Our LIZ Black Book is now available...
We think that LIZ has more positive asymmetric factors than nearly any other story we can find in retail today. Yes, we know it’s a small, ugly, financially and operationally-levered story with a horrific track record in hitting expectations and in corporate governance. But trust us, that’s the consensus call.
This is not simply a call on improved operational performance or a simple divestiture. But rather the culmination of changes that have greatly reduced the asset intensity of the model at the same time we see sales and EBIT margins turn up meaningfully on the margin.
We can talk about our $16 sum-of-parts model until we’re blue in the face, but stocks don’t trade on break-up values…we get it. But they do trade on cash flow, and the delta here for changes in cash flow and RNOA will be unmistakable over the next 12-months, and should lead to price appreciation that will be embarrassing to have missed.