For some reason, I've got Tom Petty's "Even the Losers" (get lucky sometimes) running though my head as I write this. Maybe it's because the names in this piece have all had a rough run lately; I don't believe any of them are losers, per se, and things may be looking up. Maybe....
After the bell Thursday, The Gap (GPS) , the subject of Wednesday's column, put up second-quarter numbers that were better than expected, beating consensus revenue of $2.92 billion by a healthy $360 million. The loss per share of 17 cents was better than the expected loss of 40 cents.
Gap's same-store sales were up 13%, but that figure only included stores that reopened. Online sales were up 95% year-over-year and store sales were down 48%, all of which equated to a drop in net sales of 18%. I put that in the "it could have been worse" category.
Gap ended the quarter with $2.2 billion in cash and $2.2 billion in debt, up from $1.07 billion and $1.75 billion, respectively, a win in this environment. There was nothing new on the dividend, however. It will be interesting to see how the market greets GPS shares here on Friday. They were up 2% during the day on Thursday.
In Smallville, cinema and real estate player Reading International (RDI) was up 11% Thursday on seven times normal average volume, likely due to more theaters reopening and the hope that the worst is behind the industry.
I took a position in this beaten-down name in April, primarily due to the company's real estate, the value of which did not appear to be reflected in the price. (I must admit I am rethinking real estate in general, but especially commercial, as the pandemic may be proving that work at home may be here to stay, though time will tell). RDI has been in family legal battles for many years; also, Dallas Mavericks owner Mark Cuban has been involved with RDI for years and owns 12.5% of the class B voting shares (RDI.B) , which, at $19 (up 13% Wednesday), trade at a huge premium to the A shares ($4.30).
Last but not least, it is nice to see positive movement in holding company Valhi Inc. (VHI) , which was up 25% the past two days on news that the company's 6% Class A preferred stock effectively has been cancelled, with the owner contributing it back to the company.
It has been pretty much all downhill for Valhi over the last few years; it endured a 1-for-12 reverse split in June and is down 40% year to date. In 2018, this was a $110 stock (split adjusted) that now changes hands at $13. I owned it in the 2017-2018 era, and it turned out to be a nice trade. Dumpster diver that I am, it is back on my radar, but it sure is not an easy company to understand.
