Retail Net/Nets Part I

Given the bad retail numbers we've been seeing- December retail sales were down 2.7% well worse than the -1.2% consensus- it's no wonder investors are shunning retailers these days. The problem is, so are consumers, given the crisis in confidence that is gripping our economy.

It's no surprise that there are now several retail net/nets, in fact, more than we've ever seen. Given the dire retail environment, it's inevitable that there will be a great deal of store closings in the next several months, and perhaps some bankruptcies as well. This certainly does not bode well for the smallest of the small, especially those that lack adequate working capital to bridge the recession, are choked with debt, or just can't weather a major pullback in sales.

In the early days of this site, we featured a couple of retail net/nets, Circuit City, and Duckwall Alco (search for these postings). Both had subsequent substantial run-ups. But times were different, and in Circuit City's case, the company at that time had a lot of cash-unlike the company that recently went under.

The risks here are many. If you do plan on "dumpster diving" in small retail net/nets, do so only with extreme caution. If you take a position, consider having a trailing stop-loss in place, which may help protect some of your capital, but is still no guarantee.

We recently had a position in AC Moore, and as the stock price increased, continued to move our trailing stop upward. But we were ultimately stopped out, on one of the many volatile trading days late in 2008. We still made a profit, but unfortunately left quite a bit on the table.

As always, proceed with caution. This is a toxic environment for retailers. We'll break the list into two parts, and run the other later this week.


Current Retail Net/Nets

A.C. Moore Arts & Crafts
ACMR
Market Cap: $29.8
NCAV: $85.1
Total Debt: $30.7
Price: $1.47
Cash & Short Term MS: $46.8
Quick Ratio: .8


MarineMax, Inc.
HZO
Market Cap: $45.1
NCAV: $130.1
Total Debt: $372
Price: $2.44
Cash & Short Term MS: $30.2
Quick Ratio: .2

Perfumania Holdings, Inc.
PERF
Market Cap: $33.9
NCAV: $42.7
Total Debt: $214
Price: $3.78
Cash & Short Term MS: $2.7
Quick Ratio: .3

West Marine, Inc.
WMAR
Market Cap: $124.2
NCAV: 151.5
Total Debt: $29.3
Price: $5.64
Cash & Short Term MS: $6
Quick Ratio: .4


Zale Corporation
ZLC
Market Cap: $91.8
NCAV: $92.7
Total Debt: $368
Price: $2.88
Cash & Short Term MS: $39.4
Quick Ratio: .3

Signet Jewelers Ltd.
SIG
Market Cap: $803
NCAV: 977.3
Total Debt: $613
Price: $9.42
Cash & Short Term MS: $36
Quick Ratio: 1.1

Duckwall-ALCO Stores, Inc
DUCK
Market Cap: $40
NCAV: 67.8
Total Debt: $56
Price: $10.50
Cash & Short Term MS: $5
Quick Ratio: .4

*The author does not have positions in any of the companies mentioned. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.