HRD subs…
1. The KATE Board and management should fire itself if $18.50 is the price. Maybe it just did. This is near 30% accretion for COH. I’ll be floored if nobody else steps in. If not, COH as a multi-year growth engine for the best price I’ve seen for a Retail deal.
2. RH Modern book is out. Unless its anything other than a complete product gaffe (which it’s likely not), it’s an incremental positive vs last year. Flip side is that the new Repo is flat-out aggressive. But unlikely to execute on it.
3. Pay attention to this Wayfair print. On 4/10 we moved from Long to Short. If we see rev acceleration tomorrow, we should see operating loss increase. I don’t like this TREND or TAIL.
“You don’t know what pressure is until you play for five bucks yet only have two bucks in your pocket” -- Lee Travino
Have a great day
B
1. The KATE Board and management should fire itself if $18.50 is the price. Maybe it just did. This is near 30% accretion for COH. I’ll be floored if nobody else steps in. If not, COH as a multi-year growth engine for the best price I’ve seen for a Retail deal.
- Deal value of $2.4bn with COH planning to finance with senior notes, term loans and cash.
- Implied multiple for KATE on this offer is 8.3x EBITDA.
- COH is guiding year 1 accretion and double digit accretion by FY2019.
- COH sees $50mm in synergies within 3 years of closing.
Our model puts 3 year accretion at 28% for COH, with leverage rising to only 1.0 net debt to EBITDA.
3yr Accretion Summary
2. RH Modern book is out. Unless its anything other than a complete product gaffe (which it’s likely not), it’s an incremental positive vs last year. Flip side is that the new Repo is flat-out aggressive. But unlikely to execute on it.
3. Pay attention to this Wayfair print. On 4/10 we moved from Long to Short. If we see rev acceleration tomorrow, we should see operating loss increase. I don’t like this TREND or TAIL.
