Insider Weekends: Renewed Retail Confidence

A couple of trends we have noticed in recent weeks is renewed confidence among retailers that manifested itself through increased stock buybacks and insiders of retail companies buying stock on the open market. In our September 2021 Special Situations Newsletter we wrote about buybacks in the retail space and an excerpt from that newsletter is given below:

The retail sector that had been pretty much given up for dead pre-pandemic is staging a strong comeback fueled by pent-up demand from stimulus checks, strong employment and their omnichannel transformation. In fact things are so good that I was surprised to see retailer after retailer announce large buyback programs recently.

• On August 18, Target (TGT) announced a $15 billion buyback program that amounted to more than 12% of the market cap at the time of announcement.
• Williams-Sonoma, a retailer I had briefly considered as a short candidate way back in the financial crisis of 2008-2009 and decided against shorting because it was such a well run company, recently announced a $1.25 billion buyback amounting to 9.75% of its market cap.
• Macy’s, which by market cap is just about 5% of Target’s size, announced its own $500 million buyback amounting to 7.4% of its market cap.

These buybacks came to mind as I looked at the list of insider purchases from last week, which included buying by insiders of Designer Brands (DBI), the newly reorganized post-bankruptcy Tuesday Morning (TUEM) and Goedeker (GOED). The story behind Goedeker is so wild and fascinating that I decided to extend our notable insider buys list to six this week instead of our usual five notable buys. To understand the Goedecker and its new CEO Albert Fouerti’s nearly $1 million purchase check out this YouTube video of Yet Another Value Podcast by Andrew Walker of Rangeley Capital.

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