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Posts Tagged ‘Pacific Sunwear’

“Relentless Progression” or Staying In Cruise Control?

June 22nd, 2012 Comments off

     In continuing the theme of my last post, I can’t help but reinforce the theme of relentless progression. As it relates to my day-to-day professional endeavors, I really don’t see much of a divergence from what I do in the office versus the activities that I pursue personally. For those that know me, cycling is a passion that gives me a balance, but one I pursue with a laser focus. Don’t get me wrong, I love getting out on PCH in the mornings and just going for a “ride”, but at the end of the day I’m recording and monitoring my wattage, heart rate, caloric burn, and how that ride fits into my longer term training plan. There is nothing about my execution that doesn’t fit into a longer term plan.

     That same approach is what I carry into the office on a daily basis. Yes, time is spent developing the Quarterly and Annual Budget, but that is merely a point in time and really doesn’t address the executional aspect of achieving the plan. Nor should the Budget be viewed as another exercise or used as a set of bookends at the end of the day. It’s essentially the promise you’re making to your employees and key stakeholders on what will be delivered. There’s no doubt that we all have to deal with dynamic environments that will lead to a drift in the plan, but ultimately, it’s the execution on multiple fronts that will allow you to respond and ultimately deliver a bottom line result that is in line with expectations.

Drift? Why don’t you just anticipate the drift in your planning process? I have yet to meet a colleague that has the perfect crystal ball. One of my favorite examples of the drift process is a 5-year Plan that we had worked through, and ultimately approved by the Board, during the time I was at Pacific Sunwear. We outlined the obvious elements of revenue, margin, expenses, capital expenditures, store growth, along with every other key item. It was really a very detailed plan. Keep in mind that this was the Summer of 2001. Two months later we had the unthinkable events of the September-11, combined with a recession. Only a few months after we had the plan approved….MAJOR drift.

     The drift can be an entire market, a specific customer, or the cost of your inputs in the supply chain, but the ultimate question is whether you have the ability to quickly respond and mitigate the risk. For me personally, the drift might be a bad night of sleep, a week of sickness, or work commitments that conflict with my training plan. It’s being able to respond and keep a definitive focus on the end goal and achieve that goal.

     What have you done to maintain control on your operating expenses and pull back where necessary?

     Are you clear about ALL the contributing elements to your margin and where you can adjust?

     What have you done to ensure you’re carrying proper inventory levels to take advantage of opportunities, but not leave yourself exposed to additional reserves?

     What have you done to ensure you haven’t created too narrow a range in your supply chain that you can’t respond to significant changes?

It’s all in the day-to-day execution….

Thanks for reading…

Jeffrey Ishmael

Optimism in the Retail Sector….?

August 25th, 2009 Comments off

            For so many months I essentially ignored what was happening with stock prices for the Retail sector since they were getting so badly crushed. All you had to do was look across the board and it was nothing but shades of red across the daily pricing action, 50-DMA, as well as the 200-DMA. To put it in perspective, there are 34 Retail stocks that I have in my listing that I peek in on and see what’s happening. However, the mood is definitely changing as many have seen some dramatic reversals from their 50-day and 200-day averages. In fact, it’s now the rare exception for one of these to be showing in the red on this number.

            Previously, there was not a single stock that was trading in excess of 1x Sales. There’s now seven stocks that are trading at a multiple > than 1x sales. I’m also starting to see valuations that are recognizing emerging performance while I see other retailers that are still being hit with low valuations because they have not seen a turnaround in their performance or still have yet to exhibit any consistency with previously stated strategies. Of those still being hit with valuation issues, Pacific Sunwear (PSUN) is currently trading at an 80% discount to sales. Charlotte Russe (CHIC) is trading at a 57% discount, and were it not for the recent buyout offer of $17.50/share, the effective discount on CHIC would be much higher. These are two retailers that can’t seem to stick with a strategy and have lost their way.

            There are still a number of other problem children out there in Retail and Apparel, but the strong players are capitalizing on the weakness. Even for our own small company, we have been buckled down and concentrating on what’s good for our brand, our customer, and not getting caught up with all the negativity. We’re being rewarded for that focus as we continue to see revenue growth as well as great financial results from the restructuring we have put in place over the last year. It’s senseless to get caught up in the sector speculation, negative press, and indecision paralysis waiting to see who moves first. Run your analysis, be familiar with your brand and customer, and capitalize on the opportunities that are sitting in front of you right now….

 

Thanks for reading . . . .

 

Jeffrey Ishmael