Reitmans (Canada) (Symbol-RET.A)

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Taggart
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Post by Taggart »

At this time, ret.a is still a couple of bucks above it's 52 week low. If it drops below that, I may consider adding more. We'll see. It and Le Chateau (ctu.a) appear to have good balance sheets, which, "hopefully", can help them weather the storm. I couldn't decide which one to purchase a while ago, so ended up buying a few shares in both.
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Sensei
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Post by Sensei »

Hi,

It does seem like a pretty big drop in share price. Two positives though:

1. They reaffirmed the dividend
2. Manageable payout ratio for now
Cheers

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Post by mpav »

Occasionally, just walking through one of their stores is the best research. In the downtown core I see a few of their brands....wow is the merchandise horrible (doubt my mom even shops there) and it is empty.

Out of all the brands the only one that seems to have any traffic and stocked properly is RW&co.
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Post by brad911 »

mpav wrote:Occasionally, just walking through one of their stores is the best research. In the downtown core I see a few of their brands....wow is the merchandise horrible (doubt my mom even shops there) and it is empty. Out of all the brands the only one that seems to have any traffic and stocked properly is RW&co.
That was one of the reasons I decided to part with my shares in the fall. My gf and her friends rarely, if ever, shop at any of the banners other than RW&Co and they comprise the core target market for Reitmans (other than maternity).
Their concerns:
- Price too high
- Quality too low
- Service uninspiring

I still like the company from a financial perspective, but they either need to overhaul their product portfolio to better target their intended market or try something new, IMO
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Post by investor99 »

I have to say that I still think this company is extremely well positioned in Canada. I would say their demographic has aged and fits well with the aging of Canada's population. I am aware of several women 30-55 who shop at Reitmans, Smart Set, RW, etc. and like it. Thyme maternity is one of the very few options for decent maternity clothes in Canada.

Banner locations are second to none and the ultimate in convenience, higher fuel prices and a lower $CAD help. As weaker foreign and domestic based rivals shrink in in this economy RET will benefit.
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Post by mpav »

Funny story, family dinner about a month ago...we all talk stocks and Reitmans came up:

- my mother (60 years old urban woman who is middle class, middle of the road), she has no clue why anyone would wear that clothes.

- sister in law, mid 30's mother, was really cool, couldn't believe they still existed, wouldnt even consider entering the store

- grandmother 80's, wears only black so also was out

- my little brother asked if they still sold mom jeans...no one could verify, but consenus was likely yes
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Post by AltaRed »

The issue is the 'namesake' store brand, i.e. Reitmans stores themselves. They are tired and need to be deep sixed (most likely) or completely re-invented. Some of their other brands have strong followings.
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Post by BRIAN5000 »

AltaRed wrote:The issue is the 'namesake' store brand, i.e. Reitmans stores themselves. They are tired and need to be deep sixed (most likely) or completely re-invented. Some of their other brands have strong followings.
I haven't shopped the other branded stores only reitman's. It used to be a slam dunk, walk in, buy something that looked good and it was inexpensive, Air Miles great return policy. Not anymore, I start shopping there and leave in disgust the buyers need to all be fired!!!!

The stores I have been in lately are new, lots of aisle space, look real nice, staff is always there to help cause there is no one in the store buying anything. I leave without buying.
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Post by BRIAN5000 »

last trip to Reitman's the wife bought a bunch of stuff.


Just received an email comparing the two class's of Reitman's shares. The voting shares at that time were $1.22 less then the non-voting. Less liquidity-higher yield.
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Post by Norbert Schlenker »

I own the voting shares because of the higher yield. The discount is quite permanent. I don't really understand but I don't really care either, as long as they keep the dividends on both classes the same.
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Post by JaydoubleU »

Dumb question, perhaps, but I don't fully understand dual class-structured stocks: If and when they raise the dividend, does this automatically apply to both classes?
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Post by FinEcon »

Norbert Schlenker wrote:I own the voting shares because of the higher yield. The discount is quite permanent. I don't really understand but I don't really care either, as long as they keep the dividends on both classes the same.
It's been some time since I looked into t his but if memory serves, it's because RET has far fewer outstanding and those holding the bulk of them, no surprise here, are people who have little need to transact (founding fmily, in laws, friends, ect). This means relatively low liquidity, hence the discount.

How timely do your orders get filled and how's the spread. Also, would you consider which issue (voting/non voting) on the basis of the size of your position?

JaydoubleU, each firm sets its own policies but in the case of Reitmans, the dividends are the same, a dividend raise applies to both classes. However, I'm out on a limb here but AFAIK all corporate policy out there must essentially be 'until we say otherwise' so you are taking a bet on management maintaining the status quo in this context.
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Post by JaydoubleU »

Txs, finEcon.

So a higher yield is the trade off for lower liquidity. Anyone ever had trouble buying or selling RET shares?
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Post by Taggart »

It may of been a one of thing, but I always remember that when DeGroote sold waste management company Laidlaw back in the 80's, the voting shares did fine at the time of the sale, and the holders of the non-voting shares got thumped. That's why I "always try", "if I can", to buy the voting shares in any Canadian listed company.
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Post by JaydoubleU »

Somewhat off the topic here, but Rogers employs the same dual-class system, doesn't it?

But RCI.B (non-voting) yields 3.8% while the voting shares, RCI.A yield 3.7%
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Post by Taggart »

Here's a timely article related to dual class shares, and in particular, Reitmans.

How dual shares can put profits on the table

10/28/09
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Post by BRIAN5000 »

I was more thinking if you held the A shares and were going to keep the position long term you could switch to the voting and get a few dollars. Depending on tax's etc. 1000 shares you may pick up enough to take your sweetee to dinner and still hold the same position.
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Post by Peculiar_Investor »

BRIAN5000 wrote:I was more thinking if you held the A shares and were going to keep the position long term you could switch to the voting and get a few dollars. Depending on tax's etc. 1000 shares you may pick up enough to take your sweetee to dinner and still hold the same position.
On the downside of buying the voting shares is that there is usually less of them available in the public float, so they may not trade as often or as efficiently. For the buy and hold crowd such as myself, this is usually not an issue, but for those that may require a quick exit from a position, this may be a consideration.

My rule of thumb is to purchase the voting shares where ever possible, unless there is a significant (5% or more) price differential or unless the trading volume is so low that the voting shares trade by appointment.
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Post by FinEcon »

Peculiar_Investor wrote: On the downside of buying the voting shares is that there is usually less of them available in the public float, so they may not trade as often or as efficiently. For the buy and hold crowd such as myself, this is usually not an issue, but for those that may require a quick exit from a position, this may be a consideration.

My rule of thumb is to purchase the voting shares where ever possible, unless there is a significant (5% or more) price differential or unless the trading volume is so low that the voting shares trade by appointment.
Excellent discussion guys. I have been wrestling with this issue for some time and am not exactly sure how I should approach the issue. Keeping the firm Reitmans, as the position size increases, how should one approach the value of the vote / liquidity trade off. Which would you value more holding 1k, 5k, a block, ect? Does the vote become more and more important as the position size increases? Or less so? I'm tending to think more and more but only after a 'critical mass' point is reached.

Anyone here attend Reitmans shareholder meetings?

All opinions appreciated.
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Post by Peculiar_Investor »

Using data from Google Finance, RET, Avg Volume is 6,000 while RET.a, Avg Volume is 116,000.

Check out the 1 day chart for RET, http://www.google.ca/finance?chdnp=1&ch ... RET&ntsp=0 and you can see for yourself the trading pattern. There have been only 5 trades today, would that impact a buy/sell decision in the future?
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Post by Norbert Schlenker »

FinEcon wrote:Does the vote become more and more important as the position size increases? Or less so? I'm tending to think more and more but only after a 'critical mass' point is reached.
The vote is irrelevant at Reitmans, as it is also at most other companies that have dual class voting structures. One family owns a majority of the voting shares, so some piffling number of votes in the hands of any one Joe Retail is worthless.

I own the voting shares because they're cheaper, i.e. the dividend yield is higher. I am under no illusion that they will ever not be cheaper.
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Post by JaydoubleU »

Interesting article, Tag. Nicely timed! I can't remember exactly why I bought RET.A or RCI.B, but I think I read something a few years ago about liquidity and was advised to go with the more liquid version.

Now I'm told I was merely an "irrational investor" who rushed after the less valuable issue :roll:
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Post by FinEcon »

JaydoubleU wrote:Interesting article, Tag. Nicely timed! I can't remember exactly why I bought RET.A or RCI.B, but I think I read something a few years ago about liquidity and was advised to go with the more liquid version.

Now I'm told I was merely an "irrational investor" who rushed after the less valuable issue :roll:
Not necessarily irrational Jay. Assuming you knew and considered both alternatives, you valued the greater liquidity more than the yield traded off to get it. Now if you were paying more for a non voting issue, all other things identical and held fixed over a reasonable period of time, that may qualify as irrational. Even still it may not as exogenous beliefs about future of one class of share may be influence your preference.

Apologies for my sloppily worded prior post (I'm at worked where I surf and dash 8) ) which is written such that the vote is a factor, which for Reitmans it is not, as Norbert mentioned above.

Please allow me to rephrase: how much of a differential do you feel there needs to be in order to favor RET over RET.A and how does this differential vary with the size of your position?
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Post by BRIAN5000 »

Please allow me to rephrase: how much of a differential do you feel there needs to be in order to favor RET over RET.A and how does this differential vary with the size of your position?
It depends, for me, if I held 1000 A shares and had no or very small tax consequences and I was in it for the long term. I'd switch to the voting, take the $1000, be prepared for a longer wait on a sale, cause I move very slow anyway. How many if's is that? I used to have a rule for swapping stuff around at banks. If I had to go out on a Saturday I better be making $500 for signing my name 3-4 times. Here its two trades maybe a few mouse clicks.
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