just that we trust the guidance and management saying they are still trying to turn this around and it isn’t that we feel the company will have no exposure to its credit card portfolio.  It is that this trades at enough of a discount to its tangible book value that we feel this stock could continue its recovery.  We were going to list this as one of our turnaround stocks that hasn’t turned around, but it has run more than 20% since Friday’s close.  Maybe this will keep running and maybe it won’t from our $4.39 closing price Friday (although the lowest it traded during market hours on Monday was really $4.41 at the open and it closed at $5.10). This is not without risk and it has traded this far under $10 for a deserving reason.  We’d wait after the big pop of the last two days, but the worst part of the business may be behind it.

Jon C. Ogg
December 18, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he produces the SPECIAL SITUATION newsletter and he does not own securities in the companies he covers.

Posted on: December 18, 2007 – 3:31 pm in Earnings, Retail, , , , ,

The 52-Week Low Club

Christopher & Banks (CBK) Clothing retailer loses CEO. Drops to $11.69 from 52-week high of $31.25.

Cost Plus (CPWM) Home furnishing and entertainment products retailer loses CFO and drops guidance. Shares fall to $3.98 from 52-week high of $14.34.

Coldwater Creek (CWTR) Specialty retailer still falling after bad earnings. Down to $12.43 from 52-week high of $31.25.

Sourceforge (LNUX) Poor earnings fall-out. Still dropping. Down to $2.54 from 52-week high of $5.55.

Douglas A. McIntyre

Posted on: August 31, 2007 – 3:58 pm in Uncategorized, , , ,

The 52-Week Low Club

Wachovia (WB) Even big banks get hurt when the market falls. $51.84 down from 52-week high of $58.80.

McClatchy Newspapers (MNI) Worse for newspaper stocks almost every day. Down to $24.87 from $44.95.

Hovnanian Enterprises (HOV) Home builders. Very ugly. $18.13 down from 52-week high of $38.66.

Pulte Homes (PHM) More home building carnage. $23.71 down from $35.56.

Wamer Music Group (WMG) CD business is dying. Come back baby, rock and roll never forgets. Down to $14.31 from 52-week high of $30.59.

Sanofi Aventis (SNY) Competing insulin drug has good trials. Drops to $40.27 from 52-week high of $50.05.

Inphonic (INPC) Bad quarter. Bad downgrade. Drops to $5.07 from 52-week high of $14.49.

Cost Plus (CPWM) Slow housing hits home fashion retail. Drops to $7.56 from 52-week high of $14.69.

South Finl Group (TFSG) Victim of a fraudulent land sale scheme related to a North Carolina real estate development project. Drops to $22.23 from 52-week high of $27.49.

Douglas A. McIntyre

Posted on: June 22, 2007 – 3:33 pm in Uncategorized, , , , , , , , ,