Sunday, August 21, 2005


Cache stores. Recently expanded 300 additional stores within the past 12 months. It focuses on high end fashion and Jeans for teenage and 20-something girls. Same store sales up 8% in July. This was a difficult month for retailers, so it appears to be a good indication of the possibility of further upside surprises. This appears to be roughly in line or slightly above their expectations. Their most recent quarter was over 10% above analyst's earnings estimates, and they guided up, but the stock plummeted in response.

In the conference calls, execs pointed to stores beginning to get some traction that they didn't have previously in the marketplace since they were newer. My take is that this will be the first XMas season with a large set of stores nationwide. They also indicated that their fashion garments were the highes margin items. They recently had a shakeup where their marketing promotion exec was canned, and have shifted their focus away from jeans to high end items. It sounds like they took a drubbing from AEOS, etc. in the jeans arena. Now they want to get people in the door with jeans promos, but sell their higher markup items.

Same store data releases on 9/8. Potential risks: the glut of denim hypothesis, getting slammed by the competition, and the whole higher crude, hence less spending on retail thing.

I've never visited a Cache, so I can't invest money in the company yet. But this is an interesting and a little off the beaten path candidate.

From a technical standpoint, too many concerns at this point. Looks like a current period of consolidation and a possible head and shoulders move in process.

Institutional ownership is high. Short interest is low. Insider transactions offer no clue, with some stock options exercised and a few open market sales. No recent buys. Small float and very low daily volume.

This will go on my watchlist as a wait and see until I can get confirmation on the technical trend.


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