A few weeks ago, I met a friend at Jones Beach Parking Lot 6 (P6) for a kiteboarding session. We decided to do a downwinder; leave a car at P6 and drive to Robert Moses parking lot 5 (P5) for a 15 miles kiteboarding session (I sometimes sneak away from the trading desk to pursue these kinds of activities).
While on our way to P5, he told me that he had just returned from Puerto Rico. He saw a Crocs store in San Juan and thought it was a very good looking store. He asked me how I figured out the business would change in such a dramatical way when it hit bottom in 2008. I repeated to him what I wrote about Crocs ($CROX) in the book The StockTwits Edge. To learn more about the $CROX thesis you will have to read the book because this post is not about $CROX. It is about something that could have a similar spectacular run.
I told him that I was now buying American Apparel ($APP). He interjected,"Holy cow this is awesome. I think you will do well with that. I love the brand. I love the fact that the clothing fits people nicely and that it carries no brand label on the clothing." The American Apparel brand resonates with young urbanites.
I was pleasantly surprised by his reaction because he is a professional designer. He designed my favorite wine bottle opener (OXO by Helen of Troy HELE). I use the opener frequently!
His comments help me understand how the customers think about the brand. Discovering the things that get the customers to go bananas for the product is integral to understand the top of mind positioning of the American Apparel Brand.
I am still discovering new facets about $CROX and I have been invested in the stock for 5 years. Here are some tidbits about $APP that I have collected to help me form my opinion of the company. This is a work in progress.
Now I need to investigate why some changes made to the 125th Street store in Harlem produced a sales increased of 70%. I will report on this and other discoveries within the next few months.
If you are interested in learning more about APP you might want to read this post.
What say you? Anything else?
Written by Michael Bigger. Follow me on Twitter and StockTwits.
P.S. Don't go out and buy the stock. This is a highly distressed situation and it is not suitable for the majority of investors. The purpose of the post is to write down how I think about this and share it with you.