Wednesday, November 21, 2007

Brick Income Fund 3rd Quarter Report

This one almost slipped by me considering there was no news report on Yahoo. Thankfully it was a pretty good report.
We are very pleased with our third quarter and year to date results. Sales remain strong, reflected in our seventh straight consecutive quarter of same store sales growth, driven by a strong promotional calendar. As we had in the first half, we continued to make good progress on managing key revenue and expense line items. In its most simple terms, our strong quarter was driven by more effectively executing against strong written sales. We have improved our supply chain, reduced inventories, improved our cash position, and narrowed our focus to driving sales and maximizing customer satisfaction. Management remains excited not so much by what we have done, but more so by what we believe the future holds.

The strong Canadian dollar has been killer for SFK. But in the case of the Brick, the benefit has been twofold. One, because the Brick does its retailing business in Canada, the value of its profits and its business increases for me, a US investor. Two, because some of their purchasing costs are in US dollars, the Canadian rise has decreased their costs and so also helped to boost their profits. I'm reminded of something Pabrai said at his annual meeting, which was approximately- "We don't try to specifically hedge for events in our portfolio, it just ends up working out that way."

1 comment:

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