Reitmans (Canada) (Symbol-RET.A)

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Postby JaydoubleU » 29 Oct 2009 21:58

After deep and careful consideration and another swig of beer, I have concluded the vote means (burp) to me but I'd rather have the higher yield.

Who will swap 500 RET.A for 500 RET with me :P
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Postby JaydoubleU » 01 Nov 2009 02:50

...no takers. :cry:

Interestingly, I was looking at highest yields under Market Data on the Financial Post site, and apparently the 5-yr compounded return for these two is:

RET 11.4%
RET.A 14.1%
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Re: Reitmans (Canada) (Symbol-RET.A)

Postby kenwood » 28 Nov 2009 15:02

Despite the fact that we were in a recession, unemployment rate hitting 10% and their flagship stores being empty, this stock has gone from $10 early this year to $17 now, an increase of 70%. I understand that this company has little debt and the strengthening of the Canadian dollars have reduced the cost of import, but I don't think those two factors would translate into a 70% stock price appreciation in less than a year. Does anyone here have an opinion on why this stock has gone up so much?
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Re: Reitmans (Canada) (Symbol-RET.A)

Postby Sensei » 28 Nov 2009 18:45

Hi,

Interesting point, Kenwood, about the stores being empty. As a non-resident, I wasn't really interested in investing when I left Canada some 17 years ago. Since becoming a stock investor, believe me, I now really look at businesses in my own area of Tokyo and I'm not sure the appearance of emptiness is a determining factor of business success in retail. I was back in Canada for a brief spell this summer and believe me, as an investor in RET.A I took a good look and asked around. Compared to Tokyo, almost every store seemed empty to me, not just Reitman's. Metropolis in Vancouver was the only place we went to that was even remotely busy by our standards.

My unfinished opinion is that it depends what is being sold. In clothing, I don't think one store has to sell too many items to make a profit for that day since the profit per item is quite high. Also, I had a brief stint as a lease taxi driver. I made a living at it, but one thing that stands out was that spent 7 -8 hours waiting for fares, but only an hour or two driving people around. I rarely logged more than 150 km per day. I think most retail business is the same. The business comes in surges and not necessarily just when you are looking.

I asked a few relatives, and it also seems that Reitman's has quite a loyal following. According to stockchase.com, they are making a big effort to upgrade their stores and product lines.

Does that explain a 70% increase in the stock price? I don't know. The fact of the matter is that, looking at sales numbers and EPS, Reitman's sells and makes a profit every year. Down somewhat in the last year or so, but not much.

I also looked at quite a few Le Chateau outlets. There seemed to be always people in them, so I bought a small chunk of stock. The stock price has since gone down.
Cheers

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Re: Reitmans (Canada) (Symbol-RET.A)

Postby Mike Schimek » 28 Nov 2009 19:05

Does anyone here have an opinion on why this stock has gone up so much?


I guess it depends on what perspective you look at it from. Based on a quick look, real rough numbers;

2 years ago vs today:

2007 share price 25.00
2009 share price 15.00
= decrease in share price of 40%

2007 sales 291k
2009 sales 286k
= decrease in sales 2%

2007 2nd Q eps 0.44
latest Q eps 0.38
= decrease in profit 13.6%


With that data in mind, the question could be reworded from a different perspective, equally true as the one you presented;

Does anyone know why this stock is still 40% below its high of 2 years ago, when comparative sales are only down 2% and profit down 13.6%, and the outlook for sales appears to be strengthening?

:shock:

Add to the above the element which occupies my thoughts at all times; that of easy money and low interest rates. Interest rates today are lower than they were two years ago, by which measure stocks are a comparatively better deal than cash was at that time 2 years ago. With that additional factor, reitman's, as well as most stocks, is probably trading at about half of what it would be (and I believe, will be), if the fear discount was removed.

IMO we're in a bull market that will persist until governments start to raise interest rates and act responsibly (IMO not imminent until an inflationary crisis hits, and not until sometime after the crisis is well underway).

:?
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Re: Reitmans (Canada) (Symbol-RET.A)

Postby Taggart » 29 Nov 2009 04:10

kenwood wrote:Despite the fact that we were in a recession, unemployment rate hitting 10% and their flagship stores being empty, this stock has gone from $10 early this year to $17 now, an increase of 70%. I understand that this company has little debt and the strengthening of the Canadian dollars have reduced the cost of import, but I don't think those two factors would translate into a 70% stock price appreciation in less than a year. Does anyone here have an opinion on why this stock has gone up so much?


Yes, I noticed it had little debt too. When I buy into a store, I'm very interested on the debt in the balance sheet. I started buying into both Reitmans and Le Chateau back in the early spring, when the financial world was coming to an end, and it seemed that virtually all the analysts were saying don't buy retail stocks. Sometimes it's good not to listen to smarter people than myself. These are the two oddballs in my portfolio since I normally have a starting allocation of 5% in each equity, but I couldn't decide between the two, so I ended up with both having an allocation of 2.5% each.
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Re: Reitmans (Canada) (Symbol-RET.A)

Postby FinEcon » 01 Dec 2009 18:25

Code: Select all
MONTREAL, Nov. 25 /CNW Telbec/ - Reitmans (Canada) Limited (the "Corporation") announced today that it has received approval from the Toronto Stock Exchange ("TSX") to proceed with a normal course issuer bid. Under the bid, the Corporation may purchase up to 2,728,972 Class A Non-Voting Shares of the Corporation (the "Shares"), representing 5% of the issued and outstanding Class A Non-Voting Shares as at November 23, 2009.


Good ol Reitmans, friend of the shareholder.

http://news.morningstar.com/newsnet/Vie ... 2_univ.xml
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Re: Reitmans (Canada) (Symbol-RET.A)

Postby Taggart » 02 Dec 2009 12:05

FinEcon wrote:
Code: Select all
MONTREAL, Nov. 25 /CNW Telbec/ - Reitmans (Canada) Limited (the "Corporation") announced today that it has received approval from the Toronto Stock Exchange ("TSX") to proceed with a normal course issuer bid. Under the bid, the Corporation may purchase up to 2,728,972 Class A Non-Voting Shares of the Corporation (the "Shares"), representing 5% of the issued and outstanding Class A Non-Voting Shares as at November 23, 2009.


Good ol Reitmans, friend of the shareholder.

http://news.morningstar.com/newsnet/Vie ... 2_univ.xml


I'm happy it's not the voting shares the corporation is buying up. The liquidity in them is bad enough as it is.
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Re: Reitmans (Canada) (Symbol-RET.A)

Postby BRIAN5000 » 30 Mar 2010 11:31

Was the earning report really that good to raise the stock 6%?

Report was on TDW website
Last edited by BRIAN5000 on 30 Mar 2010 12:43, edited 1 time in total.
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Re: Reitmans (Canada) (Symbol-RET.A)

Postby investor99 » 30 Mar 2010 12:22

There was an upgrade by RBC I believe. I heard it on BNN when I was eating my pancakes this morning.

Can anyone provide the report?
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Re: Reitmans (Canada) (Symbol-RET.A)

Postby BRIAN5000 » 30 Mar 2010 12:46

“Sometimes you are going to sell early and wish you would’ve held on, other times you will hold on a
little bit longer and wish you would’ve sold early - this is just part of the game.” - Frank Zorilla via Abnormal Returns
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Re: Reitmans (Canada) (Symbol-RET.A)

Postby Arby » 30 Mar 2010 13:56

investor99 wrote:There was an upgrade by RBC I believe. I heard it on BNN when I was eating my pancakes this morning.

Can anyone provide the report?

Here's a summary of the RBC report:

Upgrading RET to Outperform (from Sector Perform) with a $20 Target.
We previously downgraded RET on 1) declining earnings visibility, and 2) relative sector
valuations remaining under pressure. We now see upside to RET shares and are upgrading
based on 1) an improving retail sales outlook offering better earnings visibility, 2)
increased likelihood of meaningful earnings and cash flow generation, and 3) RET's solid
liquidity position bodes well for future shareholder value creation opportunities
(acquisitions, buybacks).
Raising Target to $20 (from $18). Our $20 target price (prior $18) is based on 5.9x
F2011E EBITDA (prior 5.4x) and 5.0x F2012 EBITDA (prior 4.6x), inline with North
American retailing peers, justified given RET's market position and above-peer margins.
Our target is also backstopped by a bearish scenario DCF valuation.
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Re: Reitmans (Canada) (Symbol-RET.A)

Postby investor99 » 30 Mar 2010 16:44

Thanks Arby :) .
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Re: Reitmans (Canada) (Symbol-RET.A)

Postby FinEcon » 30 Mar 2010 17:16

Always appreciate info Arby, so don't take what I'm about to ask the wrong way.

Am I the only skeptic who thinks brokerage house writings are little more than word processor diarrhea? One, rather typical, analyst commentary comes out and there's an ~8% price effect on a billion dollar firm. I dunno....and seriously, who buys something based on analyst recommendations? That said, I've been way over-allocated since early 2009.
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Re: Reitmans (Canada) (Symbol-RET.A)

Postby JaydoubleU » 30 Mar 2010 19:03

The problem with the analyst ratings is that they come out after the positive report. No one said "back up the truck" when it was 9 bucks, and no one said "accumulate" when it started recovering. But now that the market is fully valued and possibly overvalued, they say "outperform" on a stock that is up around 100% from its low. I get the sense the rating means, "strong buy. from me. so that I can book my fat gain and you can watch your stock drop when the correction hits."
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Re: Reitmans (Canada) (Symbol-RET.A)

Postby investor99 » 30 Mar 2010 19:44

Agree with both of you.
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Re: Reitmans (Canada) (Symbol-RET.A)

Postby scomac » 30 Mar 2010 21:50

JaydoubleU wrote:The problem with the analyst ratings is that they come out after the positive report. No one said "back up the truck" when it was 9 bucks, and no one said "accumulate" when it started recovering. But now that the market is fully valued and possibly overvalued, they say "outperform" on a stock that is up around 100% from its low. I get the sense the rating means, "strong buy. from me. so that I can book my fat gain and you can watch your stock drop when the correction hits."


Glad to see that you are learning, JW. :wink: Remember the adage: Never trust a sell-side analyst for they are prostitutes with apologies to those who actually practice the "bawdy-house science."
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Re: Reitmans (Canada) (Symbol-RET.A)

Postby Arby » 31 Mar 2010 20:22

FinEcon wrote:Always appreciate info Arby, so don't take what I'm about to ask the wrong way.


No offence taken FinEcon. I provided the RBC report in response to a request upthread. I always ignore the analyst Buy/Sell/Hold recommendations, but I sometimes find useful bits of information in the text of the reports.
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Re: Reitmans (Canada) (Symbol-RET.A)

Postby Sensei » 31 Mar 2010 21:03

Hi,

Mainly agree with previous points on Buy/Hold/Sell ratings. However, it is also important to think about what they are based on. Agencies simply follow the mainstream mentality that a stock can only be valued by its capital appreciation and that only within perhaps the next 12 months. My goal is to be ably to look ahead 10 years or so. Looking at today's RET.A price of 17.90, and the RBC's target of $20, heck my dog could have come up with that. I'm sure it will be $20 in the next 12 months.

Having said that, Buy/Hold/Sell ratings are a factor for me as a secondary place to start (div yield is the first), not a call to action. If I'm considering a stock, and XYZ puts out a sell on it, I'd like a sensible explanation of why. Also, as a dividend investor, a 'Buy' rating can be 'Don't Buy' for me as willy-nilly buying just lowers the initial yield. Likewise, a sell rating might also be an opportunity to buy, since if a lot people start selling for not reason at all, my yield on CB could be much higher. The trick is to determine what the company is really worth. I'm still somewhere on the learning curve with this, but I read relevant reports carefully to see what rationale is being applied and whether it makes sense to me.

FWIW, I did pick up RET.A at $11 and 6.5% dividend yield. If the dividend is safe, and I think it is, then I don't see any reason to unload it. OTOH, I'm not a buyer at 17.90.
Cheers

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Re: Reitmans (Canada) (Symbol-RET.A)

Postby Taggart » 02 Jun 2010 16:39

...and here I was half thinking of selling Reitmans, and what happens, a dividend increase announced today in the hikes thread....oops.

Will Le Chateau be next for a dividend increase? Stay tuned.
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Re: Reitmans (Canada) (Symbol-RET.A)

Postby StuBee » 26 Feb 2011 07:25

I am a Reitman's shareholder. There has been a fair amount of talk concerning new entrants into the Canadian retail environment. I would like to here any thoughts as to how Reitman's may adapt to this. Specifically: Are they more or less affected by this ? Would the Reitman family be considering selling the company ? In what way could Reitmans take advantage of this situation (if at all) ?

Thank-you for any insights that you may have.

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Re: Reitmans (Canada) (Symbol-RET.A)

Postby augustabound » 26 Feb 2011 08:14

Are any of the new entrants going to compete directly with Reitmans? Aren't most of the new U.S. stores geared toward the teen crowd?
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Re: Reitmans (Canada) (Symbol-RET.A)

Postby StuBee » 26 Feb 2011 08:23

augustabound wrote:Are any of the new entrants going to compete directly with Reitmans? Aren't most of the new U.S. stores geared toward the teen crowd?


Target is very "woman friendly" (not only teen's). I noticed a significant dip (though relatively minor) in RET share price when they announced their entry into Canada..
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Re: Reitmans (Canada) (Symbol-RET.A)

Postby augustabound » 26 Feb 2011 09:06

Oh yeah, I forgot about the "Target Boutique". A little more upscale than the bargain offerings at WalMart.
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Re: Reitmans (Canada) (Symbol-RET.A)

Postby pmj » 26 Feb 2011 17:10

For anyone who's not too concerned about the low trading volume of RET - it's been about $1.25 cheaper than RET.A for the last week. Same dividend - and TDW offers as synthetic DRIP. Average $0.90 below RET.A for last 12 months.
Peter

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