Second quarter earnings out today were gravely disappointing as the stock plunged as much as 50 percent before settling in at midday at 75 cents, down "just" 35.8%.

Sluggish sales, obscenely high selling, general and administrative expenses of 60% of sales (it should be 10% for a company such as this) were bad enough.

But then the company said it had fired its auditor, E&Y, and engaged a local Montreal firm. I have no idea why they did this. The savings would be on the order of $200,000 or perhaps a bit more, but less than one percent of total SGA expenses. Firing an auditor is often a red flag, so the fact that the company offered no reason should be worrying.

As I wrote last month and said to The Globe and Mail (see elsewhere on this blog), one wonders what the independent directors are thinking: Is Sarah Segal really the best and only candidate to run this company, as her mother and board Chair says?

If I could have sold today, I would have!

And if the insiders would beg to differ, wouldn't now be a great time to buy some shares? If the future is bright, shares that were $1.17 yesterday are now 75 cents. The average S&P500 stock sells for 1.75 times sales, whereas this company, if it's not headed for the scrap heap, should be a screaming bargain at one third of sales. Will the directors and executives put down a few thousand dollars of their own money as a show of support, or will they continue to gobble up (and quickly dump) shares issued to them at the expense of the long suffering minority holders?