Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Payless ShoeSource parent company Collective Brands
So what: Somehow, Collective Brands took a mere 2% increase in third-quarter sales and transformed it into a 32% hike in profits. Nice!
Now what: Wholesale sales drove CB's revenue gains, but that's where the good news ends. Same-store sales for the quarter slipped 3%. So basically the quarter would've been a bust if not for marquee brand names like Saucony and Stride Rite, which CB sells through distributors like Dick's Sporting Goods
Conclusion: Some-where down the supply chain, some-one was buying those CB-branded shoes. It clearly wasn't at Payless, so it must have been at one of the other retailers. Now sounds like a good time to start shoe shopping for value at the shoe hawkers.
An alternative play: Strong sales of CB's shoes could bode well for shoe sales overall, or they could suggest market share loss at rivals like Nike
Want to keep closer track of Collective Brands' ups and downs? Add it to your watchlist.