Replies to post #39055 on Market 99 Ltd (fka MNTY)

[opeum]

EDIT --

at bottom of my last post, meant "i do not plan on investing long term UNLESS"

A)

B)

Also, I did some more DD today in regards to the financials of the direct competition. I learned a ton and it helped me to put into perspective Market 99's business model and the financial potential for discount retail variety stores.

I am not going to post it all now because it is Thanksgiving, but here is something that is REALLY important and figured I'd tell you my findings now rather than next week.

Some poster or two mentioned speaking to the company and a profit percentage of 42% being realized so far at Choctaw. This could be interpreted in several ways, which it was on the board. Also some had different definitions of profit margin and different interpretations.

I knew with 100% certainty that this was not the store's net income / sales %, which could be used more so than any other ratio for PPS determination. I assumed that it was actually the gross profit margin, or (GROSS REVENUE - COST OF GOODS SOLD) / GROSS REVENUE,

which means for every dollar spent at Market 99, the company retains 42 cents after paying for the goods. This IS NOT profit, because that 42 cents still needs to pay employees, rent, utilities, advertising, building expenses in a triple-net lease agreement, insurance, taxes, etc etc etc etc.

TO back up my belief that the 42% profit margin is in fact the gross profit margin, or 1 - (cogs/revenue), I wanted to find out what this % is for the direct competition with the same business model.

(all %s are for the company's corresponding third quarters and from their 10Q)
FAMILY DOLLAR - 34.86%
DOLLAR GENERAL - 27.82%
DOLLAR TREE - 33.63%

The gross profit margin is highly affected by pricing models, product quality, distribution networks, vendor relationships, etc.

With only 1 store, I imagine that Market 99 works with one small vendor and has a limited product selection and therefore maintains a high gross profit margin. Or, maybe their true gross profit margin will be lower after a full year or accurate accounting!

Either way, if 42% is TRUE, if Market 99 can get $500,000 into the door, we see that we have $210,000 left over for rent, utilities, employees, insurance, taxes, etc.

Where's the net income??? That's what is important. And I'll get to that in another post next week.

Either way, if the company is opening more locations, either they have success the first few months of operation or they have a ton of money from stock issues left over. I believe that with a non-reporting company such as ECFL, there is possible short-term profits for us based on MoMo from PRs, but in order for this to maintain increased PPs, the company will have to maintain a positive net income at all locations.

Retail is simple. It's not rocket science or mining where there might be some huge discovery. Either you sell enough stuff to pay for expenses or you don't.

Word. Happy Thanksgiving.

[The Original dpb5!]

Direct competitition in town doesn't/shouldn't matter. What is more important is for the store to have an efficient, and well staffed team of both management and employees who actually LIKE their job, and understand the importance of a clean, safe, and friendly shopping environment that will keep customers coming back time and time again, regardless of the competition.

It's THE RECIPE for success in the "Dollar Store" industry.

Keep up with all your great DD!