Thursday 9 July 2015

Extra stock bought July 2015: Gerry Weber

Gerry Weber, a German fashion retail chain

This buy is very difficult to explain and most likely I will fail in doing so but still the company has been bought and is now part of my portfolio.

For month after month Gerry Weber has turned up on the inside trading reports. The reason for this was that there would be a management change in the company. Herr Weber the elder would leave the CEO position to his son Ralf Weber. Since Herr Weber the elder does not give away his own shares to the son, Ralf has been forced to buy and buy from the stock market. I like this. The new CEO steps in and the first thing he is doing is month after month to tank shares. To me that shows commitment and dedication. Sure he would probably inherit the shares form his father at some point but apparently he has considered the price for the shares to be low which is why he has been buying them at around 30 € per share for almost one year now.

The two founding families still holds a large part of the company but I find the free float to be acceptable with 50% so that criteria is fulfilled for me.

Now the shares are trading at around 20 € which comes from that they stepped out saying that they would not make the forecast for 2015. That caused a -30% drop which is the reason for why I got up my eyes for Gerry Weber. A fashion retail company trading at around P/E of 14 is cheap... but why is it  so cheap?

And this is where I will start to hate myself. Each time I have gone past a Gerry Weber store, always the same though, then that has been almost completely empty. The only time I saw people in there were when they had arranged a fashion show which I found to be a good initiative. Oh, and of course
I have seen the employees... a small store, no customer but three employees?! Too much! and you need to cut, cut, cut.

Another thing that disturb me is that Gerry Weber should direct themselves towards elderly women. Not only with the fashion that they have but also with the commercials and advertisement that they are making. Put some darn elderly people there and not some 16 year old models that have not even finished high school yet.

To grow they bought the store chain called Hallhuber last year. This was a good buy and that brand should be focused towards well-off younger women. Oh, and they do have customers in Hallhuber. Large store, several customers and one employee visible. The ratio looked more acceptable.

Buying a company that does not attract customers and that went out with a new, poorer, forecast for 2015 is bad news. One should not do that and this might turn out to be yet another one of those stupid investments fitting with Asian Bamboo and Eniro. At least the new CEO have high expectations for the future and now... so have I. Next time I promise that I will buy something that customers actually like right now and not based on some fairytale future.

I bought 50 shares for a total price including fees of 1039 € which means that I got them for 20.78 € per share.

To find out more about Gerry Weber please visit analysis of Gerry Weber 2015.

If you want to see my current Stock Portfolio then click on the link but the portfolio will not be fully updated until the end of the month. 

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