Friday, January 13, 2017
You ever go to Wal Mart? They always have a clearance bin of DVDs. They are like $5 apiece, but they are typically "straight to video" type movies. I sometimes dig through them, but it is a rare day I find something I'm willing to spend even $5 on.
Well, I have a new clearance bin. It is called retail stocks. I have officially had it with them. I own two right now, GME and GNC. I did have BKE earlier this year and it wasn't pretty, nor were GME and GNC. I mean these companies, their numbers are not just bad, they are abysmal. I walked through a Gamestop store Christmas Eve. It was not busy. It was not well organized. It had no appeal. I was not the only one who thought so. They announced today their same store sales for the holiday season - down 18.7%! How is that even possible?
BKE has not been much better. I have not gone into one of them. Their December SSS were down 15.5%. I read an interesting observation by Warren Buffett, who said Sears would never turnaround back in 2005 (you could say the same about JCP or VNCE) - "once a retailer starts going down, they never recover." He said he could not think of a single example. A failing retailer may retain customers, but they do not attract new customers.
Anyway, I wash my hands of retail. I will have to decide what to do when using my formula if I have more than one retailer on the list. I suppose discard the one in the greater death spiral. I never liked any of the $5 DVDs and I do not think I'll like the bargain bin retail stocks.
Posted by Marsh_Gerda at 7:27 PM