# Le Chateau Inc. (TSX: CTU.A)



## Plastickmat (Feb 13, 2012)

Hey guys, just a quick drop in see what you guys think about this situation/stock.

I bought "Le Chateau inc" CTU.A stocks in last April (@1.51 bought 643 of them)

Since about a week the thing's been going quite high, hanging around 3-4$ but fluctuating a lot I mean in a day there can be a gain of 0.30, and then a drop of as much..

Can any of you more experienced guys out there give me some tips, I mean I'm already more than doubled my investment, but am wondering if I can wait a little longer and hope for more realistically or is it pretty much the best?

Mat


----------



## al42 (Mar 5, 2011)

Mostly insiders buying this up. A pretty good sign in my view.
why not sell half and ride the rest for free?
A lesson i'm learning from TGal.

Oct 12/12 Oct 12/12 Silverstone, Jane Indirect Ownership Subordinate Voting Shares Class A shares 10 - Acquisition in the public market 50,600 $3.98
Oct 12/12 Oct 11/12 Gruman, Barry Direct Ownership Subordinate Voting Shares Class A shares 10 - Acquisition in the public market 50,000 $3.00
Oct 12/12 Oct 11/12 Gruman, Barry Direct Ownership Subordinate Voting Shares Class A shares 10 - Acquisition in the public market 9,000 $3.25
Oct 12/12 Oct 11/12 Silverstone, Jane Indirect Ownership Subordinate Voting Shares Class A shares 10 - Acquisition in the public market 80,900 $3.16
Oct 12/12 Oct 10/12 Silverstone, Jane Indirect Ownership Subordinate Voting Shares Class A shares 10 - Acquisition in the public market 35,800 $3.01
Oct 12/12 Oct 9/12 Gruman, Barry Direct Ownership Subordinate Voting Shares Class A shares 10 - Acquisition in the public market 11,200 $2.78
Oct 12/12 Oct 9/12 Silverstone, Jane Indirect Ownership Subordinate Voting Shares Class A shares 10 - Acquisition in the public market 19,000 $2.75
Oct 9/12 Oct 5/12 Gruman, Barry Direct Ownership Subordinate Voting Shares Class A shares 11 - Acquisition carried out privately 1,000 $2.59
Oct 9/12 Oct 5/12 Gruman, Barry Direct Ownership Subordinate Voting Shares Class A shares 10 - Acquisition in the public market 15,600 $2.60
Oct 9/12 Oct 5/12 Gruman, Barry Direct Ownership Subordinate Voting Shares Class A shares 10 - Acquisition in the public market 42,900 $2.70


----------



## PMREdmonton (Apr 6, 2009)

They were #5 in most stock purchased by insiders in the last 60 days amongst companies with no insider sales. The insiders obviously are very enthusiastic about their prospects.

I will say that this used to be quite a profitable company that made around 0.80 to 1.50 per year in the recent past. The stock often used to kick around in the $10-15 price range.

My big worry is that this tends to be a very fickle space and it seems like consumers have really turned on them over the last year and it looks like their net margin and operating margin have been low and falling for the past few years.

The insiders think they have turned it around but they are carrying a lot of inventory $138M or so for a clothing company that only sold $300M worth of clothing last year. They only turn over their inventory twice a year - seems kind of low to me.

Anyhow, I can see the value there with a P/B of 0.65 and recent profitability but I just think the space is too fickle for me. This would be a trade idea to me but I would suggest waiting for the stock to drop a bit as it doubled in the last two months and looks due for a correction from overbought conditions. If you are patient, maybe it'll come back to you under $3.00.


----------



## Eder (Feb 16, 2011)

I used to own Le Chateau when it was trading in double digits. I sold after it began trending downwards and I toured their local stores as well as calling friends in Ontario to see if their branches were busy. I still check out their stores (generally deserted) so am not interested as a turn around story here and think you are lucky to profit.

I always check out the local A&W, Boston Pizza, Keg, bank branches,look at houses to see if the standard distribution of satellite providers prevail etc etc in my travels. I'm kinda worried about Boston Pizza here in the GTA...many of their restaurants are in need of a makeover and the traffic for happy hour seems too low.

I think you can grade your investment in Le Chateau in a similar manner...go to a few branches and watch how busy they are on a rainy Saturday...then check out a Lululemen branch as an upper benchmark and maybe Reitman's as break even?

Not everything is revealed in reading financials. Hope I haven't rambled too much.


----------



## Nick1357 (Aug 12, 2010)

I'm not sure about all of their products, but I know their shirts are poor quality. Bad stitching and poor fabrics imo. You buy something from them once because it looks nice on the shelf, but you never buy from them again. I've had other friends express the same opinion of them. Now that may not necessarily say much about the quality of their stock, I don't know...


----------



## Plastickmat (Feb 13, 2012)

So what I'm getting from some of you is "sell" and let the rest ride for free... mind explaining the reasoning behind this wisdom?

The rest of you seem to think like I did, looking at how unbusy the stores were when I bought it at 1.51 it was a guess to know whether my 643 stocks were goign down the drain or not.

From here on I've doubled my investment in less than a year. The stock has been coming down over the past 2 days (0.5$ +/-) Its not that it really bothers me I still get 100% return, but am I better off waiting for more even if it plunges or just take whats good now.

Thanks for all your help its not easy to decide these days as a new investor most of my investments went negative so I havent learned to deal with something going up yet haha.

EDIT : I mean it kills to say it and everyone fears it, but what if I'm content with 100% now when in a long run (I dont need this money) I can acheive 5-10x more. If this can help you guys see my reasoning.


----------



## jcgd (Oct 30, 2011)

We see the reasoning, but you need to determine the REASON the stock would continue up. Maybe it was fluke you doubled your money. Maybe it wasn't. Personally, I'm not going to research the stock because 1) I've never bought anything there, 2) I don't know anyone who has bought anything there, 3) the stores are usually ghost towns whenever I've looked into a store. For me it's simply not on my radar. 

If you want to hold it, you should be able to say why. If your reason is it doubled once then it might double again then I'm not sure why you bought in the first place. If you had a solid original thesis and it still applies I would say hold it. 

I'll give you an example of my though process. I bought DG last October and have done very well so far. I thought it was a solid company compared to its peers and I was looking for a discount retailer who takes advantage of the depressed economy. I'm not genius or economist so my trends are pretty big and generic. 

Now with the US housing coming around and the discount retailers taking some hits I'm considering whether to hold, sell, or take my original investment off the table. I'm leaning towards selling some and keeping the freebies because I still like the stock, but I have some better (I think) ideas of where I want to put my money.


----------



## Sampson (Apr 3, 2009)

This market space is going to get very very very competitive with discount, youth, high-end apparel coming from the US next year.

With the Tanger Outlets, Marshall's, Target, J Crew, Bloomingdales, Nordstrom all arriving. I could possibly see Le Chateau being bought out, but not common in this space as you can effectively choke out the competition quickly.

I would sell.


----------



## Young&Ambitious (Aug 11, 2010)

Sampson said:


> This market space is going to get very very very competitive with discount, youth, high-end apparel coming from the US next year.


Le Chateau is not youth oriented though and not that cheap, so they do differentiate themselves from other stores. Plus, they have the men's clothing.


----------



## thompsg4416 (Aug 18, 2010)

Nick1357 said:


> I'm not sure about all of their products, but I know their shirts are poor quality. Bad stitching and poor fabrics imo. You buy something from them once because it looks nice on the shelf, but you never buy from them again. I've had other friends express the same opinion of them. Now that may not necessarily say much about the quality of their stock, I don't know...


It's a terrible store. I've also bought stuff there because it looked good but it was terrible quality. I've never been back and their stores are always empty.

My advice is don't be greedy, get out while you can. There is no reason for this stock to climb higher then it is now. Take that advice with a grain of salt because I didn't research..


----------



## Sampson (Apr 3, 2009)

Young&Ambitious said:


> Le Chateau is not youth oriented though and not that cheap, so they do differentiate themselves from other stores. Plus, they have the men's clothing.


I suppose I don't know the Le Chateau client, but surely if you want to get into the premium space, Le Chateau has nothing on the brands that Bloomingdales nor Nordstrom carries, nor the diversity that the Outlet would bring.

Looking back at my comment, the adjectives were meant to be independent of one another. I didn't really mean discount youth, but discount space (Target and Marshalls), youth space (J Crew), high-end (Bloomingdales and Nordstrom), and Tanger's has everything.

Retail in Canada is 'unique'. Canadian brands have never had too much success breaking into the larger growth market of the US (except for LULU) and they do not have a unique enough presence within Canada to cement loyalty. Competition will be fierce and I see nothing that would differentiate Le Chateau. They don't have higher margins, nor a better distribution channel than the competitors, and they don't have voracious customers like LULU or AAPL. Where will the growth come from? I don't know the numbers of the company, but I believe the fundamentals will go down quickly.


----------

