That was the game at the 18th Annual Merchandising Industry Chief Executives seminar and dinner, hosted by Financo Inc. at the Harmonie Club here, as retail executives and other interested parties (famed corporate raider Carl Icahn, for one) talked about who might buy whom, which brands are in play and the general direction of the beleaguered retail sector.
Icahn's presence had everyone in the room buzzing, and he made no secret of the fact that he smelled blood.
"You retail companies are in major stock trouble and that's what I like," said Icahn at dinner, making a surprising first appearance at the 18-year-old event.
"Things are bad now; they are going to get worse," he told the crowd of 300, referring to economic conditions. However, with the internal workings of retailers, he said he's talked with chief financial officers of some of the majors and likes what he sees. "If you look at the godd--n cash flow, they're doing great. The one question I ask is, 'Why aren't you buying back your stock?' Now is the time to look at these things. That's why I came...."
With Macy's Inc. chief executive officer Terry J. Lundgren a no-show, Icahn saw fit to comment on the chain and the man who leads it: "He's a lovely guy. I see him at the tennis matches, and say, 'Terry, why aren't you working?' As you know, we have a large position [in Macy's] and have been losing a lot of money on it."
Still, with Macy's recently having announced a round of store closings, Icahn characterized the retailer as "a very good" company.
"If you know Carl Icahn, you know he thinks very well, but he operates very much by the gut. His gut is just right," said Buckingham Capital's Laurence Leeds, who followed up on the theme of undervalued retail stocks. "Too many of them are too cheap," like J.C. Penney Co. Inc., which is down from a high of $87 last year to $37, and Macy's, which fell to $21 from $47, Leeds noted. "Look at all these great companies where the stock is down over half. They're not going away. They're fundamentally worth a lot more than they are selling for. I think we're in a recession, but that doesn't mean these stocks are worth nothing."