Howard Davidowitz
Howard Davidowitz
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There is no loyalty to a store -- that's what Federated has gone to school and found out. The place with the best product at the right time and at the right price, that's where the customer loyalty is.
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The performance of the company over the last few years has been very erratic. It's also a smaller player. It was time for Milstein to take it easy and make a gigantic pot of money and turn the ball over to someone else.
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You can see clearly how the terror attacks have affected the American psyche. People are staying more at home, spending more time with the family and eating out at restaurants. At the same time, anecdotal evidence shows that sales of products such as flashlights, candles, first-aid kits has boomed.
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When a company has bad performance and new owners, look for musical chairs,
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Those retailers who promoted like mad got the business and they won.
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Within the retail industry Federated is known for catering to the classes and May to the masses. For the May customer, it's an opportunity to get more upscale merchandise that a Bloomingdales' customer is familiar with.
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When Sears Essentials came in, you had a lot of morons running around screaming this was the greatest thing. I said it was a bowling alley with no customers. This business of going off-the-mall is much more complex than it looks.
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What happened in the third quarter is that retailers controlled inventory and expenses tremendously. So expect to see pretty good gross margins and expect to see inventories down. Put it all together and earnings will be fair.
execution problem
The problem at Linens 'n Things is execution.
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The private equity companies have never had this much money. They have $125 billion available for acquisitions.
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Bon-Ton is one of the weakest players in a very weak sector. It is increasing its risk profile tremendously by taking on debt. How does this all hang together?
buying losing market share
Bon-Ton has been losing market share and now it's buying more losers, who have also been losing market share,
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We've had an astronomical number of store closings.
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We'll have to see if these measures also will induce consumers to buy more in the second half of the year,