Research from Water Tower Research, Water Tower Research

Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Research from Water Tower Research

Equity Research Firm

Equity Bottom-Up

<div><ul><li>Global Retail expansion targets North America’s $100 billion addressable market through four growth levers: (1) doubling store footprint with 10-15 new locations annually; (2) expanding product assortment (currently ~40% the size of nearest peer); (3) increasing e-commerce sales; and (4) building brand awareness (DWR brand awareness is one-half that of Herman Miller and one-fifth that of RH).</li><li>New store economics demonstrate attractive returns. DWR stores (7,000-12,000 square feet) require a $3.5-6.5 million upfront investment, achieve sales maturity in ~24 months, deliver a three-year payback, and generate mid- to high-teens contribution margins.</li><li>Herman Miller stores (~1,800 square feet) need a $1-1.5 million investment, reach profitability in year one, mature within 24 months, and deliver low to mid-20s contribution margins.</li></ul></div>

Global Retail expansion targets North America’s $100 billion addressable market through four growth levers: (1) doubling store footprint with 10-15 new locations annually; (2) expanding product assortment (currently ~40% the size of nearest peer); (3) increasing e-commerce sales; and (4) building brand awareness (DWR brand awareness is one-half that of Herman Miller and one-fifth that of RH).New store economics demonstrate attractive returns. DWR stores (7,000-12,000 square feet) require a $3.5-6.5 million upfront investment, achieve sales maturity in ~24 months, deliver a three-year payback, and generate mid- to high-teens contribution margins.Herman Miller stores (~1,800 square feet) need a $1-1.5 million investment, reach profitability in year one, mature within 24 months, and deliver low to mid-20s contribution margins.

MLKN: Global Retail Outperforming Industry; Contract Segment Poised for Recovery

MillerKnoll

MLKN: Global Retail Outperforming Industry; Contract Segment Poised for Recovery