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Financial Times  Nov 5  Comment 
ETA leader Mikel Irastorza detained following discovery of arms cache near Paris
MarketWatch  Oct 28  Comment 
A fresh probe by the Federal Bureau of Investigation into a cache of Hillary Clinton’s emails, just blindsided Wall Street.
Financial Times  Sep 29  Comment 
Disclosure of Crown Dependencies and Overseas Territories’ records likely to spur prosecutions
Financial Times  Jul 29  Comment 
Gucci wins back its cache; Goldman Sachs; Ford; Boeing and Grosvenor House in the news
TechCrunch  Jun 23  Comment 
 When Apple released a preview version of iOS 10 at its annual developers conference last week, the company slipped in a surprise for security researchers — it left the core of its operating system, the kernel, unencrypted. “The kernel cache...
New York Times  Jun 17  Comment 
Edward Perkowski, 29, was arrested on weapons and drug charges after the police discovered assault rifles, $40,000 in cash, Nazi paraphernalia and marijuana.
TechCrunch  Jun 16  Comment 
 Following a massive cache of LinkedIn passwords being dumped online last month, users of another online service — Github — have become the latest target of a password reuse attack as hackers apparently seek to exploit credentials obtained...
InfoStor  Jun 8  Comment 
In some situations, server-side flash cache can greatly increase application performance.
MarketWatch  Jun 3  Comment 
A small group of FIFA’s top officials, including ex-President Sepp Blatter and his former second-in-command, Jérôme Valcke, allegedly paid each other bonuses and other incentives worth tens of millions of dollars, according to a cache of...
InfoStor  Jun 2  Comment 
In some cases, adding a flash cache appliance to your network can speed performance and deliver excellent ROI.




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Cache, Inc. (CACH) is a specialty retailer, which operates stores selling women's apparel and accessories under the names Cache and Cache Luxe. Each of these store concepts carries its own distinctive brand merchandise, which includes sportswear, dresses, and accessories (jewelry, belts, and handbags meant to complement the sportswear and dress categories). Cache targets women between the ages 25 and 45. Cache Luxe is the company's newest store concept that was rolled out to replace the Lillie Store concept. Cache Luxe stores will offer a larger selection of casual and evening apparel and accessories at higher price points. Meanwhile, the company recently decided to close its Lillie Rubin stores by the end of the third quarter. The company ended 2007 with 296 total stores, primarily situated in central locations in high traffic and upscale malls throughout the US. Cache also sells merchandise online through its website: www.cache.com.

The investment thesis for buying shares of Cache is the strength of the company's core Cache store concept, its direct sourcing efforts, and its healthy balance sheet.

Cache believes it can expand its total store count to 350 Cache stores, up from about 300 stores today. Part of the plan has been to increase its total square footage in the mid-single digits. Along with ramping up its store count, Cache has also been progressively refurbishing existing stores to enhance the customer-shopping experience. In addition, the company is not growing just for the sake of growth its strategy is to improve its profit margins with solid sales growth. Specifically, Cache's long-term growth strategy includes significantly increasing its operating profit margin to 15%, up from 7.5% in 2005, 6.3% (excluding Lillie Rubin exit costs) in 2006, and around 3.4% in 2007. To facilitate its profit margin expansion, the company's strategy has been to reduce the number of stock keeping units (SKUs) in its stores and the number of vendors from which it buys. Cache also has established a merchandising process that provides it with shorter product lead times. The shorter lead time enables the company to alter its merchandise mix to take advantage of popular offerings and reduce or eliminate unpopular items. The combination of a smaller number of product offerings on its shelves, fewer vendors, and shorter lead times enables the company to better manage its inventory. This should help minimize working capital requirements and boost profit margins. With that in mind, the company announced the acquisition of its largest supplier and believes it can have 40% of its merchandise directly-sourced by year-end 2007. This should help boost profit margins in 2008 and beyond. By seeking to grow its business profitably, Cache should be able to smartly manage its long-term store expansion, which should lead to several years of strong sales and earnings growth. In addition, the closing of its poorly performing Lillie Rubin stores should help boost profit margins. For the last two years, Lillie Rubin has been a consistent drag on the company's sales growth and profit margins. Additionally, the company maintains a pristine balance sheet with just $4.6 million in long-term debt with a debt-to-equity ratio of 4.2%. Cache's balance sheet and solid cash flows provide the company with the financial flexibility to internally finance its long-term growth plans, weather the current spending slowdown, or buyback shares. Note: the company recently announced a 3 million share buyback.

Lastly, the stock is down about 60% in the last twelve months, due to difficult environment for retailers and the company's soft results. But, we expect the company's performance to improve in the quarters ahead. We view this level as an attractive entry point for purchasing the shares.




References

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