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Body Central Corp.

Matt's Fundamental Stock Analysis
Content Disclaimer: I am only a retail investor and I only intend these reports to be used as a guidance. I recommend you do your own research as this will better help you to understand how companies work and operate and what drives their growth. What stocks you decide to purchase, should be chosen by you and this report is made only to display companies which I think are worthwhile to look at and discuss. Just because it is a good company or I like the company does not mean that it will do good in the future. If you want to copy or replace my report, please do so with a link connecting to my blog.

Body Central Stores (BODY) Company Business Body Central Stores is a women apparel and accessories retailer targeting women in their late teens and twenties. They currently operate over 200 specialty retailer under the Body Central and Body Shop name, along with a Body Central e-commerce segment. They are currently located in only 23 states in the United States. Store Growth: The store growth since the 2008 recession seems to look fairly attractive
January 1, 2011 January 2, 2010 January 3, 2009

Stores at beginning of period Stores opened during period Stores closed during period Stores at end of period Remodeled stores Relocated stores

185 27 (3) 209 3

180 15 (10) 185 4

188 6 (14) 180 4 5

Additional Notes: On October 2006, BODY completed their acquisition of Body Shop of America and Catalogue Ventures o Believe their Catalogue business gives them a competitive advantage since many of its competitors do not include a catalogue to their stores Body Central o Body Shops are expected to change to under the name Upper management owns 24% of the outstanding common shares

Future Outlook - Expectations Fiscal 2011 - expected to open 30-35 new stores, net of store closings o expected to continue to be able to open new stores at an annual unit rate of 15% for the next several years They believe they can improve their operating margins as they grow

Investment Valuations Reverse DCF Starting with a reverse DCF valuation, I will assume a discount rate of 12% and a terminal growth rate of 2.5%. (The terminal growth rate of any company should never be higher than the growth rate of the economy.) A reverse DCF valuation should be used just to see a rough picture of where the market has currently priced BODY based on fundamentals. Based on my assumptions the market has currently priced BODY to have a owners earnings FCF growth rate of around a 25% (or 30% if raised the discount rate to 15% to account for additional risk of a newly stock) year after year for the next 10 years with it gradually decreasing over the years, where then it will grow at its terminal growth rate. The range of the FCF growth is given due to the difference between TTM, annual, and average owners earning FCF input. This is a rough estimate number although it is a very high number for a retailer. FCFE Valuation The growth rate for this model is built around fundamentals, where it is equal to the non-cash return on equity multiplied by the equity reinvestment rate which gives us a net income growth rate of 27.53%. Reason being that we do not want to just guess a growth rate and it is better to get one from fundamentals, obviously the option to adjust these ratios can occur if needed. According to this model, the intrinsic value is roughly around $27.53. ALL OTHER VALUATIONS DO NOT HAVE ENOUGH HISTORICAL DATA.

Overview According to current growth grate based on fundamentals, BODY is fairly valued. Even if it were undervalued I wouldn't purchase at any price largely due to the fact that the company is fairly new in the stock market. Best Regards, Matthew

Matt's Fundamental Stock Analysis

Content Disclaimer: I am only a retail investor and I only intend these reports to be used as a guidance. I recommend you do your own research as this will better help you to understand how companies work and operate and what drives their growth. What stocks you decide to purchase, should be chosen by you and this report is made only to display companies which I think are worthwhile to look at and discuss. Just because it is a good company or I like the company does not mean that it will do good in the future. If you want to copy or replace my report, please do so with a link connecting to my blog.