Friday, September 24, 2010

Bookkeeping: Starting Maidenform Brands (MFB)

We are about 2 months away from my favorite CNBC day of the year...that is Black Friday... where anchors are posted at malls across America in the pitch dark and just by their views of the parking lots then can tell us how great of a start a Christmas season it will be.  Every year.  Without fail. This year might be especially special with so many millions of households living in homes they choose not to make a payment on ...after a year or two of this momma's gonna get a lot more shoes this Christmas.  We will clap like seals as an investor class boggled the American consumer can spend like this while some deranged blogging sites will whisper strategic default....ignore those sites.

Maidenform Brands (MFB) has been on my watch list for a long while now because it came to my attention quite a while back for an incredible streak where it had been up an entire month straight without a loss.  Now I know that is nothing in September, as 70% of stocks are acting like that, but that was back in a period when it was unique.  I did some digging into this company and it has one of my favorite type of situations... a subset of its business hidden within a relatively boring company, that is booming.  In this case within a staid undergarment business is a booming shapewear business.  Effectively this is the modern girdle and it's selling like hotcakes.

At this point I'd normally do a full blown analysis on the site, as this is a new stock to readers, but let's be real.  Stocks can only go up.  Why bother with analysis?

This is all you need to know: Ben + shapewear + strategic default + potential cloud computing initiative = win.

The stock has pulled back to its 20 day moving average so in this market that is a screaming buy.  In theory it could pull back to the 50 day but only in theory because stocks only go up (see Tepper analysis) I am starting with a 2% exposure.

Last earnings report here.

  • Maidenform Brands, Inc. (NYSE:MFB - News), a global branded marketer of intimate apparel, today reported second quarter 2010 net sales of $149.4 million, an increase of 30.8% over the second quarter of 2009, driven by continued strength in its core shapewear and bra businesses across the Company's wholesale channels.  
  • Reported EPS of $0.59 for the second quarter of 2010 was up from EPS of $0.31 in the second quarter of 2009.  
  • Looking ahead, the company expects third-quarter net income of 50 cents to 55 cents per share and full-year net income of $1.88 to $1.93 per share.

(a good overview on the shapewear business via Investors Business Daily here)

  • In the first quarter, shapewear sales jumped 49% over the prior year, making for Maidenform's fastest-growing category.  It now makes up about a third of all sales.
  • Analysts say Maidenform has a 40% market share in shapewear, leading the industry, and that share is still rising. Vieth expects the overall market to continue to grow also, since many women are just now rediscovering shapewear.

As an aside, I don't want to be accused of starting rumors, but I hear undergarments is an area Hewlett Packard is sniffing around ... wait maybe that was just the ex CEO (bada boom - I'll be appearing here all week).

Long Maidenform Brands in fund; no personal position


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