post #21 of 1788
8/30/09 at 9:21pm
JOEZ. I have never heard of Joe's Jeans. Which retail stores can you find their products in? I also noticed that they announced that they will begin to produce belts which will be ready for sale this holiday season. The stock didnt do much after the announcement but did notice that it went up significantly on Friday. Why is this?
I just got off the phone with Hamish Sandhu, CFO of JOEZ.
Someone raised the concern to me over their 100M A/S, with only 60M outstanding. I have no reason to see this as a problem, but I wanted to talk it over w/ management just to be sure.
Here is a summary of my conversation w/ Mr. Sandhu:
Mr. Sandhu told me the 100M figure for A/S is there mainly for security in the case of a catastrophic event in which they'd have to pursue a public option to raise cash.
He also said that these requests to increase the A/S were made back in 05-07 when the company was operating on revenues in the 40-50 millions. The company, at that time, was trying to get out of some old business associations and needed a large A/S figure in case they'd need capital to do so. Turns out they haven't needed nearly that many shares to fund their operations. Also, he assured me that the fact that they now have 70M in revenues, as compared to 40-50 back when the A/S was first raised, has drastically reduced the chances of them having to issue any more shares. Their cash flow last year was 4.5M. This year, it is already 2M.
So they have plenty of revenues, and thus cash. Mr. Sandhu says they absolutely do not expect to dilute shares unless something catastrophic happens, which at this point is completely unexpected.
He also said that if the need does arise for some sort of capital infusion they could borrow against their brand, something they've yet to do and something that, according to Mr. Sandhu, would be a much likelier route to pursue as opposed to pursuing some sort of public issuance of shares.
He also said there is a lot of activity going on at their trade show today, and that he is overall impressed by their experience with it thus far.