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Betting on retail turnarounds


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On the Greenblatt course notes, he talks about how Linda Greenblatt focuses only on retial turnarounds and kills it. Worth a read, but I can't find a link to the notes anymore.

 

IIRC, that was a long time ago. I wonder if she is still killing it. I think she was largely betting on fashion trends. One year, ANF might miss the "hit style", write down a tonne of inventory. The next year, the buyers would get it right and ANF would revert to the mean. Now, you are seeing much stronger secular headwinds for the fashion retailers (fast fashion, online shopping, declining foot traffic in malls).

 

In other words, it used to be a cyclical business. Now it seems like a secular business.

 

Retail is generally one of the worst businesses. Turnarounds rarely turn. Together, what's not to like?

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Seems like the downside protection of the inventory and real estate tends to be what traps people. Rather than waking up one day, liquidating everything, and giving the proceeds to shareholders, companies slowly sell off assets and use the proceeds to continue to fund the burn.

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