Great article. I would like to add that in terms of purchasing vs. leasing, a purchase decision can sharpen the quality of decision by management, since the decision can not be reversed so easily. If I remember correctly, Jerònimo Martins (= Biedronka) is, to some extent, leasing their stores. Compare the number of stores they have closed every year to the number of closures of Dino stores.
Yes, but it gives you less flexibility and you cannot easily try new formats/locations. It depends on the model. Up to a point, your comment remind me of those saying a dividend is good because it imposes some restriction to management and them doing foolish things. If you have any doubt a management will do stupid things with your money, what is even the point? :)
Great thread! Two of my top positions are retailers hard punished during last two years. Both of them have gone through a reduction of margins due to increased costs (due to inflation, specially freight costs) and discounted sales to reduce inventory. This brought the companies to be non-profitable during recent years, though, they have a long historic of being profitable and stable margins.
Both of them have a strong balance sheet and generate FCF.
Really good article to make me think deeply about my retail positions. Thank you!
That's a good framework to looking at retailers. Looks like my $FND ticks lots of boxes!
Also part of your article is in Spanish.
thanks Trung! I was so much looking forward to finish it that I just skipped my last double check ;) Solved.
Great write-up! Are you planning a deep dive into banks one day? I think that'd be extremly interesting too.
It will come one day. Tricky to do it in one post though, but I will do my best to summarise or give at least a general idea :)
Great article. I would like to add that in terms of purchasing vs. leasing, a purchase decision can sharpen the quality of decision by management, since the decision can not be reversed so easily. If I remember correctly, Jerònimo Martins (= Biedronka) is, to some extent, leasing their stores. Compare the number of stores they have closed every year to the number of closures of Dino stores.
Yes, but it gives you less flexibility and you cannot easily try new formats/locations. It depends on the model. Up to a point, your comment remind me of those saying a dividend is good because it imposes some restriction to management and them doing foolish things. If you have any doubt a management will do stupid things with your money, what is even the point? :)
Great insight!!
thank you, great take!
Great thread! Two of my top positions are retailers hard punished during last two years. Both of them have gone through a reduction of margins due to increased costs (due to inflation, specially freight costs) and discounted sales to reduce inventory. This brought the companies to be non-profitable during recent years, though, they have a long historic of being profitable and stable margins.
Both of them have a strong balance sheet and generate FCF.
Really good article to make me think deeply about my retail positions. Thank you!