A Enquiry For Tile Shop's Institutional Shareholders
The administration of Tile Shop Holdings (last post on Tile Shop.
I am sitting inwards an purpose inwards out-of-the-way Sydney Australia. I teach glorious sunshine in addition to harbour views in addition to a rather skillful surf beach down the route but alas I don't teach to New York for my privileged access to management.
I lead hold to create my ain thinking.
And the thing that I am thinking is that I don't empathize tile shop's margins. You come across this is - at to the lowest degree on the margins - a real wonderful business.
I compared Tile Shop Holdings to the fattest margin fast-growth retail job organisation I could mean value of. As a comparing I used arguably the greatest retailer of our age: Louis Vuitton.
Louis Vuitton sells leather handbags in addition to purses in addition to similar luxury goods for absurd grade ups. There is soundless a lot of selling expense - they involve to hold expensive stores in addition to hold the image. So you lot would await an ultra-fat gross margin in addition to a lot of selling in addition to administrative expense (SG&A) relative to sales.
Also Louis Vuitton has been inwards the hottest constituent of retail - selling super-luxury goods to the world's burgeoning elites - particularly the Asian nouveau wealthy.
Here (courtesy of the e'er useful CapitalIQ) are the final 3 amount years of LVMH's net turn a profit in addition to loss statement. The numbers are inwards millions of Euro.
Louis Vuitton has 65 percentage gross margins (give or accept well-nigh a percent) in addition to a xvi to nineteen percentage increment rate. (These calculations are mine...)
These are astounding numbers for a retailer but they are what you lot mightiness await from LVMH given the mega-trend it is riding (along amongst seriously competent management).
And hither are the same numbers - also from CapitalIQ - for Tile Shop Holdings. The numbers inwards this illustration are inwards millions of dollars.
The gross margin hither is 73 percentage addition or minus a percentage or so.
Who could lead hold known that selling tiles inwards big-box stores inwards places like Tulsa Oklahoma could lead hold a fatter gross margin than LVMH selling bags that toll pittance to industry for thousands of dollars? Note I am talking margin earlier SG&A.
Tile Shop grows simply equally fast equally LVMH too.
---
I am puzzled well-nigh this. And dissimilar the overstep institutional shareholders I don't lead hold access to Tile Shop's administration then I lead hold to sweat in addition to move it out for myself.
And frankly this fourth dimension I can't.
So I am going to pitch this inquiry at the overstep shareholders - the ones who warrant a administration stopover inwards New York. Dear shareholders (or readers for that matter) complete this sentence:
I lead hold a farther judgement too:
Thanks inwards advance for your answers.
John
I am sitting inwards an purpose inwards out-of-the-way Sydney Australia. I teach glorious sunshine in addition to harbour views in addition to a rather skillful surf beach down the route but alas I don't teach to New York for my privileged access to management.
I lead hold to create my ain thinking.
And the thing that I am thinking is that I don't empathize tile shop's margins. You come across this is - at to the lowest degree on the margins - a real wonderful business.
I compared Tile Shop Holdings to the fattest margin fast-growth retail job organisation I could mean value of. As a comparing I used arguably the greatest retailer of our age: Louis Vuitton.
Louis Vuitton sells leather handbags in addition to purses in addition to similar luxury goods for absurd grade ups. There is soundless a lot of selling expense - they involve to hold expensive stores in addition to hold the image. So you lot would await an ultra-fat gross margin in addition to a lot of selling in addition to administrative expense (SG&A) relative to sales.
Also Louis Vuitton has been inwards the hottest constituent of retail - selling super-luxury goods to the world's burgeoning elites - particularly the Asian nouveau wealthy.
Here (courtesy of the e'er useful CapitalIQ) are the final 3 amount years of LVMH's net turn a profit in addition to loss statement. The numbers are inwards millions of Euro.
| Income Statement | |||
| For the Fiscal Period Ending | 12 months Dec-31-2012 | 12 months Dec-31-2011 | Reclassified 12 months Dec-31-2010 |
| Currency | EUR | EUR | EUR |
| Revenue | 28,103.0 | 23,659.0 | 20,320.0 |
| Other Revenue | - | - | - |
| Total Revenue | 28,103.0 | 23,659.0 | 20,320.0 |
| Cost Of Goods Sold | 9,917.0 | 8,092.0 | 7,184.0 |
| Gross Profit | 18,186.0 | 15,567.0 | 13,136.0 |
| Selling General & Admin Exp. | 12,265.0 | 10,304.0 | 8,815.0 |
| R & D Exp. | - | - | - |
| Depreciation & Amort. | - | - | - |
| Other Operating Expense/(Income) | - | - | - |
| Other Operating Exp., Total | 12,265.0 | 10,304.0 | 8,815.0 |
| Operating Income | 5,921.0 | 5,263.0 | 4,321.0 |
| Gross margin | 65% | 66% | 65% |
| Sales growth | 19% | 16% |
Louis Vuitton has 65 percentage gross margins (give or accept well-nigh a percent) in addition to a xvi to nineteen percentage increment rate. (These calculations are mine...)
These are astounding numbers for a retailer but they are what you lot mightiness await from LVMH given the mega-trend it is riding (along amongst seriously competent management).
And hither are the same numbers - also from CapitalIQ - for Tile Shop Holdings. The numbers inwards this illustration are inwards millions of dollars.
| Income Statement | |||
| For the Fiscal Period Ending | 12 months Dec-31-2012 | Restated 12 months Dec-31-2011 | Restated 12 months Dec-31-2010 |
| Currency | USD | USD | USD |
| Revenue | 182.7 | 152.7 | 135.3 |
| Other Revenue | - | - | - |
| Total Revenue | 182.7 | 152.7 | 135.3 |
| Cost Of Goods Sold | 49.6 | 40.3 | 36.1 |
| Gross Profit | 133.0 | 112.4 | 99.2 |
| Selling General & Admin Exp. | 94.7 | 78.4 | 68.1 |
| Stock-Based Compensation | - | - | 0.5 |
| R & D Exp. | - | - | - |
| Depreciation & Amort. | - | - | - |
| Other Operating Expense/(Income) | - | - | - |
| Other Operating Exp., Total | 94.7 | 78.4 | 68.6 |
| Operating Income | 38.3 | 34.0 | 30.7 |
| Gross margin | 73% | 74% | 73% |
| Growth – twelvemonth on year | 20% | 13% |
The gross margin hither is 73 percentage addition or minus a percentage or so.
Who could lead hold known that selling tiles inwards big-box stores inwards places like Tulsa Oklahoma could lead hold a fatter gross margin than LVMH selling bags that toll pittance to industry for thousands of dollars? Note I am talking margin earlier SG&A.
Tile Shop grows simply equally fast equally LVMH too.
---
I am puzzled well-nigh this. And dissimilar the overstep institutional shareholders I don't lead hold access to Tile Shop's administration then I lead hold to sweat in addition to move it out for myself.
And frankly this fourth dimension I can't.
So I am going to pitch this inquiry at the overstep shareholders - the ones who warrant a administration stopover inwards New York. Dear shareholders (or readers for that matter) complete this sentence:
I believe that Tile Shop's gross margins are stable in addition to sustainably higher than Louis Vuitton's gross margins because...
I lead hold a farther judgement too:
Last calendar week Tile Shop admitted that its largest supplier was an undisclosed related party. This soundless does non alter my belief well-nigh the margins because...
Thanks inwards advance for your answers.
John
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