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This is a recap of my spotlight stock of Reitmans (Canada) Limited (RET.A). Reitmans is Canada’s largest women’s specialty retailer offering affordable clothing in different umbrella stores for all age groups. I had recently gone through a baby step process of fundamental analysis on this company as my financial resolution to invest in what I know. I figured shopping was a good place to start.

On September 5^th, the company issued a press release to announce its Q2 financial results. As a brief summary, sales had increased 4.2% due to new store openings but same store sales decreased 1.2% for the past six months as compared to the same time frame from last year. There was also concern about the Cassis chain as it failed to hit its mark with baby boomers as reported by the Globe and Mail. Expectations of a quarterly dividend increase from 16c was muted as now the excess cash will be used to overhaul the Cassis line. Of course, the stock got punished and closed Friday at $20.18. And indubitably, yours truly got caught in the fray.

Here is a table of the price history for last week given that the TSX was closed on the 3rd for Labor Day:

The stock had held up during the choppy market conditions due to the credit crunch and asset backed commercial paper fiasco. Not seeing much movement, I had put in a low-ball good until canceled (GTC) order to test the waters. Lo and behold I got filled due to the press release but I could have gotten shares at an even cheaper price. Note to self: be aware of press releases when you have a GTC so you can re-evaluate the situation.

Still, I believe this is just a blip on Reitmans’ radar and they will get the Cassis chain straightened out. Too bad I don’t have a Cassis in my area or I’d do some field research. Hint to Reitmans: just because women say they want a store catered to their age group doesn’t mean they really want it. Who wants to go to a store that blings “old people” while paying jacked up prices? Did I not mention in a previous post I know 50+ year olds shopping at Smart Set? Everyone wants a bargain and they overestimated how much the baby boomers would pay. Affordable clothing for regular people is what Reitmans does best and they should continue the formula.

For those who have had their eyes on Reitmans, now would be time to take a closer look: strong cash position, decent yield, good management, defensive play. I would be interested in picking up more shares if it goes lower and I suspect it will due to a slow third quarter start in August. Still, this is one of the buy and hold companies on my list and I’m betting on a turn around.

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