Its cyclical ? Please. Internet retailing must also be cyclical in that case.
The "average" customer you talk about must be price insensitive and have no internet access or care for value....that doesn't really fit within the demographic you outline.
Willing to pay for "service" . There is no "service"... thats why people have stopped shopping there. "Prestige" what is this "prestige " thing? I can't think of anything that they sell that you can't buy elsewhere. I don't think people consider it prestigious to carry a DJ's plastic bag.
The reason I consider them trapped is because they have shown no ability to adapt to what people want from a retailer...either a value proposition or outstanding personalised service. They have neither.
The reason they have avoided online is because it highlights the lack of any value proposition. Why would anyone pay more to buy a product from the DJ's website when a price comparison site will almost certainly show it is cheaper elsewhere.?
The lease back strategy does make some sense, but this is just weakening the asset base and exchanging an upfront cash injection for a series of outbound cashflows. Correct me if I am wrong but I think this only works if you can increase earnings over and above the cost of capital on the lease into perpetuity. It also takes out any upside from the value of the property going up if you no longer own it.
IMO the shares went up in 2009 because the market confused the sugar hit from the Federal governments cash hand outs with something more sustainable.
Excluding a P/E bis I just cannot see any value in this business. I respect your view that its cyclical but I thing the stock looks cheap on a p/e basis because the earnings are falling so much.
DJS Price at posting:
$2.39 Sentiment: LT Sell Disclosure: Not Held
