Market cap of HK$14B (peaked over $140B in 2007).
September quarter SSS falling in high single digits. CFO resigned due to 'personal reasons'. Closing 80 non profitable stores.
Plan to spend additional $18.5B in capex and opex in marketing, upgrading designs and stores in the next 4 years. With this spending they expect to expand operating margin by 15%.
All this in the face of increased competition from H&M, Forever 21, GAP,... probability of slowdowns in the European consumer spending and in China where they expect to double sales.
Considering 10year annual run rate earnings of ~$4B Expect more plan tweaking as the results of their 'transformation' comes in the next year or two as they try and nail a fickle discretionary fashion market.
Hero or Zero? Probabilities trend more to Zero, residual value in the brand. Check back in 6months.
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