Here We Go Again: Some Socioeconomic Perspective

When 1928 ended, there were some concerns about margin and trade flows.  But mostly people seemed to think that 1929 would be another good year.  There had been a string of good years, and today there is some speculation that the Spanish flu pandemic of 1918 left the survivors with a “live for today” attitude that had some responsibility for the “Roaring 20s,” as the decade was called.

By the end of 1929, the stock market had crashed, but nobody was standing around screaming, “It’s the Great Depression!”  Then, like now, it wasn’t always clear what you were going to have to dinner that evening, much less what the world would be like in a year or two.

And then, like now, we tended to project the past into the future, and it never turns out exactly that way.

I’m not expecting another Great Depression.  The speed and magnitude of the Fed’s response, the social safety net, and the technologies we have to address the virus make this different from the 1930s.  But if it turns into the worst recession since World War II, I won’t be surprised.  In the Great Recession GDP, at the bottom, was down about 4% and we hit 10% unemployment for a month.  The consensus for this quarter’s decline in GDP is almost 9%.  I expect the unemployment rate to hit around 20% at the next announcement.

As humans, we like to explain why things happen.  I think it brings us comfort- maybe a sense that we have some control- when we can point to a cause.  So, we point to covid 19.  Obviously, it’s had and is having a huge, unanticipated (though not unanticipatable except as to timing) impact.

But ask yourself, what if the companies that loaded their balance sheets with debt to buy back stock (at what turned out to be high prices) had that cash in the bank (Boeing- $44 billion just to use one example) or had invested it in productive assets that were producing cash flow?  They could use that cash now.

What if the Fed hadn’t kept interest rates way too low for way too long, causing incredible misallocation of capital, forcing people seeking some kind of yield to invest in things they had no business being invested in and allowing companies that should have gone out of business to be financed no matter how much money they lost and making you compete with some of them?

What if our politicians (from both parties over decades) hadn’t been willing to give us stuff we wanted that didn’t improve productivity without paying for it?  What if they saw being elected as a sacred public service rather than a career (yeah, I know, I expect too much)?  What if we’d been willing to elect people who wouldn’t just do and say what they thought would get them and keep them elected?  That one’s on us.

The pandemic would still have been bad, but not as bad from an economic point of view.  Here we go again trying to resolve a crisis that’s been exacerbated by too much debt with more debt when we know that more and more debt has less and less impact on GDP growth.  For about the fourth time, may I recommend, This Time is Different: Eight Centuries of Financial Folly.

Meanwhile, here’s an article with a series of graphs from May 14 that highlight the declines in various retail sectors so far.  As I’m sure you already know, you’re not going to like the one on apparel or, well, any of them.  At least we’re not airlines.

But it’s always darkest right before the dawn.  I’m starting to read and hear about brands and retailers seeing some bounce in sales, though it’s hardly a “problem solved!” moment.  For our industry and economy, and for the world’s economy there’s no V shaped recovery in our future.

The biggest strategic unknown for all of us is the extent to which the virus reemerges as we open up.  I’m feeling a bit isolated myself.  While I don’t completely blame people for wanting to socialize, getting too close to too many people for too long when we have no national policy or ability to test and do contact tracing has the potential to put us right back where we were.

That’s my best medical opinion, worth what you’re paying for it.  What’s your plan if the virus surges again?

What behaviors in which groups of your customers will change, and how long do the pandemic and associated economic ills have to go on before those changes become permanent and new ones emerge?  My parents grew up in the Great Depression.  I’ve written about how it created some permanent behavioral changes in them.  The Great Recession did the same to a different generation and I’m thinking some of the changes will be permanent.  And now, just a decade later, it’s happening again.  Damn- is “hunkering down” a strategy?

Speaking of changing behaviors, I’ve always worked out, belonged to a gym, and participated in any sport that would have me.  The last couple of months have not been great for exercise.  Or haircuts.

I should point out that neither Diane or I have a job to lose, and we don’t have children at home.  So basically, we’re lucky.  Our problems seem trivial when we think about what’s going on.

But finally, I haven’t been able to stand it.  I’ve ordered some TRX exercise bands.  I’ve gotten an exercise ball, some weights, and a large floor mat.  Even when the gym opens, I can’t work out with a mask and I’m unclear how an environment with everybody flinging sweat around and panting can be made safe.  I’d rather be in the middle seat of a plane.  What do you think?  Once I get this set up, will I ever go back to a gym?  The ROI is actually going to be fabulous with no monthly gym fee.

What changes are you experiencing that you didn’t expect when this started?

I’m rereading a book called The Day the Bubble Burst: A Social History of the Wall Street Crash of 1929, published in 1979.  It’s tragically laughable to read about industrialists and bankers orchestrating a campaign to keep the Federal Reserve from raising interest rates, or that, in early 1929, “A recent survey showed that the 60,000 families at the top of the economic scale were worth the same in financial terms as the 25 million at the bottom; and the wealthy were steadily becoming wealthier. Income from dividends, under a series of tax cuts introduced by [Secretary of the Treasury] Mellon, had risen 65 percent in nine years.  Higher dividends [like buybacks increasing EPS?] attracted more investors.  Up went the market.”

Read it to realize how it’s all come around again, but also to better understand the socioeconomic environment in which you’re running your business.

Those of you with quality customer and inventory information, strong integration of brick and mortar with online and a solid balance sheet who have made the hard choices early will, if you want to try and make this into a positive, be better off than others.  I would be particularly focused on long term customers and perhaps the subset of those who have purchased from you while stores were closed.  In that subset, I’d be really, really interested in new customers.

This is not my usual article, but I thought some perspective on what might turn into the worse year for this country since 1862 might be useful, and even give you some hope.  We’ve been through things like this before.  Crises accelerate change.  And even though the faster the change happens the more people hate it the change also creates opportunities and gets us from the bad to the good place faster.

You’re stuck with it.  Embrace.  The next article is half written in my head and will be specific as to some actions you might think about.

Corona- The Beer, Not the Virus

And you think you’ve got problems with your brand? Actually- and I say this with a certain amount of relief- apparently relatively few people are stupid enough to relate the beer to the virus.  Go take a look at this article on Snopes.com that discusses what’s happened to the brand in spite of some of the press it’s gotten.  Corona is owned by Budweiser along with a whole host of beer brands so I imagine it will be fine.

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Keep Calm and Carry On

 

The poster with the slogan was issued in 1939 by the British.  We don’t have anybody bombing our cities or threatening to invade us- exactly- but the coronavirus is a national challenge with social, financial and health related impacts unlike anything most of us have experienced.  I’m not sure I’m overstating it to say that you had to be alive during World War II- maybe the attack on Pearl Harbor- to have had a similar experience.  The speed with which it has hit us is remarkable.    

I lived in Dublin for two years and I can tell you that when the Irish close the pubs, it’s serious.

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The Impact of Demographics on the Active Outdoor Industry

I’ve just finished reading a book called The Methuselah Effect, by Patrick Cox.  As I’ve said, I often get intriguing business ideas from non-business books.  This is one of those times.  I really recommend this book.  The trouble is, it doesn’t seem to be on Amazon, which I’ve never seen before.

Anyway, the book is about advances in biotechnology and how they are going to impact health and longevity.  The first chapter title is, “Fewer Births, Longer Lives: Society’s Aging Changes Everything.”

His premise, which I found convincing, is that people are going to live longer and be more active.  But there are going to be fewer people.  He goes on to says in the first page, “From here on out, every generation will be smaller than the one before it.  After 200,000 years of population growth, mankind’s numbers are shrinking.”

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The Sports Authority Bankruptcy: Symptom of a Perfect Storm and How You Can Benefit

TSA’s filing for bankruptcy on March 2nd wasn’t a surprise. It had missed a $20 million bond interest payment in mid-January. It reached an agreement with the bond holder to file and try to sell assets to pay down debt. We’ll see how that works out and if they can avoid liquidation.

A couple of people asked me when I was going to write about it, so I sat down and started working through some of the bankruptcy court documents. Here’s the link to the court documents should you be inclined to plod through any them yourself.

But then I noticed that some other people had undertaken the task of plodding through them.  Between all those articles and court filings, your need for details of the filing should be well and truly sated.

Now let’s get to what I’m calling the strategic background. In an operational sense, you probably only care about TSA’s bankruptcy if you’re an unsecured creditor. Like most unsecured creditors in most bankruptcies, you shouldn’t expect to see a lot of your money.

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Retail and Brand Strategy: Cycles or Long Term Trends?

Could this time really be different?

Recently, a couple of retail CEOs have been pointing out, or maybe bemoaning, the lack of a strong retail trend. They’ve noted how in the past they’ve been able to rely on such trends for big sales boosts and have explained their worse than expected performance partly by the lack of it.

They say, “But that will change.” I’m sure they are right. It will change.   Their implication, however, is that this is a traditional retail cycle of relatively short term duration. I’m not so sure about the “short term” part.

It’s a bit awkward for me to be asking, “Could it be different this time?” because I’m very aware of the cycles of history over decades and centuries. I know that in retail cycles, not to mention social, economic, and financial cycles, it has mostly turned out to not be different.

I’m going to compromise with myself and say it’s probably not different, but the time frame during which that becomes clear is going to be longer than we’re used to. The factors that are coming together guarantee a long, strange trip as the tidal wave of divergences works through our retail market. I’m going to look at what those are and try to reach some conclusions about succeeding in our industry.

Let’s start with overall economic conditions and debt then move on to customer behavior and how we sell to them. Next, I want to take a look at technology and what that means to the competitive environment. Based on that, I’ve got some ideas about how retailers and brands have to operate.

It IS the Economy, Stupid

I don’t think I need to spend much time trying to convince you that this economic recovery has been weaker than any since the 2nd World War. You are certainly aware that wage growth has been low to nonexistent and that job growth, especially for our primary customer group, has tended to be in lower paying jobs and often involve multiple jobs. Let’s call that group the millennials, though you’ll see below I think that’s an over simplification. When can we expect improvement?

Not for a while, and the reason is debt. I’ve recommended a book called This Time Is Different: Eight Centuries of Financial Folly by Reinhart and Rogoff. It’s so well researched that it’s hard to dispute their findings, but they are hardly the only ones acknowledging the problem debt is causing. Basically, they show that debt over a certain point leads to lower growth in an economy.

They suggest that growth starts to be impacted when total private and public debt as a percentage of GDP reaches around 90%. As of the start of 2015, by way of some examples, Canada is the cleanest dirty shirt at a bit less than 300%. The U.S. is about 375%, the Eurozone about 475%, the U.K. 500% and Japan, the hands down winner, is north of 650%. What probably won’t surprise, but should disturb you, is that total debt has continued to rise since the Great Recession.

I’ve always found the idea of fixing a debt problem with more debt perplexing.

Meanwhile, take a look at this chart showing real GDP growth in selected periods in the U.S. 2000 is the year the stock market bubble first burst. To my way of thinking, though the Fed stepped in and “saved” us, that’s when things started to go south in a noticeable way.

GDP chart for Retail and Brand Strategy article for TWB 1-16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I borrowed” this chart and the data in the previous paragraph from Hoisington Investment Management’s review and outlook for the third quarter of 2015. You can get your own copy at http://www.hoisingtonmgt.com/hoisington_economic_overview.html. I highly recommend it.

I’ve studied enough statistics to understand that correlation does not necessarily equal causation, but I’m convinced that there’s a relationship between GDP growth and debt. It is kind of logical. If you owe money, then you have less to spend while you pay it back and pay the interest. If you choose not to pay it back, then the people you owe it to have less to spend.

I think we’re in a low growth period until we do something about our overall level of debt. Solving the problems will be unpleasant and, if avoided long enough, draconian. Please, please, please, email me and tell me why I’m wrong.

So the first thing we have to deal with is continued slow economic growth caused by over indebtedness. Let’s move on. I don’t have room for a good rant on the damage the Federal Reserve is doing with continued low interest rates.

Our Customers

Our customers are, uh, wait a minute. Who are they anyway? Seems like we, as an industry, are trying to sell to everybody from six year olds to baby boomers. A couple of individual brands seem to succeed with that, but mostly you can’t. I’ll spare you my oft repeated speech about the dangers of expanded distribution except to remind you that 1) growth requirements make it hard to be a successful public company in this space because of the requirement for regular, quarterly growth and once you get into broader distribution 2) they may know your brand but not your story and your competitive advantage goes away and 3) we’re way over retailed with too much indistinguishable product.

I also wondered a while ago if maybe distribution didn’t matter due to online and because good merchandising could overcome wider distribution. To summarize, I thought that once a product was ubiquitous in the online world and a click away, customer’s reaction to broader distribution might change. I’ve decided the answer is “no.” It turns out that getting retailers who’ve never been great at merchandising specialty product to do it well is expensive, challenging and time consuming. There’s also our continuing problem of a lack of product differentiation which poor merchandising just highlights.

Meanwhile, back to our customers. If we have to characterize them as a demographic, we’d say, “the millennials.” This is the group (much like my mom’s generation who’s formative years were in the Great Depression) that got slammed by the Great Recession. They are financially conservative (and will be for life), are having a hard time making a wage that allows them to live independently, are not particularly brand loyal (though if you can get them, you can keep them), are most influenced by their community (not your advertising), and are more interested in experiences. A product is something they seek in order to have an experience, rather than buy for the hell of it. They have the data to find exactly the right product with exactly the right attributes because they don’t want to screw up the experience. Don’t try and bullshit them.

Okay, now that I’ve defined our customers as a demographic, I have to tell you not to do that. In the days of instant, endless, information about anything, groups, trends, styles, points of view can come and go pretty damned quickly. And anybody who’s interested in them can find out about them and be part of the community they represent. It’s easier to say your customer is of a certain age, and it may be true. But it’s not an adequate description of who they are.

Notice how the term “fast fashion” seems to have disappeared? It’s like it’s no longer an aberration, but a permanent condition. This seems to require that companies be a bit reactive after all those years where being proactive was a virtue.

To go with a soft economy, then, we’ve got customers that are harder to get and keep and in general have less money to spend. I am just a font of good news today.

Technology

 Let me remind you of two things I hear brands and retailers saying all the time.

“Get the right product to the right place at the right time,” and “Give the customer what they want, when they want it, where they want it.”

Those two catchy phrases make a lot of sense and are indicative of two things. First, they tell us how much the customer is in charge. In the days of too much retail space, too many undifferentiated products and near perfect information, that’s probably inevitable. Second, we’re all trying to figure out how, exactly, to do this and the one thing we’ve learned for sure is that it’s really expensive. There’s an advantage here to big players with strong balance sheets, because the cost for a 50 store retail chain to do it is probably not that much different than for a 600 store chain. Let’s put it this way- the cost per store is lower for the larger retailer or brand.

When you accomplish it, you won’t have created a long term competitive advantage; you will have just bought yourself the right to compete. I’m not talking about using a POS system here. I’m saying that from design at the brand to returns at the retailer the systems have to be integrated to keep up with the speed and requirements of your customers.

My Hero

Maybe you remember that a couple of years ago Rip Curl got itself in trouble. They tried to sell the company, but couldn’t get the price they wanted. So they decided to solve the problem the hard way.

They refocused on just being the best surf company they could be. They cut their product offerings by 50% and focused on the ones that their customers needed. They try to offer technology and quality that differentiate the products they do sell. They emphasized efficiency and reduced their distribution. They only sold places where they could make money. What a good idea.

In summary, their primary focus was on improving net income (and reducing working capital invested) rather than gross revenues.

It seems to be working, and regular readers will know I thoroughly approve of what they decided to do. Bluntly, I don’t think they had a choice. And neither do many of you.

The economy is making fast revenue growth difficult. Your customers (who can’t be simply identified as an age group any more) won’t buy what you tell them to buy, but what their community supports. They have endless choices and information. And the continuous investment required to satisfy their product and shopping requirements has gone through the roof- especially for smaller brands and retailers.

Do some surprising things. Perhaps completely outside of what your customers expect. Even contrary to your brand image. If you accept my premise that it’s tougher to get and keep brand loyalty in the days of endless, instant new brands, and that’s it’s damned near impossible to keep up with what’s “cool” anyway, why not surprise your customers this way? It’s a way to claw back a little initiative and not have to be reactive all the time in an impossible attempt to keep up with the rate of change.

Especially as a newer brand, focus on your web site and selling there. You can’t find the customers- they have to find you. Social media, etc. This minimizes marketing costs. What you do spend should be aligned with creating experiences. If you’re not going to grow revenue as fast as you once might have, make sure you’re selling at a price that gives you a solid gross profit. In your brick and mortar retail, be very cautious about whom you open and curate the hell out of them until you know they have you figured out. Do some temporary stores in surprising places for strange reasons. Never over supply.

It’s really a pretty interesting time to be building a brand as long as you acknowledge what I think are longer term conditions under which you have to operate. Rip Curl can watch some of its competitors flail as it just focuses on the bottom line with a business model that’s responsive to existing business conditions using some of the concepts I’ve briefly described above.

You can do the same thing.

Altamont Acquisition of Hybrid; the Plot Thickens

When Altamont bought Fox Head in early December, I wrote this article, reporting what little we knew about the deal and speculating on what Altamont was up to strategically, if anything. Here’s, in part, what I said.

“Altamont now owns or at least has investments in Brixton, Dakine, Fox Head, HUF and Mervin Manufacturing. That is quite a gaggle of action sports/outdoor/street wear/fashion businesses. Are these just opportunistic buys or is there a plan here? That is, will each continue to run independently, or is there enough overlap in markets and manufacturing to justify some coordination? Maybe Altamont is looking to build the next VF. I hasten to add that’s complete speculation on my part. Still, it does feel like there’s been a recent focus on this market by Altamont.”

Now, Altamont has gotten itself a Christmas present, investing in “Hybrid Apparel (Hybrid), a leading supplier of branded, licensed and private label apparel.” On its web site, Hybrid describes itself as”… a complete and vertical operation; designing, merchandising, developing, sourcing, producing and distributing branded, licensed, generic and private label apparel to all tiers of distribution.”

The Altamont press release continues: “Hybrid’s partnership with Altamont will allow Fox, the number one global motocross apparel brand and a recent Altamont and Hybrid investment, to benefit from Hybrid’s product development and supply chain expertise as well.”

Hybrid, then, invested in Fox Head along with Altamont.

Feel now, with the investment in Hybrid, that Altamont has a plan. In the last couple of years, we’ve watched pretty much every large brand or retailer improving manufacturing and logistics. They want to minimize SKUs, control inventory, and reduce time to market. There’s too much money on the table to not do that well and it’s an important attribute of brand building.

Altamont now has a partner that specializes in exactly those areas. I can’t for the life of me imagine that Altamont won’t ask Hybrid to take a look at Brixton, Dakine, HUF and Mervin. I’ll take a shot in the dark and guess that all those brands make t-shirts. Can you think of a reason Altamont wouldn’t “encourage” consolidation and coordination of those orders through Hybrid? I’m thinking you could take some significant cost out of each of those brands, not to mention get better pricing by increasing volume.

I suggested in the quote from my earlier article above that Altamont is thinking about building the next VF. If you follow VF at all, you know one of the things they do is bring a rigorous manufacturing and logistics process to their acquisitions.

Maybe Altamont started out making opportunistic buys, but it now looks like they are creating a package of related and coordinateable brands all of which have some growth potential that can improve their financial performance even before Altamont, through Hybrid, takes some significant costs out.

Okay, now let’s take the next step in speculation. Again, I’ll remind you that I have no actual information.

With some revenue growth and cost control over the next year or two, (and other acquisitions?) what an interesting group to take public as an exit strategy. The tag line would be something like, “Just like VF, only our brands are cooler!”

Just an idea. Go back to enjoying the holidays.

What Does the Data on Our Target Market Say About Your Business Strategy?

It was a lot of years ago when I first started reminding you not to focus just on your gross margin percentage, but your gross margin dollars as well. Then, in 2009, with the recession in full swing, I got all excited about Gross Margin Return on Inventory Investment (GMRII) after Cary Allington at Action Watch pointed me to the concept.

I discussed it in some presentations and wrote about it. Here’s one of my articles on the subject. It’s held up pretty well.
I liked the GMRII concept because my reading of history is that debt caused recessions (if recession is an adequate word to explain what we’re going through) last a long time. This one, I concluded, was not going to be different from all the others. It seems, unfortunately, that so far I’m right about that.

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A Sustainable Competitive Advantage: The Zumiez 100K

I have written before about the value of Zumiez’s hiring, training, and promotion process. They take kids with a passion for the activities and brands their stores sell, train them, support them, make them compete with their peers, and promote the ones who succeed. The average age of store managers is something like 23 and pretty much all their district and regional managers started out as sales people in a store. 

This approach to culture and staffing is so important to them that it’s been allowed to impede their growth plans when they couldn’t identify enough good people to staff new stores. In hindsight, I imagine they are thrilled that happened given the way the environment for brick and mortar is evolving.
 
Anyway, it’s easy to read SEC filings and intellectualize about this, but when you walk into the annual 100K party at Keystone, where the company’s best sales people are celebrated, you look up and see a sustainable competitive advantage staring you right in the face. That’s never happened to me.  The fact that I was afraid I was the oldest person in a room of 1,300 only dampened my enthusiasm a bit.
 
A competitive advantage is only sustainable if none of your competitors can duplicate it. I suppose somebody else could do what Zumiez does, but they’d better get started. They’re 30 plus years behind.
 
I’m guessing most of the Zumiez sales people don’t read my column. If they wrote one I’d sure as hell read it to find out what brands were succeeding. If they did read it, I’d tell them how lucky they are to have jobs involved with something they love (hell, maybe just to have jobs), solid support and training, the opportunity to advance based on performance and, if they want it, a career.
 
And finally, I’d tell them what a great thing it is to be part of something that can support and validate them. Without getting too deep into generational history (read this book if you are curious what I’m talking about), let’s just say that this is a group of young people who are going to have to pull together to solve some big problems not of their making. I’m seeing it with my own kids (they don’t work at Zumiez) as they form groups and relationships outside of the immediate family that involve strong personal bonds. I see it where I went to college, where the number of students who return for reunions are much larger than they ever were in my generation.
 
So the environment Zumiez has created not only works for these young people, but for Zumiez as well and is consistent with the way generations turn over and repeat themselves in our society over decades. And it has significant implications for how any brand markets itself today.
 
But, as usual, I digress. Back at the 100K, the introduction of brand founders was particularly interesting. In groups (there’s a lot of them), they march founders out on stage and give each one a chance to say a few words. Somebody told me they’d meant to bring a decibel meter to measure the applause each brand got (or didn’t get). That would have been brilliant. I would love to publish that list with the noise levels listed.
 
Among the brands that got the loudest cheers were brands that are urban, or youth culture, or whatever word you want to use. But they were definitely not action sports brands. Not to say that some action sports brands weren’t well received, but I thought the reception of the various brands was a good indication of how the industry is evolving.

It is true that a deeply imbedded, successful culture can be destructive to a company if the culture resists evolving with the competitive and economic environment. I can’t say for certain that Zumiez (or any other company) won’t someday have that problem.  But Zumiez can minimize that potential by just letting the young sales force that is part of its target demographic drive brand selection and be the arbiter of what’s “cool.”  If they do that I think this competitive advantage can continue to be sustainable.  That’s a hell of thing and unusual in our industry.

 

 

Why Crocs Might Go Private

I’ve been holding on to this article on Crocs for a while mostly because I just didn’t have time to do anything with it.  What it says is that Crocs is looking to go private because it’s just not as cool as it was.  Currently, it’s traded under the symbol CROX on the NASDAQ and is at $12.88 as I write this.  Here’s a five year stock chart on the stock’s movement.


You’ll note that the stock is trending down at a time when the market has been trending up. 

In the 9 months ended last September 30th, Crocs earned $77.4 million on revenue of $964 million.  That doesn’t sound so bad.  Okay, but in the same 9 months in 2012, it earned $135 million on revenue of $898 million. Selling more and making less.  If that isn’t a sign of being less cool, I don’t know what is. 

So what have we got here?  The gross margin for the nine months fell from 55.8% to 53.9% and selling, general and administrative expenses rose 18.3% from $350 to $414 million.  Operating income fell from $151 to $106 million.  I’m going to resist the urge to do a complete financial analysis (I hear those sighs of relief).   

My point is simple.  It seems a lot of people still want to buy Crocs, and the company can make money.  What they can’t do is satisfy Wall Street’s endless demands for the growth that makes stock prices rise.  And I’ll bet anything that if they try to do that, their gross margin will continue down and the brand will lose credibility as it tries to push its distribution harder, faster, further.  Remember it would be trying to do that in a poor economy with a lot of competition. 

Is this starting to sound at all like any other companies we follow? 

Some smart person probably said, “Hey, if we weren’t public, we could pull back our distribution, improve our brand positioning and gross margin, cut some expenses (from not being a public company and because our improved distribution would let us reduce some marketing expenses) and maybe make more money with less working capital invested!”  Perhaps they’d consider closing some of their 600 or so stores as well. 

Maybe that would work or maybe, for this brand, it wouldn’t.  But continuing to try and satisfy the requirements of the public market looks like a bad plan.  I haven’t heard that there’s a deal done yet.  I’ll let you know if I hear and you do the same for me.