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December 15, 2010





  • Best Buy indicated that the adoption of 3DTV and IPTV has been slower than anticipated.  Instead the consumer appears to be more focused on value and opening price point TV’s.  Did anyone really think holiday 2010 was going to be characterized by millions of families sitting around the TV wearing glasses to watch a limited selection of movies? 
  • A new record has been reached for weekly email marketing by U.S retailers.  According to Responsys, an average of 4.6 promotional emails were sent by retailers over the week ending December 10th.  This represents a 25% increase year over year with one week to go.
  • According to a poll conducted by ShopSmart (published by Consumer Reports), one in four women has had her mood impacted by wearing an ugly or ill-fitting under garment.  The good news for retailers is that 50% of women complain about the way their underwear fits, leaving great opportunity for improvement.  The bad news is one in ten women admits she ventures out of here home with no underwear at all. 


NRF Revises Holiday Forecast Up to 3.3% - After a solid start to the holiday season, the National Retail Federation announced Tuesday that it is revising its forecast to 3.3%, up from 2.3%. The upward revision is due to improvement in a variety of economic indicators including stock market gains, recent income growth, savings built up during the recession - all giving consumers the capacity to spend.  According to the National Retail Federation, November retail industry sales (which exclude automobiles, gas stations, and restaurants) increased 0.8% seasonally adjusted over October and 6.8% unadjusted over last year. "The start to the holiday season has surpassed all expectations," said NRF President and CEO Matthew Shay. "While employment data is still a concern, we are starting to see improvement in other economic indicators that support an increase to our forecast. In order to sustain this momentum for retailers and the U.S. economy, there must be a renewed focus on jobs as we enter the new year."November retail sales released today by the U.S. Commerce Department show total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) increased 0.8% seasonally adjusted over October and 9.2% unadjusted year-over-year.  "Consumers have not been suffering from a lack of spending power, they've just been missing the confidence to use it," said NRF Chief Economist Jack Kleinhenz. "With noticeable improvement in key economic indicators combined with great deals on merchandise, consumers have certainly shown they shouldn't be counted out this holiday season."<SportsOneSource>

Hedgeye Retail’s Take: While we agree that the holiday is off to a good start, it’s interesting to see the NRF’s forecast inch higher with 10 of the biggest shopping days still lying ahead.  


Corneliani Opening Four Stores in India - Corneliani is increasing its presence in India. The luxury Italian brand will open four stores in that country by the end of the year. Last week, a 328-square-foot shop opened within the historic Taj Mahal Palace and Tower in Mumbai. Three additional units are planned for the Taj Krishna Hotel in Hyderabad, followed by The Collection at UB City mall in Bangalore and another unit in the Grand Hyatt Plaza in Mumbai. All of the units will have a design reminiscent of the company’s flagship store on Via Montenapoleone in Milan, which was created by Sergio Corneliani, creative director, in collaboration with the Ponti Architecture Studio. Gray marble floors will complement sand-colored carpet, dark brown Anigre displays with leather and beige velvet, stainless steel and ebony. This will bring the number of Corneliani stores in India to five. <WWD>

Hedgeye Retail’s Take: Following in the footsteps of Burberry earlier in the week, India’s luxury lure appears to be gaining steam.  However, for this market to really become meaningful, the government’s stance on foreign direct investment will have to finally relax.

Brooke Burke Back With Skechers -  Skechers USA has again turned to TV personality Brooke Burke as the face of Shape-ups. Burke has inked an endorsement deal that goes through 2011. She will appear in a campaign spanning print, TV, the Internet and outdoor placements, according to the Manhattan Beach, Calif.-based company. In 2009, Burke appeared in the “Nothing Compares to Family” charity campaign. She was also a Skechers model in 1995. “We love Brooke, and we’re excited for this opportunity to work with her on our new global Shape-ups campaign,” said Michael Greenberg, president of Skechers. “Not only is Brooke a great talent and personality who always looks amazing, she’s also an inspiration to women [for] her balance of career, family and wellness. This makes her a perfect fit to represent our family-friendly brand.”<WWD>

Hedgeye Retail’s Take: Shortly after signing the Kardashian’s, the company now introduces another high profile campaign with Burke. Additionally, with the company confirming at its recent analyst day that it has once again purchased Super Bowl advertising, there is little evidence of letting off the accelerator as it relates to marketing spend adding further pressure to margins near-term.

New Balance Partners with Westin Hotels - New Balance and Westin Hotels & Resorts have forged an exclusive, worldwide partnership to provide Westin guests with New Balance footwear, apparel and fitness program content. The complimentary program recently launched at 10 Westin properties across the globe and will begin rolling out brand-wide in 2011. Guests of the 10 Westin pilot properties have access to New Balance shoes, apparel and accessories through a product loan program.  During their stay, guests can borrow running shoes with brand new, disposable insoles for each use, as well as a variety of men's and women's apparel including shorts, shirts and socks for men and shorts, capri pants, shirts, sports bras and socks for women. New Balance Fitness Ambassador and Exercise TV celebrity trainer Holly Perkins will develop exclusive in-room fitness and equipment-free content that includes stretching and strengthening workouts, cardio and yoga.  The program includes "Wellness in Travel" tips from Holly on nutrition and creative ways to combat jet lag and promote healthy living. <SportsOneSource>

Hedgeye Retail’s Take: Brilliant (and practical) marketing partnership on the part of New Balance.  Now what to do with all that extra space in your carry-on bag?

Federal Court Hits California Firm With Big Labor Settlement - A federal judge awarded 115 workers from a Southern California apparel maker more than $887,000 in unpaid wages and damages, the U.S. Labor Department said Tuesday. Laundry Room Clothing Inc., a Westminster, Calif.-based firm that the Labor Department said has manufactured clothing for Forever 21 and Ross Stores Inc., missed several payrolls between Feb. 7, 2009, and March 31, 2010. The Labor Department's Wage and Hour Division investigated the company's practices and monitored company payrolls before filing a lawsuit."Low-wage workers, such as those employed at garment shops throughout Southern California, are particularly vulnerable," said Labor Secretary Hilda Solis. "The Department of Labor will not hesitate to hold employers accountable for paying their employees the wages they have earned."<WWD>

Hedgeye Retail’s Take: Yes, there are still garments made in the LA basin.  Just not many.

Vietnam Garment Sector in Need of Local Fibre Suppliers - Vietnam Textile and Garment Group is urging companies within the sector to invest in support industries to boost production and competitiveness. Le Tien Truong, the group’s deputy general director, said although the sector’s export value would reach US$11-$11.2 billion this year, 23-24% higher than last year, the sector relied heavily on imports of raw materials. Truong said the sector should focus on making garments from raw materials it had produced, he said. The sector is now looking for locations suitable for producing fibre, weaving and dying cloth and producing finished garments.  For the fifth month running, the sector in November earned $1 billion in exports, bringing the total for this year to $10.36 billion.<FashionNetAsia>

Hedgeye Retail’s Take:  A development worth noting and tracking as it relates to added competitive pressure to facilities in Central America – particularly with the world’s largest cotton producer nearby and hourly wage rates in the garment industry nearly half that of Honduras.


What Consumers Want from Retail Apps - As more consumers make smartphones their everyday companions, mobile commerce is taking hold. But the mainstream of mobile commerce is not yet based around making purchases via mobile, but in using phones as a shopping aid—for store location, product research and finding deals. Consumers are eager to check their phones for info, but retailers have been behind the game. According to October 2010 data from mobile and social marketing consultancy Brand Anywhere and Luth Research, for example, fewer than 5% of retailers have a mobile site. And research from Adobe found consumers were unimpressed with retailers’ mobile apps and preferred to simply browse the mobile web. <emarketer>

Hedgeye Retail’s Take: Mobile apps are more cost effective and easier to get up and running offering retailers late to the e-commerce game a chance to get ahead of the competition not to mention boost traffic.


R3: BBY, SKX, Holiday Sales, New Balance - R3 12 15 10