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February 2, 2010



  • With increased focus on Walmart’s ability to take prices higher (or lower) and to clear excess inventory (as per a recent NY Post expose), the company continues to seek out real estate in New York City.  The latest word suggests WMT and Shoprite both have their eye on the same Brooklyn retail center.  Union opposition is already heating up as organized labor is clearly opposed to non-union Walmart.
  • Offense or defense?  The moves at Gap in which the brand now has a new CEO (was former head of outlets), a new advertising agency in NY, a newly created position called Global Chief Marketing Officer, and a new NY based global creative center all come at time when sales momentum appears to have taken a step back.  Change can be good, although we note that traffic driving initiatives have been the key challenge for the brand over the past five years.
  • More than six in 10 American adults (62.9%) were either overweight (36.3%) or obese (26.6%) in 2010, which is essentially unchanged from 2009 as measured by the latest Gallup-Healthways Well-Being Index.  Sadly, a Gallup analysis found that if the 10 most obese US cities reduced their rates to the national average, they could collectively save about $500 million in healthcare costs a year!


Gilt Groupe Teams up With Nicole Richie - Gilt Groupe has teamed with Nicole Richie for a full-price sale event of the celebrity-turned-designer’s House of Harlow 1960 and Winter Kate spring collections. The sale will start Thursday at noon Eastern time and end at midnight Sunday. Gilt in August ventured into uncharted flash sale territory when it offered the Tucker by Gaby Basora and Mulberry collections for Target before the lines hit the mass merchant’s stores. <WWD>

Hedgeye Retail’s Take:  With the supply chain extremely tight, the market for off price luxury apparel and accessories is not nearly as plentiful as it was over year ago.  Expect to see Gilt continue to incubate its full-priced offerings in collaboration with smaller, upscale brands.


Teen Retailers to Opt Out of Monthly Same-Store Sales Reports - American retailing’s monthly same-store sales reporting ritual is about to get hit by a case of empty-nest syndrome. Following reports on January sales this Thursday, the list of retailers participating in the comparable-store routine will get three companies shorter when the three A’s of teen retailing — Abercrombie & Fitch Co., American Eagle Outfitters Inc. and Aéropostale Inc. — end their participation.  Although the move is part of a larger trend among companies seeking refuge from the spotlight of monthly disclosure, the recent developments could be more indicative of precipitous pressure in the teen space, according to analysts. <WWD>

Hedgeye Retail’s Take:  Within the next few years, the 20 or so companies reporting monthly sales will likely opt out as well.  Long a legacy of the industry, but now more of a distraction and fuel for trading volatility, there is very little incentive for a retailer to report on such a frequent basis.

The Ralph Lauren Man - Ralph Lauren’s world just keeps expanding.  At his fall men’s wear preview on Tuesday, the designer showcased what he called a “multilevel sensibility of how men could dress” that created individual statements for each brand while maintaining his overall vision. New this season is a distinct denim collection under the Black Label Denim moniker, as well as an expanded accessories assortment that covers shoes, leather goods and watches. <WWD>

Hedgeye Retail’s Take:   With solid momentum in men’s apparel over the past few months (across the board), Ralph should continue to benefit as one of “the” key resources in the men’s arena.


Prices Paid by U.S. Manufacturers Increased in January - An index measuring prices paid by U.S. manufacturers rose to its highest level since July 2008, according to the latest Manufacturing ISM Report On Business, which is based on data compiled from purchasing and supply executives nationwide.  The Index shows that new orders, production, employment, inventories, prices, exports and imports all grew faster in January then in December. The ISM Prices Index registered 81.5% in January, 9 percentage points higher than the 72.5% reported in December and the highest reading since July 2008. This is the 19th consecutive month the Prices Index has registered above 50%. While 64% of respondents reported paying higher prices and 1% reported paying lower prices, 35% of supply executives reported paying the same prices as in December. <SportsOneSource>

Hedgeye Retail’s Take:  Very much as expected, with rising costs continuing to permeate the broader domestic manufacturing space.  


Direct Marketing Association to Investigate Online retailers - A program designed to reassure consumers about their online privacy is taking effect this week. The Direct Marketing Association, a trade group, says it is ready to investigate marketers that do not display the Advertising Option icon on online ads that they serve to consumers based on their prior online behavior. The icon links consumers to information about online behavioral advertising and allows them to opt out of receiving ads based on their online behavior. The Advertising Option program is a self-regulation effort launched by a consortium of advertising trade groups in October that includes the Interactive Advertising Bureau, the Association of National Advertisers and the American Advertising Federation. As of yesterday, the DMA says it is now enforcing the rules it set out in October. <InternetRetailer>

Hedgeye Retail’s Take:  Is this the end of “cookies” and the contextual banner ad?  Probably not, but this certainly seems like a step in the right direction for consumers looking to keep their online activities private.

Phoenix Footwear's Shareholders Authorize Reverse/Forward Stock Split - Phoenix Footwear Group, Inc., the owner of Trotters, SoftWalk, and H.S. Trask, announced that at a special meeting on Jan. 28 its shareholders approved a 1-for-200 reverse stock split of the company's common stock, to be immediately followed by a 200-for-1 forward stock split of the common stock.  As a result, registered shareholders owning fewer than 200 shares of common stock of record prior to the Reverse Stock Split will have such pre-split shares cancelled and converted into the right to receive cash consideration of 75 cents per pre-split share.  The Reverse/Forward Stock Split will be effective following the close of business on Jan. 31, 2011. <SportsOneSource>

Hedgeye Retail’s Take:   Still not sure this move helps liquidity enough to put Phoenix under a bigger market spotlight. 


LV to open stores in Zhengzhou, China - Aiming at the 100-million population, Louis Vuitton has opened news stores in Zhengzhou, Henan province, China. The huge population and the number of billionaires in the province that reaches the 12th nationwide are the key reasons why the French luxury brand expanded their retail network in the city, according to  the Rupert Hoogewerf Fortune Report in 2010. The survey also show edthat consumption of luxury products in second- and third-tiered cities exceeded those in first-tiered cities both in value and volume for the middle-class. Private enterprises owners, affluent second generation and white collar workers are the main consumers. <FashionNetAsia>

Hedgeye Retail’s Take:   While the biggest cities are clearly important from a strategic marketing standpoint, it’s interesting to note that the actual purchasing power resides more in the second and third tier population centers.