May 25, 2012 6:19 pm
French Connection in two minutes - Interactive Investor
Impressed by Next (NXT), value investor Richard Beddard reappraises French Connection (FCCN). Perhaps management could have done more to stave off losses at its stores and the latest profit warning contains disturbing news about cash flow.
It’s a cliché but FCUK was an iconic fashion brand. French Connection fashions are sold wholesale internationally and through the company's own stores and department store concessions in the UK, primarily, the US, and recession-bound Ireland, Spain and Portugal. The company also has two stores operated as joint ventures, one in Honk Kong, and one in China, and smaller brands YMC, TOAST and Great Plains. It receives income from ranges of spectacles, toiletries, watches, fragrances and jewellery which use the FCUK and French Connection brands under licence.
Bargain / Recovery / Cyclical / Stalwart / Growth
While wholesale, licensing, and international operations are growing at varying speeds and overall it made a modest profit last year, French Connection is losing money retailing in the UK, Europe and North America, which accounts for 60% of sales. Costs like rent are fairly fixed or, like cotton prices, volatile, but revenues are falling as customers restrict shopping to sales periods, or find bargains on the internet. Since French Connection targets the high end of the middle-market, it's vulnerable to cheaper brands during slowdowns.
Expectations
To keep prices and sales up, French Connection has launched an exclusive premium range for women, a range of homewares, and aims to minimise discounting. To keep costs down it's negotiating lower rents as leases expire, six this year and eight next out of 71 stores in total, and will close unviable stores. Press reports suggest the company may go further, and sell off some of its most expensive leases before they expire but turning the stores around will take "a number of seasons", which could mean years, and if they require refurbishment it will add cost.
Threats
Competitive position - weak
Though French Connection's vulnerability to cheaper brands is cyclical, the down-cycle this time is prolonged. The fading of the FCUK brand and the emergence of the internet are more intractable dents in its competitive position.
finances - neutral
I'm reluctant to say French Connection's finances are strong, despite the fact it has no debt or defined benefit pension scheme. The retail stores are losing money partly because of lease obligations agreed when they were profitable. Those obligations are a kind of debt not recorded on the balance sheet. Include them at face value, and French Connection's tangible assets are almost 80% funded by 'debt'.
Falling retail revenues reduced the cash balance from £18.5 million at the end of April 2011 to £11.3 million at the end of April this year. A falling cash balance is a bad sign because cash pays the rent and it's clear too that the end-of-year cash balance, which in recent years has typically been over £30 million, is flattered by sales over the Christmas period. At other times of year the company's finances are weaker.
Management - neutral
Founder and executive chairman Stephen Marks has the experience and the incentive (a large shareholding) to turn the company, his life's work, around but he was slow to act as the profitability of the UK stores declined. I wonder if he gambled on a short recession and four years in he's facing a protracted one.
Valuation - cheap
The shares trade at a 60% discount to tangible book value.
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Verdict
The shares are very cheap, but the stores aren't profitable in recession or near recession and if French Connection can't turn them around until the economy recovers, they could put the whole company in jeopardy.
Its eroding cash reserve and profitable wholesale, international and licensing operations give French Connection some time but I feel nervous enough about the Thrifty 30's holding to have considered ejecting the share from the portfolio.
I haven't, because turnarounds are rarely smooth and it's foolish to buy shares in a company you expect to turn around, only to be shaken out by a temporary reversal.
However, the protracted recession and what looks like accelerating losses in the retail portfolio mean I'm not as confident as I'd like to be that the latest setbacks are temporary.
Notes
- Profit warning, April 2012
- Next v French Connection
- French Connection, TOAST, YMC, Great Plains
- Performance in year to 31 Jan 2012
- Effect of leases on financial strength and valuation
- Stephen Marks: holding ratio
- More about French Connection
- Blogger Expecting Value charts French Connection's falling popularity (via Google)
- Poppy Dinsey on French Connection
- The Thrifty 30
Shopping by mobile gives Menarys a welcome online boost - Belfast Telegraph
Menarys.com went live in 2010 and has attracted orders for fashion, accessories, homeware and giftware from 19 countries including Germany, Spain, New Zealand and France.
The performance of the local retailer reflects forecasts from a recent study published by the Centre for Retail Research that anticipates shopping on mobile devices in the UK will rise by 53% to £4.5bn in the next 12 months.
Menarys Group e-commerce manager Marisa Maguire said the online shop has also seen a notable shift in the typical customer profile.
"Mobile shopping has grown so quickly because it's a convenient and easy way for shoppers to find the best products at the most affordable prices," she said.
"There has been a significant increase in people browsing the Menarys site for leading fashion brands, accessories, gifts, cookware and beauty products through tablet computers and smartphones.
"Having an online presence is a very important part of our strategy to ensure we are meeting our customers' needs."
Established in 1923, Menarys sells lingerie and fashion, accessories, handbags, cookshop, home and hosts concession partners throughout Northern Ireland.
Menarys is headquartered in Moygashel, Co Tyrone, with outlets in Bangor, Coleraine, Cookstown, Dungannon, Junction One in Antrim, Larne, Limavady, Lisburn, two in Newry, Newtownards, Portadown, Craigavon, and Strabane.
In the Republic there are branches in Carrick-on-Shannon, Clonmel, Letterkenny, Dublin and Offaly.
Menarys was originally established in Co Tyrone in 1923 as Joseph Alexander Ltd, and has since become a favourite local department store chain, which was rebranded as Menarys in the 1980s. It employs over 500 Menarys staff and 1,000 concession staff.
Dogs, booze and bling: Northern Ireland's medieval shopping mall - BBC News
BBC Great British Story
Share your local stories - BBC's Great British Story will be visiting Mount Stewart on Saturday 26 May.
Excavations on Dunnyneil Island in Strangford Lough, Northern Ireland, have revealed a seventh century trading emporium frequented by merchants from as far afield as modern day Russia, Germany, Iceland and France.
Back in early medieval times, there was no cash economy, few buyers, and even fewer sellers, but there are surprising parallels between these ancient trading outposts and modern shopping centres.
Luxury goods, lots of wineAccording to archaeologist Dr Philip MacDonald, who led the dig on Dunnyneil, merchants would have brought wine and other luxury products to Ireland to exchange at emporia for furs, seal skin, slaves and famed Irish wolfhounds.
"High status members of the Dal Fiatach [the local dynasty whose royal centre was Downpatrick, County Down] and local traders, would have frequented the island," he said.
In medieval times, the king controlled trade and wealthy merchants travelled the seas to buy and sell goods. The trade in imported prestige items would have been important for the king of Dal Fiatach, to signify his status and power.
"This little speck of an island had a very high significance to the wealth of the Ulster Kingdom," explains Tom McErlean from the Centre for Maritime Archaeology.
"Dal Fiatach, or the Kingdom of Ulster, was a great maritime kingdom. It was fairly cosmopolitan with connections all around the North Sea."
The particular kind of pottery found at Dunnyneil Island is evidence that luxury goods were imported in some quantity from the continent. The coast around Strangford Lough has the highest density of this type of pottery ever discovered in Ireland, suggesting the Kingdom of Ulster was relatively wealthy.
Dunnyneil: a brief history
• Believed to be named for Niall of the Nine Hostages, a fifth century king of Ulster who took hostages from nine kingdoms around the UK, one of whom was St Patrick.
• Site of an early medieval emporium dating from 650 AD.
• A long rectangular hut was built on the island around 900 AD, during the Viking invasions.
• After a period of disuse, it was re-occupied during the 13th century. A belt buckle from this period was found.
"Dunnyneil played a big role in creating their wealth … [it] would have been a profitable stopping point for foreign wine merchants. The Irish kings valued wine very much. There was a big market for wine here. It would be very much worthwhile," said McErlean.
An eye for what sellsMuch like the shopping malls of today, Dunnyneil's ancient traders would have needed a keen eye for selling the right products to the right people, as Dr Jonathan Jarrett, a lecturer in medieval history at Oxford University, explains.
"If you sailed [to a settlement] halfway up the east coast and found that a boat had already been by with Scandinavian hides the previous week, that's a wasted stop. But at the emporia someone would probably buy the goods, quite possibly expecting to sell them on."
In short, trading emporia like Dunnyneil Island offered a ready-made market where you could usually find someone eager to buy your goods.
"They probably did offer at least some speciality goods from each area. Ireland and England were both famous on the continent for their hunting dogs, so there were things worth coming a long way for."
And it seems that, like today, the medieval trade in prestige goods wasn't exempt from dodgy rip-offs.
"One Carolingian swordsmith by the name of Ulfberht acquired such a name for his blades, which unlike most he stamped onto the metal, that they seem to have been faked, like knock-off Rolexes," said Dr Jarrett.
“Start Quote
End Quote Mark Bourgeois Retail expertArchaeologists of the future will probably notice we're not building cathedrals any more, we're building shopping centres and music festivals ”
As managing director of a large retail investment company, it is Mark Bourgeois' job to understand what makes a good place to buy and sell goods. He sees similarities between medieval emporia and modern shopping centres, particularly in the supply of the latest prestige goods.
"A manager would identify what items will sell well in their area and work with the markets to provide good products for consumers that will sell. It is the mix between the prestige factor shops… which consumers want in their area, as a matter of civic pride, mixed with a variety of good local retailers. That mix is the Holy Grail of a successful shopping centre."
There is very little evidence left on Dunnyneil Island of its wheeler-dealer past. It's a tiny place and the emporium there was never built to last. Only tenacious archaeological investigation has revealed its role as a sort of 'pop-up' shop that could be taken down as quickly as it was put up, but sufficient to catch the passing trade for more than 200 years.
Dr Jarrett perhaps sums up the seventh century trading environment that Dunnyneil inhabited best of all:
"If one were to hear a message from the early medieval business consultancy, it would perhaps be something like: stock goods that no-one else has, cut deals with local resellers so you can sell wholesale, get shopping anywhere else outlawed, and pay the government a cut of your profits for it. Oh, and if shoppers turn up in boats with dragon prows it probably wise to come up with some really special offers!"
Local resident Rosemary Marr remembers some of the local legends around the island: "There's a story from when we were kids about 'the ABC trees' at Linden Walk, just to the side of Killyleagh Castle. It's believed that there are Cromwellian soldiers buried underneath each one, and there's treasure buried there too. There's a kind of a hole in the side of the castle, when we were kids we were told there was a tunnel going out to Dunnyneil that would have been used when Cromwell was here. During the Seventies on Frederick Street or the Back Street as we'd know it, apparently there was a tunnel found, so that added fuel to the rumours - but it might have just been a pipe, you never know..."
If you have a story to share about the place where you live, or want to uncover the hidden history of your area, BBC's Great British Story are holding an event on Saturday, 26 May at Mount Stewart.
How selling wholesale fashion clothing for women - Salon
Dressing for any occasion makes every one happy and for women having a fashionable wardrobe is just like their dream come true. Keeping women dresses in outlet is the best way in which retailers can keep their shop flowing with customers. Now day's there are numerous stylish dresses for every occasion which attracts the women most. Women are delighted when they buy wide variety of wholesale dresses at discounted prices in good quality. The women dress wholesale are available for all occasions with different patterns, colors, right quality and materials. The women dresses are made according to their taste and new designs to keep the trend alive.
The dream of every woman is to look attractive, beautiful and sexy in prom to catch the attention of other people. Today wholesale prom dresses are sold like hot cakes in the market. Many women have changed their wardrobe from old prom style dresses to the latest stunning wholesale prom dresses. The important aspects of evening dresses and prom dresses such as style cut and flow are important things that one keeps in mind while designing and purchasing the clothes. The flower collection works best as evening dresses. The collection of evening gowns has variety of colors and designs such as shiny short black dress with halter neck, Mini off shoulder red dress with flower prints, Simple black dress with red buttons in the middle and full sleeves short pink dress. Evening dresses with such designs add elegance to the beauty of women.
China is good source of producing any clothing as china is one of the biggest country that have maximum producing capacity. This will make china largest wholesaler of the international market as China sell any thing whether it is related to technology, or textile, or accessories. China also sell clothes at wholesale quantity. Clothes from china are different from our regular one and these clothes are of good quality which makes your look better.
China wholesale clothing is of good quality that if any one buy it once and it would try to buy it another time also. We can buy fashion women dresses from china wholesale clothing stores as it is very cheap than any other country in the world. Clothes from China have good quality fabric and which is different from any other quality fabric which is imported from any other country. China wholesale clothing is very famous for its price as it is not so much expensive and second reason for its popularity is that the fabric of china is of good quality. These days, products from China are of great quality that's why they are sold very cheap because labor cost there is extremely low. Quality control in China has vastly improved over the last few years and savvy businessmen know they can get cheap wholesale products from honored and tested suppliers in China.
Many china wholesale accessories suppliers who claim to be wholesalers are retailers; hence you are likely to spend more money than normal. Reputed wholesale accessories dealers are always prepared to provide variety of services such as drop ship services, replacement defective products services, return policy services, and much more.
China wholesale accessories products are popular and have definitely made a name for itself in the wholesale accessories world. Many unique china accessories products in People's Republic of China are manufactured in bulk and marketed to most of the countries in Europe, Australia, and the United States. The competition is getting tougher and at the same time the demand for china accessories products is growing at rapid pace.
Finally, make sure to select a wholesale accessories from China supplier who is ready to offer drop ship services. Remember, many wholesale accessories distributors are ready to ship china accessories products to your customers at no extra cost. This process will definitely save a lot of money, and in return will help to improve your profit margin.
American Diabetes Wholesale To Offer 10% Discount Off All Orders During Memorial Day Weekend - YAHOO!
American Diabetes Wholesale announces their Memorial Day Sale.
Pompano Beach, FL (PRWEB) May 25, 2012
American Diabetes Wholesale announces their sale to honor Memorial Day giving customers a 10% discount on all products purchased between May 25th and May 28th at http://www.americandiabeteswholesale.com.The sale is a 4-day sale and will be applicable to all orders processed through the company’s website from May 25-28. To obtain the discount, enter coupon code MEMDAY10 into the promotion code box during the checkout process.
American Diabetes Wholesale offers a full line of both name brand and generic diabetes testing supplies such as blood glucose monitors, test strips, lancets and lancing devices. ADW’s focus is to provide customers with affordable options to manage their diabetes while offering superior customer service and timely shipping.
About American Diabetes Wholesale:
American Diabetes Wholesale (ADW) diabetic supply mail order company that is dedicated to keeping diabetes management affordable. ADW is focused on helping customers effectively manage their disease by providing one of the largest selections of diabetes-related products, fast service, significant discounts and support for customers who have health insurance, as well as the uninsured. ADW takes a leading role in diabetic education through Destination Diabetes, an informational component of the ADW website featuring tips and advice from diabetes and nutrition experts, diabetic recipes and more. ADW is involved in and supports the diabetes community and organizations that further diabetes education and research.
Chris Maguire
American Diabetes Wholesale
(877) 241-9002 401
Email Information
US wholesale prices fell 0.2 percent in April - Yahoo Finance
WASHINGTON (AP) -- U.S. wholesale prices fell in April, reflecting a big decline in gas and energy costs. But outside that drop, inflation was tame.
The Labor Department says the producer price index, which measures price changes before they reach the consumer, dropped 0.2 percent in April. It was the first decline since December and the biggest drop since October.
Excluding volatile food and energy costs, the so-called core index rose 0.2 percent.
For the 12 months that ended in April, wholesale prices have risen just 1.9 percent, the smallest 12-month change since October 2009.
Modest wholesale inflation reduces pressure on manufacturers and retailers to raise prices. That helps keep consumer prices stable.
Gas prices spiked earlier this year. But they have dropped 5 percent since peaking last month.
Bayshore Shopping Centre embarks on $200-million renovation and expansion project - Yahoo Finance
OTTAWA, May 25, 2012 /CNW Telbec/ - Ivanhoé Cambridge announced today a $200-million investment in Bayshore Shopping Centre, boosting the centre's retail area by 160,000 square feet (14,900 m2). Slated for completion in 2015, this major redevelopment and expansion project begins immediately. The additional retail space will allow the centre to introduce highly desirable retailers into the Ottawa market.
"This investment reflects our strategic plan to invest in our properties in order to provide an exceptional shopping experience for consumers and an optimal place of business for our retailers," said Kim McInnes, President, Global Operations, Ivanhoé Cambridge.
The centre, managed by Ivanhoé Cambridge and co-owned with KingSett Capital, will remain open during the phased construction. The modern makeover includes moving and expanding the food court and nearly tripling its seating area, as well as increasing parking space by 10 percent. The bulk of the expansion will be on the northern side of the property, in place of the existing parking tower.
"The project is well-timed because the Ottawa market has grown substantially over the past few years," noted George Fiddler, Senior Vice President, Retail, Central North America, Ivanhoé Cambridge. "Ivanhoé Cambridge and KingSett Capital are proud to partner in this investment which will seal Bayshore Shopping Centre's position as the preferred shopping destination for Ottawa and the surrounding areas," he added.
Ottawa Mayor Jim Watson commented: "Bayshore is a commercial cornerstone for not only the community, but the entire west end of the city. These improvements will generate significant economic benefits and ensure that Bayshore Shopping Centre can continue to be a strong partner to the community."
Mayor Watson and Bay Ward Councillor Mark Taylor joined Ottawa West-Nepean MPP and Ontario Minister of Transportation and Infrastructure Bob Chiarelli for the official launch of the redevelopment - one of the largest projects of its kind in Ottawa history. "Expanding Bayshore Shopping Centre will create over 400 new, permanent jobs, right here in Ottawa West-Nepean," said Mr. Chiarelli. "The shopping centre's commitment to enhance our farmers' market and strengthen its partnership with the Pinecrest-Queensway Community Health Centre's employment program will also benefit local families."
Bayshore Shopping Centre has been working closely with the provincial and municipal governments, and local community partners, to ensure the success of this redevelopment project. Construction vehicles will be re-routed to mitigate congestion on local streets, and transportation initiatives will be introduced during peak shopping periods.
"Area residents are looking forward to seeing their neighbourhood shopping centre grow into one of the more impressive centres in the country," said Councillor Taylor. "Bayshore Shopping Centre is an incredible community partner and I am very pleased to be on hand for the groundbreaking of this project."
About Bayshore Shopping Centre
Bayshore Shopping Centre is Ottawa's premier shopping destination thanks to its strong tenant mix and ideal geographic location. Situated in the western portion of the Ottawa-Gatineau metropolitan area, it boasts 165 retailers such as Bath & Body Works, Banana Republic, Aries and Jack & Jones, in addition to several anchor stores, including The Bay, Sports Experts and Old Navy. It is also the only shopping centre in Ottawa where both Winners and HomeSense can be found under one roof. Bayshore is visited by over 7 million customers per year.
About Ivanhoé Cambridge
Ivanhoé Cambridge is one of the 10 largest real estate companies in the world, with more than $30 billion of assets in over 20 countries as at December 31, 2011. Ivanhoé Cambridge is a real estate subsidiary of the Caisse de dépôt et placement du Québec (lacaisse.com), one of Canada's leading institutional fund managers. For more information, visit ivanhoecambridge.com.
About KingSett Capital
KingSett Capital is Canada's leading private equity real estate business co-investing with pension fund and high net worth individual clients. For more information, visit kingsettcapital.com.
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