B Riley 2016 Conference Notes

This week we attended the B Riley conference in Los Angeles. These notes are from one on one meetings with management teams.

Steve Madden (SHOO) Director of Finance Derek Browe at B Riley Investment Conference 5.25.2016

Steve Madden (SHOO) Director of Finance Derek Browe said consumer shopping habits are changing   

“We feel like consumers are focusing on comfort and that trend will likely continue.  Also, millenials are less brand conscious, they don’t want to wear branded goods with logos on them, they want to think for themselves.”

Steve Madden (SHOO) Director of Finance Derek Browe talked about increased efficiency in the supply chain

“It now can take us about 6-8 weeks to bring a product to market whereas it used to take us about 3 months.  Also, about 65% of our products are shipped via boat.  However, when time is of the essence and we need to be on trend with our product, we can ship via airplane and get it here faster.”

Steve Madden (SHOO) Director of Finance Derek Browe talked about the profitability economics of different channels

“Amazon is currently the most profitable place to sell our goods because they’re taking care of all the logistics and sometimes we’re able to give them exclusive products.  Macy’s is our next most profitable channel but it is less profitable because they often push us on volume rebates and bulk pricing discounts.  Selling on our own website isn’t as profitable as the previous 2 channels because of the high shipping costs.”

Amazon is making a hard push into apparel

“Amazon definitely wants to be seen as a place where a customer can get fashion

Perry Ellis (PERY) CEO Oscar Feldenkreis at B Riley Investment Conference 5.25.2016

Perry Ellis (PERY) CEO Oscar Feldenkreis says no analysts are asking Amazon CEO Jeff Bezos the right questions

“E-commerce is not profitable, I don’t care what Bezos says.  Some of the biggest costs in the online channel are freight and credit card fraud protections.  No analysts are asking Jeff the right questions.  They need to be asking him what the liquidation value of his inventory is if he doesn’t sell it.”

Perry Ellis (PERY) CEO Oscar Feldenkreis says brand is important in retail

“Amazon doesn’t want to carry fashion product, in order for us to succeed I have to focus on brand differentiation and treating my product with respect.”

One must adapt to change

“The world is changing and you have to understand what’s around you, what you can and can’t control. If not you’re not long for this business or any business really”

Destination XL Group (DXLG) CEO David Levin at B Riley Investment Conference 5.25.2016

Destination XL Group (DXLG) CEO David Levin said the economics of e-commerce returns are atrocious

“In the online channel, it’s the return and refund costs that kill you because of the high cost of shipping versus the ultimate price of the order.  About 20% of overall apparel orders on e-commerce are returned whereas, because our customer segment is so unique, ours is around 8%.”

Digimarc (DMRC) CFO Charles Beck at B Riley Investment Conference

Digimarc (DMRC) CFO Charles Beck said a key ingredient is necessary in the innovation process

“Innovation only happens if trust is inherent in the organization.”

Digimarc CTO Tony Rodriguez noted that there has been interest in AI before that didn’t pan out

I was around for the first AI wave…AI became such a dirty word that grad students avoided the subject because you’d have your funding pulled right away

Camtek CFO Moshe Eisenberg

Camtek’s CFO said that the semiconductor industry has become less cyclical as it has matured

I think that as the industry has become more mature you see less cycles. The trend in the semi cycle is up.

Jetpay CFO Peter Davidson

Government regulations to protect low income borrows may have restricted their access to credit

“Government regulators have declared war on anything that serves underbanked consumers”

Earthlink Treasurer Trey Huffman

Legacy Earthlink still has 700,000 subscribers

“There are still 700,000 subscribers to legacy Earthlink. There are a lot of people who are tied to their email and don’t want to give it up.”