While City Chic's decision to increase inventories is quite correct, it isn't really appropriate to compare it to JIT supply chains in manufacturing. There is potentially a much higher cost in holding inventory in perishable and personal consumer goods than in (for instance) car parts. They are liable to become unsaleable, as most wholesalers and retailers have discovered at some point in time.
Business philosophy and dogma don't come into it; the only issue here for shareholders is: do Phil Ryan and his team have the skill to minimise this potential trap?
They very probably do, but with the caveat that as a result of the business's expansion, management now have to juggle markets in different hemispheres (i.e. seasons) and different countries (varying fashions).
The risk/reward level would seem to be increasing for CCX.
CCX Price at posting:
$3.38 Sentiment: None Disclosure: Held
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