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November 3, 2010





  • In a positive sign that spending may indeed be picking up on the west coast, Big Five noted that comps increased in each month during Q3 driven by an increase in customer traffic while average ticket declined modestly. So far in 4Q, the positive momentum has continued with comps up LSD despite tougher year-over-year compares.
  • Steven Madden confirmed that while boots started selling earlier this year than last, the category continues to be robust again in 2010. In addition, the company is also seeing a shift into booties as well with a lace-up style one of the brands hottest selling SKUs currently. 
  • H&M’s new lookbook for the highly anticipated Lanvin collaboration is now available. The new line to be launched on November 23rd is priced under $200 including accessories and shoes and will include a menswear component as well. If the company’s collaboration with Jimmy Choo last year is any indication, the Lanvin line will likely provide a much needed boost to the fast-fashion retailer.


LVMH Pursuit of Hermes Heats Up - In their most explicit statement since LVMH Moët Hennessy Louis Vuitton announced its stealth purchase of 17.1 percent of Hermès shares, the company’s bosses hit back in a newspaper interview in which they called for luxury mogul Bernard Arnault to get rid of his stake. Patrick Thomas, chief executive officer of Hermès International, and Bertrand Puech, executive chairman of Emile Hermès SARL, which represents the family shareholders, told French daily Le Figaro they did not consider the move by the LVMH chairman and ceo as “friendly” despite his assurances that he does not plan a hostile takeover. “The family is saying clearly and unanimously: ‘If you want to be friendly, Monsieur Arnault, then you must withdraw’,” Puech was quoted as saying by the paper. He added that he reacted with “surprise and displeasure” when Arnault phoned to notify him of the stake, just hours before issuing a statement. Thomas and Puech said they met with Arnault last week and told him face-to-face they did not consider his overture friendly. “There is nothing friendly about this move. It was neither desired nor solicited,” said Thomas, adding: “It is very probable that he will increase his stake, I don’t know his intentions.” <WWD>

Hedgeye Retail’s Take:  History suggest that the involvement of Bernard Arnault is very rarely a “friendly” gesture.  This is heading towards soap opera status. 

KCP Reclaiming Women's Sportswear License - Kenneth Cole Productions Inc. is taking control of its Kenneth Cole New York women’s sportswear license. The New York-based firm said Monday it will terminate the category’s 5-year-old license agreement with Bernard Chaus Inc., effective June 1, 2011. The license was originally scheduled to expire in June 2012. Total wholesale revenue from the line, which is distributed in more than 400 doors nationwide including Nordstrom, Bloomingdale’s, Dillard’s and Lord & Taylor, is estimated to be in excess of $50 million annually, according to a company statement. Jill Granoff, CEO of Kenneth Cole Productions, said that bringing the line in-house will help build the company’s women’s business going forward. “We intend to invest the resources required to realize the growth potential we believe exists in the wholesale, retail and international channels,” said Granoff. <FootwearNews>

Hedgeye Retail’s Take:  While Chaus may not have been the right partner, it’s still not clear how successful KCP will be while bearing the entire cost of production from design to distribution.  The brand needs help and women’s sportswear isn’t the answer.


Twitter CEO on Retail - Whether it’s Facebook, Twitter or another social networking platform, apparel and retail brands are taking money from their traditional ad spend and placing it with these Web tools to reach new consumers. On the Internet, it’s all about avoiding ad lingo and keeping the message “organic and viral.” “Where you can, be less formal,” advised Twitter chief executive officer Dick Costolo. He pointed to the Dolce & Gabbana Twitter feed and compared it to Stefano Gabbana’s personal account as a good example. The official Twitter page for Dolce & Gabbana, which has almost 40,000 followers and features a picture of Madonna, has several kinds of tweets, such as party pictures, behind-the-scenes photos from a fashion shoot and friends of the brand, such as Naomi Campbell. Costolo spoke to fashion brands on how to use Twitter to further monetize their brands, but the number-one question for Costolo following his presentation was how Twitter plans to do the same thing. “It’s a fairly easy proposition,” he noted. “Promoted tweets are often retweeted more often than organic tweets. We have an ad platform where people are incredibly engaged and we are going to expand it.” But if a company wants to pay for a “promoted tweet,” it has to be something that has already been tweeted from the account. In other words, it cannot be written expressly as an advertisement. And, like Google, Twitter will experiment more with providing key words to advertisers so they will appear at the top of any search list. <WWD>

Hedgeye Retail’s Take:  While Twitter itself is looking to monetize and commercialize its advertising properties, it appears the retailers (at least so far) have done a fairly good job promoting their brands for free.  After all, with a bunch of “followers” already  it costs absolutely nothing for a retailer to Tweet a promo or a new product launch.  Good for everyone but Twitter. 

Retailers Pursue Mobile Aggressively - The increasingly social, mobile nature of the Internet is reducing the space between retailers and their customers and forcing merchants’ hands when it comes to investing in new technologies. That was one of the common denominators among speakers on an e-commerce panel. Participants were Janet Carr, senior vice president of strategy and customer engagement for Coach Inc., Denise Incandela, president of Saks Inc.’s Saks Direct unit, and Carl Sparks, president of Gilt Groupe. Edmond Jay, senior vice president of American Express Co.’s Business Insights division, moderated. Incandela led off by defining four areas that are receiving more attention at Saks’ e-commerce unit — improving the customer shopping experience, adjusting to the global nature of the business, adapting to mobile technologies and integrating social networking into operations. Getting e-commerce right is crucial, she noted, because the multichannel customer spends three to four times more than the single-channel customer, and also spends more time in stores. Salespeople get commission for Web purchases they facilitate, and all stores have access to merchandise that’s on the Web. A database has been assembled that incorporates customer information from all channels used by Saks, and the retailer is working on integrating its inventory so that all channels have access to it. <WWD>

Hedgeye Retail’s Take:  This is getting old.  At the end of the day the consumer wants its mobile experience to mimic its online experience and its retail store experience.  Very simple.   

Men Mobile Mavens - The model of the young male early adopter seems to have fallen by the wayside with the rise of digital phenomena like social media, but according to research from Adobe Systems Inc., men were ahead in mobile. In a few content activities, women led. They were 10 percentage points more likely than men to access social media via mobile, and about equal when it came to searching for local information, reading or posting to blogs, and playing games. But men’s hunger for content put them ahead in more than just sports; video, music and news were all primarily male-conducted activities. Men weren’t just using more content—they were more willing to pay for it too. Adobe found that men were more likely than women to purchase every category of mobile media and entertainment content studied, including games, video, news and, of course, sports content. Overall, 53% of women said they had never paid for mobile entertainment content, compared with just 38% of men. Mobile-commerce is also a male-dominated area. Women held their own in categories like clothing, shoes and jewelry—as well as toys, babies and kids—but men were never far behind and in many areas dramatically outpaced women’s purchase habits. <emarketer>

Hedgeye Retail’s Take:  Great opportunity for the marriage of social media and retailing given the high overlap of female participation in both activities.

R3: LVMH, KCP, SHOO, H&M - R3 11 3 10


R3: LVMH, KCP, SHOO, H&M - R3 2 11 3 10

Vietnam Retail Sales Up - Vietnam’s total retail sales and service revenue is estimated to have accelerated 25.1% on-year to VND1282 trillion in the first ten months of this year, according to the General Statistics Office of Vietnam(GSO). The service revenue contributed VND116.9 trillion, up 22.3% on year in October. The trade sector reported an on-year revenue increase of 25.8% to VND1010.9 trillion compared with VND905.149 trillion in September, equivalent to 79% of the country’s sum during the nine-month period. The Ministry of Industry and Trade has forecast retail sales and service revenue in the world’s 13th populous country with 86.5 million people will soar 22% from a year earlier to $78.9 billion this year. <fashionnetasia>

Hedgeye Retail’s Take: With the trend of manufacturing demand shifting increasingly towards Vietnam for much of 2010, we view this rapid acceleration in the country’s venues likely to continue over the intermediate-term at a minimum. As a point of reference, at its recent analyst day, PSS noted that they expect to shift from 85% of production out of China to 70%-75% over the next 2-years of which Vietnam will be a primary beneficiary.

U.S. Customer Becoming Less Attractive on Relative Basis - Chinese footwear firms are shifting their focus from developed countries to emerging markets like the Middle East and ASEAN countries to reduce the burden of anti-dumping duties imposed by the EU and America, revealed by a research report conducted by RNCOS. Export to the Middle East countries has significantly increased over the previous year. Due to the establishment of China-ASEAN free trade zone, a huge growth has been seen in exports to the ASEAN countries, said RNCOS. Chinese footwear industry has witnessed robust growth both in terms of consumption and exports. The research has found that the footwear industry will recover from the 2009 downturn in near future. Liberalization and globalization have given required impetus to the Chinese footwear sector thus, enabling it to become the largest footwear producing country. According to the report, the Chinese footwear retail market can be subdivided into four sectors: Leather shoes, Rubber shoes, Cloth (textile) shoes, and Plastic shoes. As a whole, demand for rubber shoes is rising due to gradual diversification in functions and designs as well as constant improvement in comfort. The domestic sales of footwear in China have significantly risen on the back of rising online sales and increasing brand awareness. Chinese have shown great interest in the branded shoes after the entrance of many global brands that employ various promotional methods to popularize their products. <fashionnetasia>

Hedgeye Retail’s Take: Since 2009, China exports to ASEAN countries have doubled in terms of growth at the same time the domestic market demand is ramping rapidly. With manufactures also now starting to balk on orders in USD due to Fx risk, it doesn’t look likely that the cost of procurement is going to be easing in the near-term.