Body Central Corp. (OTCMKTS:BODY) Continues Its Ascent
For months on end the stock of Body Central Corp. (OTCMKTS:BODY) has been going nowhere but down. The losses have been staggering – from $4 at the start of the year to around 50 cents in early July. Back in September a 10-for-1 reverse stock split was performed and it bumped the stock price up but it failed to stop the decline – on October 31 BODY registered their new 52-week low of just 45 cents per share.
Just a couple of sessions later though, on November 6 to be precise, the company filed its financial report for the third quarter of the year and since then they have been on a non-stop climb up the chart. In fact out of the last 11 sessions only one has ended with a correction. Yesterday the stock continued its amazing recovery and even briefly spiked to an intraday high of $4.15. Such prices were too much for the moment though and BODY closed at $2.98 for a gain of 12.5%.
So let’s see what caused the drastic change in investors’ sentiment. According to the quarterly report BODY have:
• $4.85 million cash
• $38 million total current assets
• $30 million total current liabilities
• $43 million revenues
• $16.7 million net loss
It is apparent that the retailer of women’s clothing is still struggling. Their cash position, although rather respectable if it were any other pennystock company, fell down significantly compared to the $15.6 million at the end of September, last year. Revenues declined by more than 28% while the net loss almost doubled.
BODY are trying to turn their business around and the implemented cost-reduction measures are starting to take effect – their general and administrative expenses experienced a $7.2 million, or 29%, reduction compared to last year. Since the start of 2014 the company has closed 22 stores with plans to close an additional six stores by the end of the year. As of September 27 they operated a total of 272 stores. For now they should have enough resources to move forwards with their plans thanks to a $12 million revolving line of credit.
Investors should note that BODY has around $18 million in outstanding convertible notes that could be turned into 5.1 million common shares at a price of $3.50 each. For now the market price is lower than the conversion price but that can quickly change if the stock continues its climb. If these shares are issued they would significantly dilute the outstanding shares that as of November 3 were 1.9 million.
BODY is still a risky choice for investment. They have began showing signs of improvement but a lot more will be needed. The stock has appreciated significantly and if you don’t already have a position chasing after it may not be the best decision.
