December 23, 2010





  • Like many retailers, online sales growth is a key initiative to drive top-line growth over the near-to-intermediate term at Finish Line. What sets this goal apart from peers is that management is looking to grow online sales as a percent of the total to the mid-teens – well beyond the 10% hurdle most retailers are citing.   
  • Among the key drivers of steadily improving apparel comps throughout the quarter, Finish Line highlighted “powerful” sales of The North Face gear for both men’s and women’s – consistent with what we’ve seen in weekly athletic sales data.
  • While gross margins contracted modestly during Bed Bath’s 3Q, the company noted that coupon redemptions were actually down year-over-year providing a positive offset – further evidence of improving consumer confidence.



Men's Outperforming This Holiday - Driven by pent-up demand, or just boredom with dated wardrobes, men’s wear has emerged as the star performer for many retailers this holiday season. This reverses a downtrend that has plagued men’s sales for nearly the entire year and offers the industry hope the momentum will carry through to 2011. Surprisingly, tailored clothing has been the sleeper hit of the season with the more-fitted silhouette leading to increased business for many stores. The luxury end of the market is also experiencing an uptick, stores report. In a recent survey, Mastercard’s SpendingPulse found that, through mid-month, men’s wear sales were leading the apparel category. While the apparel business in general has been strong this season through Dec. 11, men’s was up 8.4 percent, nearly double that of women’s, which is running ahead 4.4 percent. <WWD>

Hedgeye Retail’s Take: Consistent with what we heard on December retail sales calls, the outperformance in men’s apparel sales appears to be shaping into a 2-year trend that has occured since the turn of the century.


L.L. Bean's Robust Holiday Sales - L.L. Bean told USA Today that it has broken a number of records already this year, including the biggest sales day in its history on Dec. 19 and the biggest day for website traffic on Dec. 13.  The newspaper has been following Bean as part of its "Cautious Optimism" series this holiday season. Steve Fuller, chief marketing officer, told USA Today that consumers are less price driven this year and looking more for qualities such as "warm" or "dry." "Customers are still making highly considered purchases, but product quality and performance are taking much larger roles in the decision making," he said. CEO Chris McCormick, added that L.L. Bean has already sold out of almost anything made of flannel, as well as some slippers and boots. He believes "next year will be an even better Christmas than this year," says. <SportsOneSource>

Hedgeye Retail’s Take: Further indication that the trend in authentic “Americana” remains robust and has been for the better part of 2010. Sounds like the 2011 Christmas is going to look an awful lot like 1986.


California Rain Impacts Retail - Torrential rains in Southern California put a crimp in retailing, as power failures shut some stores and kept holiday shoppers under wraps. The deluge was expected to ease by today. Select stores at the Third Street Promenade and the revamped Santa Monica Place shopping center, including Bloomingdale’s, lost power Tuesday. In general, outdoor shopping centers and districts suffered as shoppers fled the downpours, although indoor shopping malls and online retail were said to have gained customers. Gov. Arnold Schwarzenegger has declared a state of emergency in six counties because of the downpours. The hardest-hit areas received rainfall of more than 20 inches. The rain caused mud slides and darkened neighborhoods. Flooding forced evacuations, and road closures were prevalent. <WWD>

Hedgeye Retail’s Take: Given the fragility of sales in the southwest of late, torrential rains are the last thing retailers need. On the other hand, favorable weather has lead to outperformance in the Northeast over recent weeks – a gap that apparently will be widening near-term.


CFO Hammer Resigns From Crocs - Crocs Inc. Wednesday said the company's chief financial officer, Russell C. Hammer, has resigned effective Dec. 31 in order to join an unnamed Chicago-based public company as its financial chief. The shoe maker said a search for Hammer's successor is underway. A company spokeswoman wasn't immediately available to comment further on the departure. Hammer served as CFO of Crocs since the beginning of 2008. He was responsible for the company's national and global financial operations. Prior to joining Crocs, he worked for Motorola Inc. for more than 30 years, serving in several senior-level executive positions, including as CFO and vice president of that company's $5 billion connected home solutions business. <DJNewswire>

Hedgeye Retail’s Take: After navigating the company and its financing from the brink of collapse, we’re not entirely surprised in the move given Russ never relocated his family, but commuted to Colorado for the past 2+ years. Optically, however, the company’s inability to retain top-talent is a bit disconcerting.


Christmas Shopping Survey - The International Council of Shopping Centers and Goldman Sachs announced that their joint holiday consumer tracking survey indicates roughly 15 percent of shoppers ages 16 and older - a total of 23 million consumers - plan to shop on the day before Christmas. "With many last-minute shoppers still needing to finish their gift lists, brick-and-mortar retailers will be buzzing with activity on Christmas Eve," Michael Kercheval, president of the shopping centers group, said in a news release. According to the survey, more men (17%) plan to shop that day than women (13%). By age, people 18 to 34 years old are more likely to be shopping (21%) than those 55 and over (8%). By region, 19% of those living in the Midwest said they were planning on doing last-minute holiday shopping on Christmas Eve, while those in the West (16%), Northeast (13%) and South (13%) were relatively less likely to shop that day. <SportsOneSource>

Hedgeye Retail’s Take: Interestingly, but at the same time predicable, the regions that have struggled the most of late are also the ones that plan to shop at the last minute more – perhaps in hopes of capturing extra savings associated with last minute deals.



Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more

McCullough: ‘My 1-Minute Summary of My Institutional Meetings in NYC Yesterday’

What are even some of the smartest investors in the world missing right now?

read more

Cartoon of the Day: Political Portfolio Positioning

Leave your politics out of your portfolio.

read more

Jim Rickards Answers the Hedgeye 21

Bestselling author Jim Rickards says if he could be any animal he’d be a T-Rex. He also loves bonds and hates equities. Check out all of his answers to the Hedgeye 21.

read more

Amazon's New 'Big Idea': Ignore It At Your Own Peril

"We all see another ‘big idea’ out of Amazon (or the press making one up) just about every day," writes Retail Sector Head Brian McGough. "But whatever you do, DON’T ignore this one!"

read more