I love when randomly looking through financial statements of companies I come across this ultra long term thinking from management.
Whats crazy is this is part of an even longer 3 Phase plan by the company. From 2014-2020 was phase 1 which was diversifying the product base, Phase 2 is about reinvesting into the company and is from 2020-2024.
So far the plan seems to be working quite well.
But given the company is still fundamentally a branded products company it faces significant challenges and is even guiding for -10% revenue growth in 2023. But this long term thinking to me shows management is somewhat trying to create shareholder value, even if the stock is down 60% this year.
I started following Kohls after they threatened to poison pill to stop a takeover attempt. It was an interesting moment somewhat overshadowed by Twitter threatening the same against Elon. This leads me to believe its managements responsibility to prove that was the right decision.
So, Kohls reported earnings today, how did they do? Spoiler: Not Great.
Revenue down 7%, margin collapse, inventory up 34%!!!
Management trying to save face with commitments of deleveraging and the suspension of their share buybacks. But interestingly...
Commitment to a dividend? But...
There is no Free Cash Flow??? They are just going to pile on more debt by keeping the dividend. Strange.
On top of this given "macroeconomic challenges" Kohls has pulled FY Guidance. Along with this it was announced a few days ago the CEO would be stepping down.
Overall very unfortunate quarter all things considered. The stock is up nevertheless as apparently all of this was expected. So I think I will continue to stay away until the company starts to show some improvement somewherre.
Seems like they maybe regret not entertaining the takeover offer, and are now keeping the dividend high to keep shareholders happy... I'm sure given the macro picture, many shareholders would love to be bought out at a premium now!
What was once more than 15% of my portfolio Corsair has fallen quite a bit. Most of this has been due to supply chain issues and slowing demand for their products. But as of this most recent earnings call it seems something is improving, although it is hard to tell what exactly.
On the surface, these numbers look bad, and they are, however, I tend to agree with management when they say stimulus drove consumer spending in gaming and streaming. As that fades Corsair must face the hard reality of declining revenue.
On top of this Corsair cut guidance for the third time this year. Lowering all targets by quite a bit.
On top of that SBC was up 20%, although still not a large amount overall which seems fine.
So where is the good?
Well, there is the 1% revenue beat. But I think more important is falling inventories.
I imagine this was a signal that constraints may be easing and Corsair can get back on the path to profitability again.
To me, it seems like things are trending upward. After all, the company is still growing revenues nicely, making solid acquisitions without piling up too much debt and now things seem to be normalizing.
The falling inventories do make Corsair less dependent on price cuts for getting stuff out the door. But what exactly will bring more demand for gaming equipment when games are looking to be in VR headsets rather than on TVs connected to consoles?