MARKET WATCH: One Institution’s Economic Outlook
Jeff Harbaugh
- December 15 2008
- 523 views
- 5 comments
I spent about 45 minutes Saturday morning drinking coffee and reading Wachovia’s 2009 economic outlook. HERE’S the link to it.
We all need to make our best guess as to what next year, and the year after that I suppose, is going to be like to manage our businesses to the best of our abilities. These are one organization’s ideas. It’s not too technical, not too long, and not too tough a read. And it has some interesting graphs.
It talks about economic prospects in general- not just for our corner of the economy. It’s worth a bit of your time. You probably ought to get perspective from other reports as well, but you got to start somewhere. You can’t make longer term management decisions unless you have a point of view on how the economy is going to perform.
Jeff Harbaugh is a consultant for the action sports industry and works with companies to identify and focus on critical business issues and opportunities fundamental to the bottom line. For more information, visit www.jeffharbaugh.com.
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December 15th, 2008 at 9:15 am
Jeff,
The one you attached is for 2008? Do you have the 09 update?
Thanks,
MR
December 15th, 2008 at 9:25 am
Aw, Shit! Thanks MR. Here’s the correct link. I’ll change the bad one.
J.
http://mediaserver.fxstreet.com/Reports/abbcad03-8183-4e62-93b0-73ea91577d7c/ee6e3116-835c-4156-8347-5a9c291c3c05.pdf
December 15th, 2008 at 11:33 am
Rip Curl posted a profit of $14.4 million in the year to June, down from $22.8 million last year, but up when a one-off gain of $12.8 million is excluded from last year. While sales rose by 11 per cent to $431 million, the company had to write down the carrying value of its retail stores by $1.5 million “based on a softening in their retail performance”. It also wrote down the value of its merchandise by nearly $300,000 - twice as much as it did a year ago.
Hi Jeff - Could you break this down in laymen terms?
December 15th, 2008 at 12:23 pm
New Ideas,
You can begin to see why I tend to stick to public company filings. Very hard to interpret what?s going on here without more information. You wouldn?t have more complete information you could send me would you?
Here?s some of the analysis issues I?m not quite sure of based on what you sent me:
1) I gather, but am not sure, that both the $14.4 and the $22.8 are six months after tax numbers. Is that correct?
2) What?s the ?one time gain? of $12.8 million for? Some companies want you to ignore that stuff but lots of companies have ?one time gains? most years, even if they are differernt ones. I always want to know if it?s a cash event or not.
3) To really understand the bottom line impact of the one time gain, I need to know what the tax impact is. That is, if they didn’t have that gain, did they pay several millions less in taxes?
4) As I haven’t seen a balance sheet for Rip Curl, I don’t know if the $1.5 million retail carrying value for their stores is a big number or not. I assume it’s a non cash item- writing down of fixtures maybe or good will.
5) Ditto for the inventory. A $300,000 write down is pretty meaningless if you have an inventory of $30 million. But if your total inventory is $1 million, you may have a problem. Generally, I am expecting to see companies be a little aggressive in writedowns this year because of economic conditions. Just because it doubled doesn’t mean much if the total inventory number is big.
So, I haven’t broken it down much I’m afraid. Just not enough information. I’d be glad to do it, but am very cautious about reaching a conclusion without enough facts.
thanks,
J.