R3: UA, LVMH, Cotton, & HOTT

R3: UA, LVMH, Cotton, & HOTT 

November 5, 2010

RESEARCH ANECDOTES

  • As an example of how much impact a viral YouTube video can have, KSWS highlighted the success of their recent Tubes training shoe effort featuring Kenny Powers from HBO’s “Eastbound and Down.” The ads, which feature Jeremy Shockey of the New Orleans Saints, mixed martial artist Uriah Faber, and Patrick Willis of the 49ers have had over 2million viewers over the BTS season and increased the company’s Facebook fans 10x since the campaign’s inception. The youth consumer has been an elusive demographic for California brand which could be changing as a result of these unconventional marketing efforts . If you haven’t seen the campaign yet have a look (http://www.youtube.com/watch?v=0_sCW1_fRDA )
  • H&M is debuting its augmented reality app, which includes a virtual fashion show comprised of looks from the retailer’s fall/winter collection. Users can view, interact and snap pictures of virtual apparel and accessories in front of any of its 10 New York City locations. Consumers will instantly receive a 10 percent discount on any purchase just by selecting the items they want to view and “capturing” them by taking a photo. H&M junkies can also use the app to try on outfits (virtually, of course), take photos and post these images to Facebook to create personalized look books. 
  • Fashion jewelry company Monet, a division of Liz Claiborne Inc., launched an e-commerce site last week. Monet.com will include more than 500 styles, with prices ranging from $24 to $148, as well as editorial content with “how to wear it” advice, videos and styling tips.  Notice the integration of editorial and e-commerce remains a key factor in fashion retailing online.

OUR TAKE ON OVERNIGHT NEWS

High street giant vows to increase prices by 8% to protect profits in face of rocketing cotton costs. Next stands to lose £60m profit in the first half of 2011 if it does not pass the spiralling cost of cotton on to customers, according to chief executive Lord Simon Wolfson. Wolfson this week lambasted a report by analysts Investec Securities which claimed the price of the average autumn shopping basket at Next had already surpassed its equivalent at Marks & Spencer for the first time in a decade - but conceded the retailer would be forced to pass on price hikes of about 8% next year. <drapersonline.com>

Hedgeye Retail’s Take:  One of the most vocal examples of cotton inflation and its impact on retail.   While most have been dismissive about cotton’s impact and strategies to deal with it, Next is about as clear as can be.  Cotton up, AUR’s up.

 

UA Sponsoring Manhattan’s Largest Sports Complex- Under Armour Inc. has inked a deal with Chelsea Piers, a sports and entertainment complex on the West Side of Manhattan, to be its official athletic apparel and footwear sponsor. Under the terms of the deal, Under Armour will outfit the trainers, coaches and instructors at the Field House, which offers indoor soccer, basketball, batting, rock climbing and gymnastics, as well as at the center’s health club. The brand will also be the exclusive athletic performance apparel to be sold at the two venues. Other Chelsea Piers sponsors include Izod, Capital One Bank, Coca-Cola, Johnnie Walker and Jet Blue Airways.  <wwd>

Hedgeye Retail’s Take:  While not on the same caliber of a Tom Brady signing, the grassroots local sponsorship is more akin to the company’s core marketing efforts.

Jimmy Choo One Step Closer to Lifestyle Brand- Tamara Mellon has unveiled the latest iteration of the Jimmy Choo brand — fragrance. Beginning in January, the brand’s eponymous first scent, created with Inter Parfums SA, will be introduced.  “We’ve transitioned into a lifestyle luxury brand, and it seemed like the next natural step for us,” said Mellon, founder and chief creative officer of Jimmy Choo, at a London event to launch the fragrance last week. A similar event was held in New York on Tuesday. “Fragrance is such an important accessory for women — I think it will have a very broad reach. Our customer is every woman.” <wwd>

Hedgeye Retail’s Take:  With shoes, handbags, and now fragrance we wonder how long before apparel enters the Jimmy Choo line up?

LVMH/Hermes Soap Opera Evolves-  France’s market regulator AMF will investigate LVMH Moët Hennessy Louis Vuitton’s acquisition of a 17.1 percent stake in Hermès International to determine if rules were respected, an AMF spokeswoman said on Friday. LVMH filed a statement on Oct. 23 revealing that it had purchased more than 15 million shares, representing 14.2 percent of Hermès, and had options for another 2.9 percent.  In France, companies are required to declare stock purchases when they surpass 5 percent of the share capital.   Luxury mogul Bernard Arnault’s group said it achieved the Hermès stake through several cash-settled equity swaps, in which an investor essentially bets on the future value of a stock without actually owning the underlying shares. <wwd>

Hedgeye Retail’s Take:  As expected, this luxury house showdown continues to heat up.  Most likely a page one store for many weeks to come, especially in Paris.

 

Oil on the Rise, Biking Looking Attractive?- The League of American Bicyclists and the Alliance for Biking & Walking announced a three-year campaign to double federal funding for bicycling and walking by 2013, even while bemoaning the defeat of one of their great champions in Congress in Tuesday's mid-term election.  The League and Alliance have been awarded up to $1.2 million from SRAM over the next three years to unite active transportation advocates across the nation and give them tools and resources to secure increased funding from existing federal transportation programs for critical bicycle and pedestrian projects. <www.sportsonesource.com>

Hedgeye Retail’s Take:  This may be the first time we’ve included a blurb on cycling but probably not the last as many urban centers have and will become much more biker friendly over the next several years.  Did anyone initially believe NYC would permanently close traffic in Times Square to accommodate bikers?

Nielsen discloses flaws in how it measures online traffic- Audience measurement firm The Nielsen Co. today told its clients that its data for traffic to online sites is flawed. The company put most of the blame on its failure to properly account for longURLs, such as those used by shoppers when following links from a search engine to an online retail site. Nielsen said it expects to have fixed the problem in time for December reports, which will be released in January. <internetretailer.com>

Hedgeye Retail’s Take:  Interesting that even the data-driven internet can’t be tracked with a high level of accuracy.  Not good for what was once thought as THE king of measurement statistics.

Hot Topic Debuts Harry Potter Boutiques- Warner Bros. Consumer Products and retail partner Hot Topic are launching dedicated in-store boutiques with exclusive merchandise inspired by Harry Potter and the Deathly Hallows. The boutiques are opening in Hot Topic's 680 locations in the U.S. and Canada. Exclusive product includes juniors', young men's and women's apparel (i.e. Gryffindor and Slytherin polo and tie combination tees), bags, throws, jewelry, key chains, stationery and posters. Select items will also be sold only online at Hottopic.com. In addition, an in-store mobile application will offer challenges and rewards to shoppers who participate through their iPhone and Android phone. Harry Potter and the Deathly Hallows: Part 1 hits theaters on Nov. 19. <licensemag.com>

Hedgeye Retail’s Take:  Hard to believe that a retailer primarily known for goth and punk is going all-in on Harry Potter.  Clearly they expect to attract a different audience than the 7-10 year old Quidditch fan.

 

Li & Fung to source for Li Ning brand- Hong Kong-based multinational Li & Fung, the global consumer goods exporter, will become a sourcing agent for Li Ning’s brands in both international and domestic market. The agreement will cover sourcing for a certain range of brands in both international and domestic China market, including soft goods for Li Ning’s popular running, basketball and lifestyle lines.  <fashionnetasia>

Hedgeye Retail’s Take:  Even the Chinese need Li & Fung to navigate their own factory base.  Clearly a vote of confidence for the world’s largest sourcing conglomerate.