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R3: REQUIRED RETAIL READING

January 13, 2010

 

 

 

RESEARCH ANECDOTES

  • In one of the more aggressive clearance efforts we’ve seen in a while, Old Navy will be throwing a “Practically Free For All” sale this weekend.  The aggressive promotion promises discounts of up to 80% on post-holiday clearance activities.  At 80% off, we agree this is “practically free”.
  • Is Dawson’s Creek readying for a comeback? In just the past couple of days, Katie Holmes and James Van Der Beek both announced endorsement deals, with Ann Taylor and Dockers respectively.  Expect the Van Der Beek campaign to take the prize however for his starring role in a viral campaign promoting a fictional brand called “DILF Khakis”.  Check it out on Funny or Die.
  • In light of the point above, a recent study shows that celebrity endorsements are largely ineffective.  The 2010 Celebrity Effectiveness study showed that fewer than 12% of ads using celebrities exceeded a 10% lift, and one-fifth of celebrity ads had a negative impact on advertising effectiveness.  In fact the average lift of non-celebrity ads was 8%, while celebrity ads returned negative effectiveness of -1.4%. 

 

OUR TAKE ON OVERNIGHT NEWS

 

Quiksilver Enters India - Quiksilver Holdings has signed a 25-year agreement with Reliance Brands Ltd. to bring its products to India, Sri Lanka, Nepal and Bangladesh. Quiksilver, which manufactures surfwear and other board-sports-related equipment, is available in 90 countries. Roxy, another of its brands, is also being brought to India. “The company plans to open six exclusive Quiksilver stores across Gurgaon, Pune, Hyderabad and Chandigarh this year,” said Darshan Mehta, president and chief executive officer of Reliance Brands.<WWD>

Hedgeye Retail’s Take:  While India is clearly on the radar of western brands, this marks one of the more formal and very long-term partnerships that we’ve seen to date.  With the potential for foreign direct investment to also finally get passed, expect more Indian expansion announcements over the near to intermediate term.

 

Jermaine O'Neal Launches Men's Line - Boston Celtics center Jermaine O’Neal isn’t about to let Amar’e Stoudemire steal the spotlight in the apparel arena. With Stoudemire linking up with Rachel Roy to launch a line of, first, women’s wear and subsequently men’s wear at Macy’s later this year, O’Neal has already quietly produced his own men’s collection, Le Jaunty, that he is hoping to roll out in 2011. The line, which has been tested at a few specialty stores, is now targeting department stores and a wider specialty store distribution.<WWD>

Hedgeye Retail’s Take:  Note to Jermaine. Your apparel line won’t last more than one, maybe two seasons.  Does anyone remember KG’s line? Or Starbury’s?

Athleta Opens First Full-Scale Store - The women's activewear brand owned by Gap Inc., opened its first full-scale retail location on San Francisco's renowned Fillmore Street. Gap said in a statement that the store offers Athleta's collection of women's active lifestyle apparel for yoga, running, swim, gym, hiking and skiing - designed by and for female athletes -- as well as an array of other products for both athletic and everyday pursuits. "Our customers have been asking us for a place to touch and feel the product and we are thrilled to be able to deliver on their wishes," said Kelly Cooper, Vice President of Merchandising, Design and Product for Athleta. "With Athleta's heritage rooted in Sonoma County, it was a natural fit for our first store to be located in the Bay Area, and in one of San Francisco's great neighborhoods. Our customers will have access to a wide selection of our product in an innovative and vibrant store environment providing a place to build community, and connect with the energy beauty and strength that is Athleta." The 5,000 square foot store, located at 2226 Fillmore Street, has an "open, airy feel and showcases the brand's inspirational imagery and headlines." <SportsOneSource>

Hedgeye Retail’s Take:  Finally an offensive growth move for the activewear brand that has been largely a non-event for Gap Inc.  Perhaps LULU’s monster 2010 gives management reason to believe there may be room for more than one player in the female oriented activewear space.  Key to success will be customer service and experience, both of which drive LULU’s industry leading sales per square foot.

Fleet Feet Surpases $100 Million in Sales - Fleet Feet, Inc. said revenues for the Fleet Feet Sports franchise in 2010 surpassed $100 million ($107M) and marked the seventh straight year of double digit comp store gains (10%). Fleet Feet, Incorporated President Jeff Phillips commented, "Our ongoing success is a direct result of our franchisees' ability to create an environment of inclusiveness where our customers can find the resources and inspiration to live a more fit life." Currently there are 90 Fleet Feet Sports stores located nationwide.   <SportsOnesSource>

Hedgeye Retail’s Take: Further confirmation that specialty running remains a key standout amongst the athletic footwear and apparel space and yet another reason why we may ultimately see RUN by Foot Locker expand beyond its current test phase.

N.Y. Shoppers Snowed in  - In the wake of Manhattan’s first major snowfall of the new year, consumers hit the streets Wednesday morning and stores were ready and waiting, but neither seemed to do any serious damage retailwise. Traffic at Tiffany & Co., Saks Fifth Avenue, A|X Armani Exchange, Pucci, Bottega Veneta, Ferragamo, Escada, De Beers, St. John and other designer boutiques along Fifth Avenue was sleepy. Without anyone lined up outside Hollister’s Fifth Avenue store, the velvet ropes near the entrance looked more like an art installation than a holding pen. Intrepid spenders who ventured out found plenty of sale items. <WWD>

Hedgeye Retail’s Take: Given the frequency of major storms recently, we may have consumers looking at the weather channel instead of websites and email promotions for the best post holiday deals.

Online Sales Delivered for Big Chain Retailers this Christmas - Thanks to big discounts and an early start, several big chain retailers reaped the benefits of a strong holiday shopping season online. In numbers reflected in the December sales reports for five big chains—Best Buy Co. Inc., No. 10 in the Internet Retailer Top 500 Guide, GameStop Corp. (No. 115), Kohl’s Corp. (No. 43), Macy’s Inc. (No. 20) and Urban Outfitters Inc. (No. 53)—customers also increased their online shopping more than their purchases in stores. <InternetRetailer>

Hedgeye Retail’s Take: E-commerce growth has outperformed brick and mortar stores for most retailers in 2010 so December performance is not exactly an exception. That said, snow bound consumers can only help drive the spread.

 

Sports Shoe Brands in China Plan Retail Expansion - A number of Chinese sports shoe brands, including Anta, Xtep, 361 Degree and Peak, plan to expand the number of their retail stores up to 10,000 in the next five years. According to the growth rate of these companies’ half year financial reports, within three years most of them will become the  10,000-retail store establishments. Sources reported that Xtep president Ding Shuibo plans to open 800 to 1000 stores this year including those to be opened in Taiwan. <FashionNetAsia>

Hedgeye Retail’s Take:  With Nike and Under Armour both intensely focused on ramping retail locations in China, the competition for retail space and brand awareness will be fierce indeed.