Progress in Summer Infant's (NASDAQ:SUMR)
turnaround remains slow, but there have at least been signs of
progress. Revenue growth has been disappointing, but the company's core
revenue continues to grow despite price reductions in the monitor line
and an ongoing restructuring of the company's core product line.
Likewise, the company has made meaningful progress working off obsolete
inventories and reducing its working capital.
Having a bigger presence in Europe may improve Summer
Infant's long-term revenue growth prospects, but it will cost money to
support. Moreover, Summer Infant is still a small player in a market
that includes huge retailers like Wal-Mart (NYSE:WMT), Target (NYSE:TGT), and the Toys/Babies R Us chains and large competitors like Mattel (NASDAQ:MAT), Newell Rubbermaid (NYSE:NWL), and Dorel (OTCPK:DIIBF).
While there would seem to be 25% to 50% upside from here on the basis
of mid-single-digit, long-term revenue growth and low-to-mid
single-digit FCF margins, the execution risk here is very high and
management really needs to deliver better revenue and gross margin
numbers over the next few quarters.
Read more here:
Summer Infant's Slow Road Back
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