Joe's Jeans-JOEZ

Dear Investor,

It makes premium jeans in the United States. It has secured a price niche that is neither too expensive nor is it too cheap. Consumers always want to have the latest fashion and apparent from their balance sheet that consumer spending is likely back.

Profit

Description	2011 (Q1) (USD’000)	2012 (Q1) (USD’000)	2013 (Q1) (USD’000)
Retail	-119	253	-326
Wholesale	4,441	5,671	6,704
Total	4,322	5,924	6,378

Strength:

·         Premium branded jeans. Gross profit margin stands at 50%.

·         The consumers are spending again in the US,

·         Third most owned premium brand in the US

·         Wholesale via Departmental stores are growing

·         Experimenting with retail which could boost their brand image

·         Jeans known for its comfy and perfect fit

Weakness:

·         Dependant on consumers to like them, one wrong product and they are screwed

·         Competition are strong; profit margin maybe eroded from heavy discounts

·         Its jeans; not much of a differentiator

·         Retail is still making mistakes and hiccups

Opportunity:

·         The countries such as China, South East Asia has not been penetrated. IF they can just make it into these markets, the potential will be immense.

·         Their retail strategy in theory should be better; once they sort it out, they will be making money

Threat:

·         Bigger guys going after them; Guys like True Religion.

·         Consumer spending to go down will cause even more discounts

Catalyst:

Currently, they are facing investor’s wrath because of missed earnings. In Q1 2013, they spend money to acquire the founder’s block of shares so that they do not need to pay him the gross profit anymore, thus lowering their earnings. But from the business fundamentals, nothing has changed.

Opportunity to accumulate will be present to accumulate if this falls to levels around USD1.20…(RM3600 per lot)….