With what cash? My understanding is that the back pay is essentially a loan to the company. It allowed him to put more cash flow into growing the company through new stores and web site promotion. That money is spent. I doubt that there's some account with all his back pay sitting in it.

The audit idea makes sense to me. I agree with Matthew on that, it would create trust, which would shoot the stock price much higher. But how much does an audit cost? If it's so much that it would delay new store openings by several months, then I'd think it would be better to open another store or two, and then start to audit.

You assume that dilution would be needed to maintain new stores, but from what we've been told, the first 2 stores were instantly profitable, once opened as "World of Leggings". So, your argument doesn't hold up.

If you have a proven profitable model, it's in the interest of both employees and shareholders to replicate that model as widely as possible, as long as it gets a good return on the money. That's basic business. Buybacks are only for when you can't get a good return on further capital expenditures, and you believe your stock price is undervalued, so you'd expect a better return by investing in your own stock than by investing in the business.

You also assume BRAV has loads of cash sitting around. It doesn't. They couldn't spend lots more than 6K on a buyback even if they wanted to. Only after expanding the business will they have enough to put into a buyback.

Right now, spending any extra cash on buybacks would be disastrous, because it would squash the chance for significant growth of the business, and since stock price is based on expectations of the future, that would keep the stock price down.

A $6K buyback wouldn't budge the price.

Besides, buybacks are only for companies that are flush with excess cash and can't get a great return on that cash by investing it into the business. Bravada is the exact opposite of that (little cash, and good return on whatever cash it invests), so a buyback would be ridiculous.

All extra cash should be invested in growing the business right now. Growing the business will make the share price go up better than anything else.

Yes, a reverse split makes people suspicious, especially if there is likelihood of dilution, and no evidence of a real, legit business. But the likelihood of more dilution gets less every day, and proof of the legit business is there in this case. So, I think a R/S could actually bring in more investors than it will scare away, if not today, then in the near future.

What this business needs is capital to open new stores, and attention from more investors. A R/S gives them the second without taking away from the first, so it's a better idea than the buyback, which would take away from the first (capital) without helping the second.

Any extra money lying around should be saved up for opening new stores. After a few more months of steady growth & "proof", I think a R/S would make sense, as too many investors are scared away by the low price.

A buyback should only happen when they have more capital than they need for opening new stores. That day is a long way off.

Indeed. It's interesting how people can interpret things so differently. If you're fearful, you'll likely find things to be afraid of.

To me, in reading this line:

the key words are "accelerated pace" and "large expansions". In other words, to really grow aggressivly, like his very ambitious wish/goal of 15 stores by year end, he would need capital beyond that from operations. But even then, it could come from shareholder loans. Dilution seems to be a last resort, and only to expand a proven business model more quickly.

In other words, dilution is not needed to open just a couple of new stores, but it might be used to very aggressively open lots of new stores in a short time. However, if you listen to the interview, you'll see that there are other restrictions to such fast expansion, like building up supplier networks to maintain responsive service. I get the feeling that operational infrastructure buildup will be more of a bottleneck to fast expansion than cash flow/capital needs.

Yes, he said he sometimes checks chat boards to get a feel for what people are thinking, and is surprised at the theories people come up with about dilution. He mentioned anyone can call Madison to find the share structure info, as they're ungagged, and even mentioned the # of outstanding shares earlier in the interview.

He also mentioned that other companies protect their top executives and board members from the effects of dilution, but that he thinks that's wrong, even though it's allowed. He doesn't do that, because he thinks those in charge should be motivated to do whatever they can to avoid dilution.

Quiet is good for price for now, because there's still some time until results are announced.

But take a look on alexa.com at # pageviews for onlyleggings.com. They seem to be surging up, highest since November. Search engine hits are high. Hopefully this takes us to the high end of Q1 guidance.

The difference is that now he has the cash flow to keep someone in-house permanently for doing the financials. Whoever he had before was temporary, and it seems like he still had to do some work on the financials himself. Now there's someone whose primary job will be Bravada's financials, which hasn't been the case before. So there's reason to believe that this will be the last time there will be a last-minute delay in reporting.

However, I agree with others that the delay should have been announced sooner. People will understand the delay, just not being told at the last minute.

Here's the math for you.

The "almost 100k" was announced early on the 13th, so it's only for the first 12 days. If you figure it means about 90k, that comes to $7500/day. Project that to 29 days, and you get $217,500 for February, and that's just for online sales.

Whatever you think "almost 100k" means, multiply it by 2.4 to get the full projected February online sales.

Add to that store sales, and you're getting into the high 200s. If each store makes just 2 sales per hour for 10 hours per day, at an average of $30 per sale (all wild guesses), that's $600 per store per day, or over $30k for the month. I would expect that they'd be closer to double that amount, which would get them close to 300k overall for Feb. Again, just guesses. Anyone who's been in the stores (which I haven't) could give better guesses.

I wish it were so, but when I type the addresses into Google Maps, I see the stores as being no more than 2 miles from each other, all concentrated far west of downtown, between Hollywood and Beverly Hills.

Do I have the locations wrong?

The PR said the 3rd one was 3rd St near the Grove Mall. I assume that's at "The Grove Drive". That would put it almost halfway between the other 2.

Still, it's all very urban, and being near a big mall is great. I'd love to see future stores spread out in some of the other areas you mentioned, as well as closer to downtown. Perhaps rental costs are higher near downtown, and the current neighborhoods are seen as trendy, so could help WOL gain a positive reputation as a "store of the stars" for a lower cost before further expansion to higher traffic areas. Seems like a good strategy if that's it.

I suppose if all 3 stores can do well being so close, it's a good sign for future expansion potential.

Yes about being on the high side for faster growing companies, because PPS is always forward-looking.

However, typical revenue multiples for retail stocks are less than 1 times annual revenues. BRAV should be a bit higher than 1x due to the potential growth in the online side of the business, and the fast growth so far, but don't expect 5x, unless you mean 5x quarterly revenues.

Yes, that was their previous guidance, but I never believed it. It seemed like wishful thinking. When you're growing fast and get a big boost from holiday shopping, you can get confused and think the boost is all your own exponential growth. I couldn't see how Q1 could beat Q4's holiday boosted numbers. I figured at best they'd match Q4 in Q1, then slowly build from there, accelerating into next holiday season. It seems like they're saying that now, too.

So, my reason to invest hasn't changed, since I never believed the previous projections.

The good news is, they're funding expansion from cash flow. Long term, that's great for investors, even if the short-term is less exciting than you thought. My hope is that they patiently build infrastructure for another holiday surge in late 2012, then ride that wave to rapid expansion in 2013.

I agree that you don't want to maintain stores if they're giving consistent losses. Of course, we don't know what they're doing yet.

Another way to put my point is this: FUTURE profit is more important than current profit (as long as you can survive to that future without lots of dilution). To get future profit, you need to make consistently good decisions, for which you need good, timely, accurate information.

One decision, as many here have suggested, is how to replicate a profitable portion of your business, and eliminate unprofitable portions. The info you need for that is good breakdowns on the financials of each portion of your business, and perhaps an understanding of the key factors that make the profitable portions work (i.e. test different types of store locations, advertising, web site front pages, etc.).

Other decisions are harder to quantify. To drive new sales or repeat sales, you need to see trends in customer desires, and to do that ahead of the competition in an industry like this requires direct customer contact and some intuition. There are many ways to do that, and having brick-and-mortar stores might be one of the best. They can test things in stores and get very immediate feedback on customer reaction, with very little expense or commitment to inventory needed compared to testing online. They can also see how interested people are even if they don't buy. Their salespeople can get feedback on people's decision making process as they ask customers if they can help them find something. It's just one factor among many to consider when deciding on the value of having stores. It's a factor that's easily overlooked, and probably more important than most people realize. But it's still just one factor.

Have been reading here a while, and finally felt I must respond to this store discussion. I think having the brick-and-mortar stores has more benefit than just covering the costs of warehouse space, and having stores signs act like advertising.

It also gives a sense of connection to the customer, in a way that online sales can't. Danny needs to be in touch with fashion trends. He's a people person. Relying only on online analytics to sense coming trends would leave him one step behind, instead of one step ahead. Direct contact with customers is important in this industry.

If the stores are reproducibly profitable, then go ahead and expand until it stops becoming profitable. If they're just break even, then just keep a small number, but don't close them all.

Analyzing financial numbers is just one part of making good business decisions. You also have to look at what went into making the business profitable, which generally means keeping focus on the customers' needs. Having 1 or 2 stores will help be responsive to customers which will improve future profit, whether you see the connection or not.