AlanS

I dont suppose they had any information on their delayed financials ? Maybe going dark is a real possibility for the company.

I was expecting Tandy to file its missing financial reports within the stipulated 18 Feb 2020 time frame. However, this is taking way longer than it should. The last practicable date is 10 Aug 2020. However, this is subject to approvals. What are your thoughts on this delay ? https://s3.amazonaws.com/sec.irpass.cc/1625/0001140361-20-003783.pdf\ "The Company is taking definitive steps to file the Forms 10-Q as soon as practicable. However, there can be no assurance that the Panel will grant the Company’s request for continued listing pending the hearing or grant any extension of time to comply with the Rule. Furthermore, there can be no assurance that the Company will be able to regain compliance with the Rule within any extension of time that may be granted to the Company by the Panel."

My thoughts on this company are as follows Pros 1) Company seems relatively safe , but main issue is very high inventory . 2) Common problem is not on expansion but lack of store managers, currently it is consolidating to larger format stores and also improving its hiring process (more pay, more operating costs ?) 3) This is a very high gross margin business. Competitors even buy inventory from Tandy, ones which it does not hold. It had breath of inventory as well as depth (which leads back to the problem of (1) high inventory 4) Good Leathership/Leadership. Activist Investor , so management probably wont pull tricks. 5) This company was almost a net-net. 6) Strong and consistent cashflows. Issues 1) Accounting issues on accounting for its inventory. We dont really know if its been overstated. 2) Delisting ? Low share turnover , high listing costs 3) Leather-crafting may be considered a dying trade by many. (arguable) 4) Room for improvement on inventory turnover

Just an update , a former fund ,Beddow Capital Management Incorporated , bought into the company https://secfilings.nasdaq.com/filingFrameset.asp?FilingID=13925336&RcvdDate=2/14/2020&CoName=TANDY%20LEATHER%20FACTORY%20INC&FormType=SC%2013G/A&View=html Did a quick check and that this fund is a "money where your mouth is" fund where the fund manager invests his net worth along side with the investors. It now currently holds a "smallish?" position of 2 million , 4+% in the company, and I am surprised this did not move the stock price much, and he would have probably accumulated over the period of more than a month given that average share turnover is low.

Those are all smart thoughts I think (and this is very much just my opinion since management has not openly said this) the plan is to close a bunch of stores in Q1 of FY 2020 and use the liquidity from inventory liquidations to buttress the balance sheet until the start of the next console cycle. I don't think this is a particularly smart plan, but I suspect it is more-or-less how management is thinking about the situation. Foreign Tuffett, Just seeking your views, what would be a smart plan in this situation ? Judging from a cash preservation point of view, they should close down unprofitable stores and improve margins. This would dramatically decrease net sales but improve cashflow and margins and ultimately survivability. About 90% of Gamestops 5,000+ outlets are cashflow positive , and I dont really see an issue if you close down the remaining non-profitable ones. Though based on the recent updates, this 90% would have dropped as video game sales suffer overall. On the other hand, instead of conserving cash and paying down debt they did a huge buyback, as a vote of confidence that the shares are undervalued, confident of their ability to weather the year till the next console cycle. Agreed that with a net loss and sharebuyback , the EPS would be terrible. And it is ironic in Burry's letter to management that he said "Depending on the timing and quality of execution, such a repurchase would increase earnings per share dramatically - far more than any other possible action on a per share basis....shareholders do not have faith in current management, and have not been inspired by new leadership policies.... All of this creates the opportunity to enter 2020 with a dramatically reduced share count along with multi-fold greater impact per share for every single other achievement of management." The impact per share part is correct, but its a negative impact per share Many four-wall profitable stores are probably just doing a little better than break even. Keep in mind that the stores themselves aren't expensive to operate: Many (most? all?) GME stores only have two full time employees, are very small, are often in B or C type strip malls, etc. Alot of the expenses are not on the store level.....regional managers, corporate executives, marketing, distribution, etc. The management team is right to close stores. I would actually argue that they are a couple years late in doing so. Recall that this company did not, for all practical intents and purposes, have a management team in place for well over a year. It was foolhardy to strain the balance sheet by buying back shares. GNC did the exact same thing several years ago just as its business results deteriorated, but its board fired the CEO before he bankrupted the company. Generally speaking a company shouldn't buy back stock if the terminal value of the business is seriously in doubt. The "smart plan" here, IMHO, would be to accept that the business is in secular decline and manage it accordingly. Rationalize the store fleet, pay down the debt, and focus on the basic "blocking and tackling" of operating the business. Agreed on that front. This can still be a low/negative growth with some terminal value if the management doesn't do something stupid. But I find the part on them refocusing Gamestop as a gathering place of sorts and an experiential gaming hub that I find concerning.

Those are all smart thoughts I think (and this is very much just my opinion since management has not openly said this) the plan is to close a bunch of stores in Q1 of FY 2020 and use the liquidity from inventory liquidations to buttress the balance sheet until the start of the next console cycle. I don't think this is a particularly smart plan, but I suspect it is more-or-less how management is thinking about the situation. Foreign Tuffett, Just seeking your views, what would be a smart plan in this situation ? Judging from a cash preservation point of view, they should close down unprofitable stores and improve margins. This would dramatically decrease net sales but improve cashflow and margins and ultimately survivability. About 90% of Gamestops 5,000+ outlets are cashflow positive , and I dont really see an issue if you close down the remaining non-profitable ones. Though based on the recent updates, this 90% would have dropped as video game sales suffer overall. On the other hand, instead of conserving cash and paying down debt they did a huge buyback, as a vote of confidence that the shares are undervalued, confident of their ability to weather the year till the next console cycle. Agreed that with a net loss and sharebuyback , the EPS would be terrible. And it is ironic in Burry's letter to management that he said "Depending on the timing and quality of execution, such a repurchase would increase earnings per share dramatically - far more than any other possible action on a per share basis....shareholders do not have faith in current management, and have not been inspired by new leadership policies.... All of this creates the opportunity to enter 2020 with a dramatically reduced share count along with multi-fold greater impact per share for every single other achievement of management." The impact per share part is correct, but its a negative impact per share

Those are all smart thoughts I think (and this is very much just my opinion since management has not openly said this) the plan is to close a bunch of stores in Q1 of FY 2020 and use the liquidity from inventory liquidations to buttress the balance sheet until the start of the next console cycle. I don't think this is a particularly smart plan, but I suspect it is more-or-less how management is thinking about the situation. Foreign Tuffett, Just seeking your views, what would be a smart plan in this situation ? Judging from a cash preservation point of view, they should close down unprofitable stores and improve margins. This would dramatically decrease net sales but improve cashflow and margins and ultimately survivability. About 90% of Gamestops 5,000+ outlets are cashflow positive , and I dont really see an issue if you close down the remaining non-profitable ones. Though based on the recent updates, this 90% would have dropped as video game sales suffer overall. On the other hand, instead of conserving cash and paying down debt they did a huge buyback, as a vote of confidence that the shares are undervalued, confident of their ability to weather the year till the next console cycle. Agreed that with a net loss and sharebuyback , the EPS would be terrible. And it is ironic in Burry's letter to management that he said "Depending on the timing and quality of execution, such a repurchase would increase earnings per share dramatically - far more than any other possible action on a per share basis....shareholders do not have faith in current management, and have not been inspired by new leadership policies.... All of this creates the opportunity to enter 2020 with a dramatically reduced share count along with multi-fold greater impact per share for every single other achievement of management."

Agreed on that. Paying down debt should be the main aim of the company if it aims to remain solvent. Also since TLRD eliminated the dividend. A buyback wouldn't really reduce its cost of capital. A buyback would only make sense if the company has the resources and feels its share price is undervalued. Alternatively, an optimal situation would be to do a share buyback with the earmarked 48m for share repurchases, get the company on even keel by paying down debt and improving cashflow and margins and then reissuing the shares at a much higher price once this is accomplished. But I have seen more disastrous share buybacks than good ones and it works better if the company has less debt.

For Tailored Brands, FCF was positive since 2016 (3 yrs), after the disastrous purchase of JoS. A. Bank. Sales revenue has not fallen off a cliff, but would probably decline. It has committed and paid down its debt by 400m since 2017. Eliminated its dividend, saving about 30+m a year. While committing to buying back shares which would further increase its EPS. In other words TLRD seems safer now than previously. Management so far made a few good choices during the short time they were elected, with the NFL deal, the share buyback and dividend elimination. The concern is whether it could be able to catch its own fall from the mistakes of the previous management.