Companies which bought back their stock or debt in the last 3-6 months ?

[calonego]

I should say "has been healthy" - I bet '09 will look terrible for these companies.

[StubbleJumper]

Look at GM at The Brick and Leon's.

Not sure why gross margin in furniture retail in Canada is healthy, but it is.

 

The GM for the Brick's furniture sales might look healthy, but it really is not.  In recent years the Brick has basically broken-even on the retail sale of its furniture, and it made decent money from its financing arm.  There is a large portion of the population that can be sucked in on those, "Do not pay one red cent until 2012" type sales.  Once 2012 comes, those suckers can't find the money to pay off the financing and suddenly they are paying 18% interest on the refrigerator that they bought two years previous.  Similarly, the Brick makes good money off extended warranties as there are a bunch of suckers that will pay $300 to have a 5 year warranty on a $1200 TV.

 

I don't know much about Leons or Brault et Martineau, but I'm guessing that they use the same modus operandi -- sell crappy furniture on credit to uneducated consumers.  It would be important to understand their exposure to credit losses as my hypothesis is that the population of suckers is probably the same population that is most vulnerable to unemployment....  It would also be important to understand the extent to which a XX% decrease in plasma TV sales would affect their income from their financing arm.

 

SJ

[calonego]

The furniture isn't great, but they all seem to have a selection across differing price points. Would you call the Nebraska Furniture Mart a retailer of "crappy furniture"? The have some similar stuff...

 

10% of BRK.un's furniture sales is via franchised operations,  while Leon's has about 22% and BMTC is zero...

BMTC GM is 40%, Leon's GM is about 40.5% as well (excluding the franchised business), while the Brick GM is about 40% including franchised (only retailing though, its excluding finance - per pg 112 of the '08 Annual)... so not as clean IMO... I've prob missed something, but I haven't found a good way to separate the corp from franchised biz at the Brick for the GM, etc.

 

Gotta love the BMTC model of simplicity - nothing fancy there. They own the property, own the stores... really buy back a ton of stock.

BMTC does a tremendous amount of business based on the floor they have... 32 stores doing $860mln is amazing (hard to breakdown on sales/ft as there are DCs and mattress stores etc).

[StubbleJumper]

The furniture isn't great, but they all seem to have a selection across differing price points. Would you call the Nebraska Furniture Mart a retailer of "crappy furniture"? The have some similar stuff...

 

Just to be clear, there's nothing wrong with selling crappy furniture...and there's nothing wrong with targetting the "white trash" segment of the population that requires credit to buy a chesterfield.  The Brick made money doing this in the past, and if they scrape through this recession, it's pretty sure that they'll make money from it again in the next growth period. 

 

But, let's face it....this is NOT Ethan Allen!  If you go into the Brick, you'll look long and hard to find any solid hardwood furniture.  It's all mediocre veneers that'll look like crap in 10 years.  And the chesterfields look ok, but they'll be crap in 10 years too.  If you have the means, IMO you're far better off paying a little bit more and getting a far better product that will last much longer.

 

Anyway, that long digression is simply to say that a good product does not necessarily equal a good business....nor the converse!

 

SJ