Tonner One World Holdings Inc (TONR)

[Voices of Reason]

LUV - disregarding for the moment the latest quarterly that shows a negative margin, and using the 4th quarter figures instead, you will see that taking the gross margin and dividing it by the gross sales, you come up with an approximate net margin of 20%. Using the dollgenie online sales price figures of $24.95, and assuming they are making an additional 10% markup, you can back into a breakeven price of about $17.95 as the cost of each doll to make them.

I did a little recon and went to two of the stores you mentioned and actually found the dolls sitting on the shelves with no price tag on them at either store. I had to take one of them to the check out line to get a price check - it was being sold at $14.99. Now HEB will likely be getting a much smaller cut, lets say 2% (typical for grocery stores), so the net sales price back to OWOO is $14.69 per doll. Using the logic I have above, they are losing about $3+ per doll at HEB. Now clearly, this is speculative because we simply don't have the actual figures, but you kind of get the picture that even at a small profit, it will take a substantial number of dolls to pay for the ongoing overhead.

Objectively, the sales price of $14.99 to $19.99 appears to be a good price point for selling the dolls. Also objectively, the dolls were poorly displayed in the store. One display was literally tucked away in a corner opposite the registers - no visibility at all. The other store had the dolls displayed near pool equipment - not exactly the toy isle. Trent needs to do a better job at getting them more visible to front the merchandise. Perhaps the other 2-3 stores have better displays and different pricing - but my initial impression was "meh...".