Bijou Brigitte BIJ.F (euros)
July 08, 2008 - 4:25pm EST by
SpocksBrainX
2008 2009
Price: 80.30 EPS
Shares Out. (in M): 0 P/E
Market Cap (in $M): 652 P/FCF
Net Debt (in $M): 0 EBIT 0 0
TEV ($): 0 TEV/EBIT

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Description

dylex849 wrote this idea up in Oct 07 and I will refer you to his excellent job on this company which is a retailer with 1000+ stores in Europe selling costume jewelry.  I just don't think much has changed except the valuation is a whole lot less, and if this were an American retailer it would be double this price. 
 
Why? 
 
consider:
 
*company has an impeccable balance sheet with over 150m in excess cash (all figures euro) as of Dec 07
*company pays a $6.50 dividend which is 8.1% at the current price
*company is 50.3% insider owned
*company issues no options and there is no pension plan for management (per annual)
*company generated 80m in cash past 12 months; cash flow is roughly 92m with 18m fairly typical for CapEx
*over 1000 stores with 80 planned this year; growth in Spain, Germany, and Eastern Europe; stores in UK have opened optimistically
*PE ratio is 8.2; pcf ratio is 7.1, pfcf is 8.9x
*company is currently buying shares; not much, but they seem to like the shares more as the price goes down (unlike a lot of companies)
 
so why does it trade where it does?
 
*margins are extraordinary high; net margins have been a high of 19.8% in 2003 and 24.1% in 2005 and they are more than vulnerable to declines
*company has reported negative comps for the past few quarters and forecasts more of the same in future quarters
*no conference calls and you have to slog through different looking filings with interesting english translations
*more competition; as reported in the other threads on dylex note, management is seeing more competition from other vendors and also admitted that the business just reached peak levels in 2005 so it was time for the trend to go the other way for a while (see CLE)
 
What has to happen for the company to succeed?
 
*execute; they already are; even with tough comps last year management kept profits high and did something similarly in the 1Q; inventory looks fine and the buyback - which seems well-considered - has to indicate something positive long-term
*keep expanding at the measured pace they have; the company has grown very big very fast and there are risks to ever larger numbers, but they've done it in various countries and in different retail environments and you have to admire them for that
 
In short, you get the idea for 652m with 150m free and clear and an 8% dividend and growth potential and good management that doesn't do options and a buyback thrown in for good measure.  Maybe comps aren't going to recover anytime soon but even if margins got cut in half the stock would still trade for just 16x earnings.   Just three years or so ago people were fallling over themselves to buy these sorts of companies for 20x earnings now nobody wants them when they approach the 5x level.  And so it goes...
 

Catalyst

Basic cheapness
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    Description

    dylex849 wrote this idea up in Oct 07 and I will refer you to his excellent job on this company which is a retailer with 1000+ stores in Europe selling costume jewelry.  I just don't think much has changed except the valuation is a whole lot less, and if this were an American retailer it would be double this price. 
     
    Why? 
     
    consider:
     
    *company has an impeccable balance sheet with over 150m in excess cash (all figures euro) as of Dec 07
    *company pays a $6.50 dividend which is 8.1% at the current price
    *company is 50.3% insider owned
    *company issues no options and there is no pension plan for management (per annual)
    *company generated 80m in cash past 12 months; cash flow is roughly 92m with 18m fairly typical for CapEx
    *over 1000 stores with 80 planned this year; growth in Spain, Germany, and Eastern Europe; stores in UK have opened optimistically
    *PE ratio is 8.2; pcf ratio is 7.1, pfcf is 8.9x
    *company is currently buying shares; not much, but they seem to like the shares more as the price goes down (unlike a lot of companies)
     
    so why does it trade where it does?
     
    *margins are extraordinary high; net margins have been a high of 19.8% in 2003 and 24.1% in 2005 and they are more than vulnerable to declines
    *company has reported negative comps for the past few quarters and forecasts more of the same in future quarters
    *no conference calls and you have to slog through different looking filings with interesting english translations
    *more competition; as reported in the other threads on dylex note, management is seeing more competition from other vendors and also admitted that the business just reached peak levels in 2005 so it was time for the trend to go the other way for a while (see CLE)
     
    What has to happen for the company to succeed?
     
    *execute; they already are; even with tough comps last year management kept profits high and did something similarly in the 1Q; inventory looks fine and the buyback - which seems well-considered - has to indicate something positive long-term
    *keep expanding at the measured pace they have; the company has grown very big very fast and there are risks to ever larger numbers, but they've done it in various countries and in different retail environments and you have to admire them for that
     
    In short, you get the idea for 652m with 150m free and clear and an 8% dividend and growth potential and good management that doesn't do options and a buyback thrown in for good measure.  Maybe comps aren't going to recover anytime soon but even if margins got cut in half the stock would still trade for just 16x earnings.   Just three years or so ago people were fallling over themselves to buy these sorts of companies for 20x earnings now nobody wants them when they approach the 5x level.  And so it goes...
     

    Catalyst

    Basic cheapness

    Messages


    Subjectrecent comps
    Entry07/08/2008 10:38 PM
    Membermiser861
    can you give us the last 4 quarters comp numbers? are they sequentially getting worse or sequentially improving. I agree it is a very cheap stock as long as comps move toward 0. The stock is priced as if comp sales and margins will deteriorate for the next 2 years. I have no confidence that wont be the case.

    SubjectComps
    Entry07/16/2008 04:21 PM
    Memberzzz007
    Where are your comp nums coming from? I went back briefly and looked at the press releases and came up with 1Q to 4Q 2007 = -3.2%, -3.7%, -3.2%, -5.5% (extrapolated from full year) and then 1Q 2008 -4.4%. Trying to figure out where the discrepancy lies. Thanks.

    SubjectRE: Comps
    Entry07/16/2008 06:03 PM
    Membergocanucks97
    oops. you were right. I had the wrong numbers. -3.2%, -4.1%, -2.3%, -5.5% was 07.

    only diff with you was Q2. I think they said H1 SSS was -3.7%, so i got -4.1% for Q2. but it doesn't matter.


    SubjectQ2 interim results
    Entry09/03/2008 07:04 PM
    MemberSpocksBrainX
    Despite the miserable Q2 comp BJI apparently reported a 1H profit drop of only 4%, which seems like a mighty fine performance to me. The buyback seems to have been completed now, and the stock continues to languish. This one still trades for slightly over 7x earnings which continues to seem ridiculous to me, but obviously anybody buying in the last year has egg on the face, so...

    SubjectQ3 interim notice
    Entry11/06/2008 12:13 PM
    MemberSpocksBrainX
    Well, our favorite German retailer trades for 72.55 E or 92.47 USD last time I checked. Notes from the Q3 release:

    currency figures in Euros
    *sales up 3.1% ytd
    *58 new stores, 13 closures, 40 remodels, 3 relocations; doesn't include display racks (see below)
    *Comps down 4% ytd
    *Spain a weak spot; Germany actually up
    *Earnings down 7.6% to 78.9 or down 6.5m
    *they are getting into the display stand game in department stores with 90 units in Q3 and more than 100 by Q4
    *expansion continues into Finland and Sweden
    *buyback continues - BJI posts details on this on the website; 10m done; next 10m plan in motion

    That's it. This is just a summary about the release (which you can find on the website), but I don't see much has changed here. Comps continue down and profits are lower but I think any retailer would like these results in this environment.

    Of course, maybe things get worse, but BJI trades for 587m with trailing cash flow still well over 80m a year. You've been hurt by Euro depreciation but maybe that is behind us now (I have no idea).

    This company doesn't do stupid things and management has a huge amount of skin in the game and they wouldn't be buying shares unless they thought it was the logical thing to do.
    The company pays a big dividend and there is no reason to expect a decrease there.

    I have not added to my position (lately) but have no thoughts on subtracting either.

    Ok, that's it. If anybody has some original commentary on this I would love to hear it.

    Subjectstill here
    Entry08/05/2009 12:31 PM
    MemberSpocksBrainX

    Still here - Price has reached $102.50, for a modest gain since the write-up, though there was also a dividend recently.  Prelim figures were released per a PR in July so I figured I'd share a brief summary:

    *sales were up 4.3% ytd

    *comps were down 4.0% ytd.  Sounds rough, but Q1 comps were apparently down 7% so a better number in Q2.

    *Store counts reached 1103, up 71 from the previous year

    *plans are for continued expansion into Eastern Europe and Turkey, and the company is adding display racks (concession stores) in a number of retailers. 

    *Spain gets special mention for sales weakness, not surprising considering that country's high umemployment rate

    *Won't know about Earnings until late Aug, though Q1 was down pretty good.  I'm hoping for a better performance in Q2 - maybe a little less than breakeven?

    *Valuation - trades for 10.4x earnings (inclusive of Q1), less on an enterprise basis

     

    I continue to hold my shares.  


    SubjectQ2 results
    Entry09/10/2009 12:40 PM
    MemberSpocksBrainX

    an update on everybody's favorite German retailer.  Q2 was fine.  Some details from the latest interim report:

    *for ytd, earnings were 31.2m vs. 32.1 last year.  However, Q1 was +8.8 and +12.2, so Q2 was an improvement (22.4 v 19.9)

    *Germany was positive comps and they saw improvement in Italy, Netherlands, and Austria; Spain was weak

    *finished with 1103 stores as of Q2, with 33 openings and 15 closures in 1H.  They also operate 116 concessions.  For the year, they see 70-80 store openings with 25 closures. 

    *buybacks, which are also updated online at their website, were 212,284 at EUR 75.20 (current price is 122).  They appear to have stopped for now with only 13,620 purchased ytd. 

    *and the valuation?  It is up more than 50% since this write-up in EUR, but the valuation is 969m.  With 177m net cash, the enterprise value is 792m.  Using that later number, the PE works out to 9.7x, P/CF at 8.2.  Or 12m trailing net income of 82m, cash flow of 96m (NI + d/a), and CapEx of 16m. 

    *The BS looks great as usual - 177m cash, inventory up 6% , hardly any debt. 

     

    In short, I feel that if this were an American retailer, it would trade at least 50% higher than here.  The FCF yield is still over 10% and given the company's intelligent actions with the buyback (buy low), big dividend (5.8% at today's price), high insider ownership (50%), I feel the stock could still be purchased with confidence at today's level.


    Subjectwhat a bad typo
    Entry10/07/2009 03:11 PM
    MemberSpocksBrainX

    I just noticed my symbol on the idea is dead wrong - actual symbol is BIJ.F (BIJBF pink)...


    SubjectWhat did latest German PR say?
    Entry10/30/2009 12:22 PM
    Memberelan19

    Revenue was up 4.1% but what was LFL?  What else was said in the German-only press release?


    SubjectThe garbled google translation
    Entry10/30/2009 05:27 PM
    Memberelan19

    One can glean at least a few things from the following automated/garbled Google translation, such as LFL -4.1% for Q:

     

    Wire: News Updates (OTS) Date: Oct 29 2009 0:09:02
    EANS-IRE: Bijou Brigitte AG fashionable accessories / Zwischenmitte

     
    Interim Geschaeftsfuehrung 30 September 2009
     
    Highlights
     
    * Consolidated sales increased by 4.1% to EUR 280.6 million increased
     
    * Net profit after tax of EUR 54.3 million, slightly below the
    Previous year
     
    * Market in Lithuania
     
    * 46 Filialeroeffnungen since the beginning
     
     
    Sales and earnings
     
    Bijou Brigitte in the first three quarters of 2009 consolidated revenues
    Compared to the previous year's figure of 269.6 million EUR by 4.1% to EUR 280.6 million
    increased. Like basis, sales amounted to minus 4.1% lower
    the
    Previous year.
     
    Group turnover increased from 1 Quarter to 3 Quarter of positive
    Development. Particularly on the domestic market in Germany has Bijou
    Brigitte like basis, sales can increase. As a result of
    stable
    Price konsumfoerdernden climate and the positive impact
    the
    -cyclical measures is private consumption continues to be a
    important
    Stuetze the internal market. In addition, decreased in Germany in July for the first time
    since
    1987 again, consumer prices compared with the same period.
     
    Eastern Europe had to remain strong with the effects of financial and
    Economic crisis, including rising unemployment figures were preoccupied.
    Spain saw itself as a further consequence of the international crisis with decreasing
    Tourist arrivals faced.
     
    On the inventory based on estimated values and estimated values to
    the
    Use of materials gives the extrapolation of the Group figures as of 30 September
    2009, a profit before tax of EUR 78.9 million and was thus at the level of
    the previous year. Earnings after tax amounted to EUR 54.3 million (previous year: 54.5
    Million), and thus went slightly over the same period last year back.
     
     
    Regular Growth
     
    In August 2009 was with the opening of a branch in Vilnius
    the
    Market in Lithuania completed. Bijou Brigitte is now in 17
    Countries
    represented by its own commercial areas.
     
    Total Bijou Brigitte expanded in the first three quarters of 2009 by 46
    new branches. During the same Period 19 shops were closed and
    24
    Sites has undergone renovation. In six shopping centers
    moved
    Branches in layers at a higher frequency of visitors.
     
    At 30 September 2009, Bijou Brigitte has 1112 branches in Germany and abroad
    operated. On the same date last year there were 1050th
     
    The sales area Concessions were also strengthened. At 30
    September 2009 were 124 locations (operated last year: 90).
     
     
    Financial Position
     
    The Liquiditaetsbestand was about the end of the third quarter of the
    Previous
    and stands for the strong financial position of the company. The cash flow from
    the
    commercial activities exceeded the current investment
    and
    Financing needs.
     
    By last year comparatively lower Filialeroeffnungen
    and
    Renovations have reduced the volume of investment.
     
     
    Updates on business developments and outlook
     
    In the last three months of 2009, Bijou Brigitte, the
    Branch expansion continued on. For the full year 2009 are
    64
    Filialneueroeffnungen provided.
     
    The Lagergebaeude is under construction with approximately 7,500 m2 of holding
    Mid
    Be completed in 2010.
     
    In October 2009 came with the foundation, another subsidiary
    the
    Starting signal for the entry into Turkey. In the metropolis of Istanbul
    is
    Bijou Brigitte in November, the first Branch opening.
     
    A kaeuferfreundliches price level has the consumer climate in Germany
    in
    Having the year. The labor market has remained very
    robust
    represented and has had only moderate clouding reported.
     
    Economic research institutes and banks are forecasting a deficit of about 5.0
    % Annual average for the GDP in Germany. The consequences
    the
    Economic crisis is still seen as a negative factor for
    the
    Development of the labor market considered. Overall, the
    Sentiment regarding the economic outlook
    than
    to denote very uneven. The recent positive developments
    have to
    sustainability proved.
     
    The Bijou Brigitte Group expects for the full year 2009
    one
    Business development on a continued high level of earnings. That
    Christmas business
    will, as in recent years, crucial for the
    more
    Sales development and thus have significant influence on the
    Final Results
    of the Group.
     
     
    Hamburg, October 2009
     
     
    Bijou Brigitte AG, fashion accessories
     
    The Board
     
     
    Financial Calendar 2010:
     
    29. April 2010 Annual Press Conference
     
    June 2010 publication Business Report 2009
     
    15. Annual General Meeting in July 2010 CCH - Congress Centrum Hamburg
     
    16. July 2010 Dividend Payment
     
    Aug. 2010 Interim Financial Report as at 30 June 2010
     
    Oct. / Nov. 2010 Interim results at 30 September 2010
     
     
    Forward-Looking Statements
     
    This Interim Announcement contains forward-looking statements about
    future
    Developments based on current assumptions and estimates of management
    the
    Bijou Brigitte AG based fashion accessories. Despite the assumption that the
    forward-looking statements are reasonable, it can not help it
    guarantees
    be that these expectations will prove to be correct.


    SubjectRE: The garbled google translation
    Entry10/31/2009 03:00 PM
    MemberSpocksBrainX

    well, since they did flat earnings or so again on down comps, I'm still pretty encouraged.  I'm also continually surprised by valuation here - i get a single digit pe and they are largely insider owned, don't do options, pay that big dividend, and generate enormous amounts of free cash.  Really think if this were US based it would be at least 50% higher. 


    SubjectRE: RE: The garbled google translation
    Entry10/31/2009 03:00 PM
    MemberSpocksBrainX

    single digit pe sans cash


    SubjectRE: RE: RE: The garbled google translation
    Entry11/10/2009 06:22 AM
    Membergocanucks97

    Minor news. BIJOU completed the 2nd buyback program and announced a new plan to buy another 10M euro. It is small compared to market cap, but considering how illiquid the stock is, not bad. between dividend & buyback & the quality of the business, i am perplexed why the stock is not higher. 

     


    SubjectRE: Author Exit Recommendation
    Entry07/14/2010 04:55 PM
    MemberSpocksBrainX
    no great insights - I just figured with continued SSS weakness (down 5.4% in the 1H due to weakness in Spain) and more interesting prices in the USA in retail stocks I'd focus on stores I can visit more frequently...
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