R3: SKS, UA, TSA, Men’s Apparel

R3: REQUIRED RETAIL READING

January 6, 2010

 

 

 

RESEARCH ANECDOTES

  • In case you missed it, Under Armour’s annual High School All-America Football Game took place last night with the most brand exposure I think I’ve ever witnessed in one event. While only in its fourth year, UA’s game is taking notable share from the traditional U.S. Army All-American Bowl with 6 of the nation’s top 10 recruits participating this year.
  • According to a study published by popular UK rag the Daily Mail, women spend $110 on average each year buying clothes on sale that don’t fit in hopes of fitting into them someday. With New Year’s resolutions still top-of-mind, sometimes it helps to know you’re not alone.
  • It was only a matter of time, but Groupon just sold its first marriage proposal ‘deal’ last night. Call it a sign of the times, a hoax, or whatever you like, but one thing is for sure - this company knows how to stay in the headlines.

OUR TAKE ON OVERNIGHT NEWS

 

Saks Closing its Denver Store- Saks Inc. will close its Saks Fifth Avenue store in the Cherry Creek Mall in Denver on March 19, marking the luxury chain’s seventh closing since July. Additional closings are expected as Saks continues to scrutinize its stores and shift resources to the most productive units and those showing potential. Saks Inc. operates 47 Saks Fifth Avenue stores, 57 Off 5th outlets and saks.com. “Store closing decisions are never easy,” Stephen I. Sadove, chairman and chief executive officer of Saks, said Wednesday. Sources said Saks wants to close its Dallas Galleria unit. Asked if that was true, Julia Bentley, senior vice president of investor relations and communications, responded: “It is our policy not to comment on rumors or speculation.” The 87,000-square-foot Denver unit opened in 1990. The store is owned by Saks and is being sold to the landlord. From the sale and closing, Saks expects to realize a net after-tax gain of about $6 million in the fourth quarter ending Jan. 29.<WWD>

Hedgeye Retail’s Take: Given the frequency with which retailers hold onto underperforming real estate, hats off to Saks for making the tough decisions – however with razor thin margins and negative margins two years running it’s not exactly like they have too many options. To put the 7 closures into perspective, the company had a store base of only 108 at year end (including outlets).

 

TSA to Open Third S.A. Elite Store - Sports Authority plans to open its third S.A. Elite, its new smaller concept, this spring in Town Center Corte Madera in California. Its first two S.A. Elite locations were opened in the Denver area in August and November. According to the North Bay Business Journal, Sports Authority signed a lease for a 15,640-square-foot space at the south side of the mall and plans to open the store in May. <SportsOneSource>

Hedgeye Retail’s Take: After launching the concept back in May, we’re a bit surprised quite frankly that it’s taken TSA this long to open a 3rd store – particularly with DKS and HIBB stepping on the store growth accelerator and upping the ante for the industry in the process. In fact, at ~20% of the size of a typical footprint these concepts should be much easier for TSA to roll out in short order due to the dearth of new larger format construction.

 

Men's Wear exhibits Strong Performance in the Holiday Season - Behavioral experts say shopping doesn’t come naturally to most men, yet men’s wear was among the star performers this past holiday and retailers are expecting (or at least hoping) the growth will continue in 2011. They’re helped by the fact that clothes do wear out — and men feel that it’s time at last to replace their threadbare suits and holey socks and underwear. According to behavioral finance expert Meir Statman, author and business professor at Santa Clara University, the recession has stirred men’s competitive juices and they see dressing better as a competitive edge. “It’s not just a matter of impressing women anymore,” he said. “It’s also about impressing potential employers. There is a sense that the competition out there is more fierce.”<WWD>

Hedgeye Retail’s Take: The simple fact that since 2000 men’s apparel expenditures have outperformed women’s every other year offers some credibility to the wear-and-tear theory. As it turns out the last ‘men’s cycle’ occurred during late ’08/ early ’09 so it makes sense to see the resurgence of men apparel outperformance in recent months.

  

Anchor Blue is Shutting Down Operations - The retail landscape has its first casualty of 2011. Anchor Blue Inc., the Corona, Calif.-based teen specialty store operator owned by private equity firm Sun Capital Partners, has closed its corporate offices and is in the process of winding down operations at its 120 stores. Officials at Sun Capital declined to comment Wednesday and calls to Anchor Blue officials weren’t returned, but suppliers and store associates confirmed that operations were being shut down and details on the chain’s liquidation were expected on Friday. The troubled teen retailer survived a three-month stay in bankruptcy, beginning in June 2009, and a series of downsizing moves, but found itself at a loss to compete in an increasingly promotional youth retail market. In an effort to work down inventories and generate cash, it had been running “buy two, get two free” promotions for much of the holiday season. Anchor Blue also had been among a series of retailers operating stores with large amounts of empty space within its walls and concentrating its inventory in the remaining square footage.<WWD>

Hedgeye Retail’s Take: The first retail closing of the new year reflects persistent challenges in teen apparel. While retailer balance sheets on the whole are improved relative to 2008, Anchor Blue isn’t likely to be along on this list for long.

 

Online Holiday Sales Rise 12.1% - ComScore Inc. reported Wednesday that online sales for the holiday season, including all of November and December, totaled $32.59 billion, 12.1 percent higher than the $29.08 billion reported for 2009. The new data update a previous report in which online sales between Nov. 1 and Dec. 26 were reported to have risen 12.6 percent to $30.81 billion. Between Dec. 27 and Dec. 31, a period which included a vicious snowstorm along the Eastern seaboard, sales rose 10.1 percent to $1.78 billion from $1.62 billion in the comparable prior-year period.  Gian Fulgoni, chairman of ComScore, noted the final results for holiday outpaced the firm’s earlier projections of 11 percent growth. <WWD>

Hedgeye Retail’s Take:  With both athletic apparel and footwear sales up 10% last week according to our weekly data sources, concern over last week’s storm appears to be overblown indeed. Online continues to be one of the fastest growing channels for retailers.

 

Carhartt, Adam Kimmel to Launch Men's Line- Workwear maker Carhartt has partnered with designer Adam Kimmel to launch a co-branded line that will make its debut at retail in May. The line will be sold at Barneys New York and a small number of specialty retailers in the U.S., in addition to stores internationally.  The launch collection encompasses 29 pieces, including outerwear, jeans, plaid flannel shirts and pants in moleskin or cotton twill. Accessories in the line include a duffel and tote bag as well as cotton cashmere beanies. Retail prices will range from $70 to $600.“I’ve worn Carhartt since I was 10 years old and for me it’s a chance to expand my business in a romantic way,” said Kimmel, who founded his signature men’s wear label in 2004 in New York and sells to about 80 stores worldwide including Barneys, Maxfield, The Webster, Colette in Paris and Dover Street Market in London. “Carhartt is an American heritage brand and it’s really maintained the integrity and quality of the product and kept a focus on their core customer over the years. This is the perfect marriage.” <WWD>

Hedgeye Retail’s Take: Further evidence that a resurgence in authentic ‘Americana’ wasn’t just a 2010 phenomena.

 

The Future of Social Shopping  -Retailers are exploring a new frontier in social commerce as they go beyond simply offering Facebook pages and Twitter profiles for their customers to follow.Fueling this trend is web retailers’ quick adoption of social sign-on, which allows consumers to log in to their Facebook account instead of registering on an ecommerce site. Social sign-on gives retailers access to rich profile information for targeting customers. “Bringing Facebook profile data into retail sites makes sense because it influences consumers when they are close to conversion,” said Jeffrey Grau, eMarketer principal analyst and author of the new report “Social Commerce: Personalized and Collaborative Shopping Experiences.” “In contrast, many consumers on Facebook are mainly socializing with friends and further removed from making purchase decisions.” Over half of online retailers who responded to an August 2010 survey by Gigya, a provider of social sign-on applications, had either implemented the feature or planned to add it in the near future. <Emarketer>

Hedgeye Retail’s Take: Call me out of touch, but I had no idea what social sign-on was – essentially using sign on information for social service sites (i.e. Facebook, Twitter, etc.) to gain access to corporate retail websites. A great way for retailers to gain access to more detailed analytical data on consumers, but the inherent Big Brother personal profile sharing conundrum remains a key hurdle in technology adoption.

 

R3: SKS, UA, TSA, Men’s Apparel - R3 1 6 11

 

 


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