Nowhere was that more evident than with LVS which puts a lot of perspective into Sheldon's comments last night.



Total revenues grew 32% YoY in January, a little short of the 40% pace where the month was heading in the first part of January.  We estimate that direct play was 8% this January vs. 7% last year. Adjusting for direct play, hold for both periods was high, just north of 3%, so there was no impact on market growth.


Sheldon was very bullish about January on the LVS call but after looking at the detail, the enthusiasm may be fleeting.  It’s all hold percentage yet market share wasn’t even that great.  As we noted earlier this week, LVS’s market share was almost 18%, above Q4 but still well below the 2010 average of 19-20%.  LVS’s hold percentage was through the ceiling, especially at Four Seasons.  However, Rolling Chip (VIP volume) market share was very low- at 1.1% in line with the last two months.  Mass market share declined to 24.2%, the LVS' lowest share since we've been tracking the numbers (early 07').  Rolling Chip share was 11%, in-line with December but also the lowest since pre-Venetian.  The underlying January metrics just were not good for LVS despite Sheldon’s assertions.


Wynn’s lower share looks like it was a combination of weaker hold relative to the last 2 months and lost VIP volume share.  Mass market share actually increased sequentially to 11.9%, its highest since March 2009.  That should bode well for profitability.  MPEL’s Mass share was a strong 9.9%, below Nov/Dec but well above the average of rest of the year.  MGM continues to perform very well, posting its 3rd highest Rolling Chip share since August 2009 ever and its 2nd highest Mass share ever, in January.


Of course all eyes are now focused on Chinese New Year… 



Y-o-Y Table Revenue Observations:


LVS table revenues grew only 8% in January compared to market growth of 33%

  • Sands was up 11.6%, driven by a 25% increase in VIP which was offset by a 10% decrease in Mass
    • Although hold, adjusted for 15% direct play (in-line with 4Q10), was about 3.3%, last’s year’s comparison using a 10% direct play estimate was even higher at 3.4%
    • Junket RC increased
  • Venetian was the only property to see revenues decline 7.5%, with VIP down 20% somewhat offset by Mass up 14%
    • Junket VIP RC decreased 4.2% but hold was weak and up against a tough comp. Assuming 19% direct play, in-line with 4Q10, we estimate that hold was 2.63% compared to 3.50% hold in Jan 2010
  • Four Seasons was up 65% y-o-y driven by 79% VIP growth and 13% Mass growth
    • Junket VIP RC decreased 36%, but the massive hold which we estimate was north of 5% (assuming 4Q10 54% direct play levels) more than made up the difference, especially compared to the low 2.2% hold in Jan 2010 (assuming 43% direct play)

Wynn table revenues were up 43%

  • Mass was up 54% and VIP increased 40%
  • Junket RC increased 20% and an easy hold comp helped comparisons
  • Assuming 12% of total VIP play was direct, we estimate that hold was 3% compared to 2.7% last year (assuming 10% direct play)

Crown table revenues grew 21%, with Mass growing 38% and VIP growing 18%

  • Altira was up 36.6%, with Mass up 27% and VIP up 37%
    • VIP RC was up 13% and hold comparisons were favorable. We estimate that hold was 3.3% compared to 2.8% last year.
  • CoD table revenue was up 10%, entirely driven by Mass growth
    • Mass revenues grew 41% while VIP only grew 3%
    • VIP growth was negatively impacted by a difficult hold comparison. Junket VIP RC grew 44%, Jan 2010  hold was 3.8% vs. 2.8% this month, assuming 15% direct play

Despite the family drama, SJM revs grew 38%

  • Mass was up 11.6% and VIP was up 54%

Galaxy table revenue was up 50%, driven almost entirely by 57.6% VIP growth while Mass grew only 5.4%

  • Starworld continued to perform well with table revenue up 64%, driven by 71.5% growth in VIP revenues and 4% growth in Mass win

MGM table revenue was up the most in January, growing 58%

  • Mass revenue growth was very strong at 54%, while VIP grew 59%
  • Junket rolling chip was up 73% 


Market Share:

LVS share ticked up to 17.8% from 16.7% in December, but was still below its 2010 average of 19.5%

  • Sands' share was flat sequentially at 6%
  • Venetian’s share decreased to 8%. All-time low market shares for the property were set this month in Mass, VIP, and Junket RC volume
    • Mass share declined 160bps to 14.7% from 16.3% in December
    • VIP share declined 1.1% to 5.8%
    • Junket RC declined to 5.4%
  • FS share increased to 3.4% on the back of massive hold
    • Junket RC share of 1.1% remained at the bottom- in-line with the last 2 months
    • VIP share increased to 3.8% from a low of 1.0% in December
    • Mass share was flat sequentially at 2%          

WYNN's share at dropped 3% to 13.9% from 16.9% in December

  • Mass market share ticked up 40bps to 11.9%- its best share month since April 09
  • VIP market share decreased to 14.6% or 3.9% sequentially, compared to its 2010 average of 16%

Crown's market share increased to 14.5% from 14.2% in December

  • Altira’s share increased to 6.7%- 1.8% sequentially - the properties’ best share month since September 2009. The share gain was entirely from gains on the VIP side.
  • CoD’s share decreased 1.5% sequentially to 7.8%
    • Mass market share declined to 8.1% from a high of 8.8% in December
    • VIP market share declined 1.8% to 7.8% while Junket RC share only decreased 20bps sequentially to 7.8%

SJM's share increased 1.5% to 32.2% from December levels, with share gains coming mostly from Mass


Galaxy's share also increased 1.5% sequentially to 11.8%

  • Starworld's market share grew to 10.1% from 9.1% in the previous month

 MGM's share decreased to 10.3%, from 11.6% in December

  • Mass share increased 170bps to 9.1%- which was the property’s second highest share
  • VIP share declined 2.2% sequentially to 10.7% but VIP chip share only decreased 50bps


Slot Revenue:

Slot revenue grew 26.7% YoY in January to $102MM, the second best month on record after October 2010 when slot revenues hit $111MM.

  • MGM slot revenues grew the most at 123% reaching $17MM – a record for the property
  • At 39% YoY growth, WYNN had the second highest growth with slot revenue reaching $22MM in-line with October levels and a high for the property
  • Crown’s slot revenues grew 26.6% reaching $19MM
  • SJM grew 17.9% to $14MM
  • LVS slot revenues were flat YoY at $28MM
  • Galaxy was the only operator with negative YoY, declining 7.7% to just $2MM







For the sixth month in a row, the employment data released this morning by the Bureau of Labor Statistics were positive for Quick Service restaurant stocks. 


The data, detailed in the chart below, shows that the 20-24 year old age cohort saw month-over-month employment growth of +3.6% versus +2.3% in December.  Unemployment in this demographic, a key source of traffic for QSR companies, is extremely high on an absolute scale but this acceleration in employment growth for young people is - on the margin - positive. 


MCD, SONC, JACK, BKC, YUM, and WEN have all mentioned unemployment among younger age cohorts as being a primary impediment to same-store sales growth over the past year or so. 


While the preponderance of the news of late has not been positive for QSR, specifically as it relates to commodity cost headwinds, this data point is positive on the margin.




Howard Penney

Managing Director

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The Macau Metro Monitor, February 4, 2011



Resorts World Sentosa will distribute a special lump sum payment for 3,000 staff, over and above the overtime pay for LNY.  RWS has said that nearly 150,000 people have visited its attractions over the Lunar New Year holidays.  Meanwhile, MBS said the first day of the Lunar New year saw more than 235,000 visitors pass through.  A spokesman for Marina Bay Sands added that The Shoppes at Marina Bay Sands was one of the few retail destinations that opened throughout the Lunar New Year.




R3: WMT, KCP, JCP, and ANF


February 4, 2010



  • In a marketing driven, fashion world sometimes it’s just better to remain silent.  Yesterday, Kenneth Cole used poor judgment by Tweeting that the “uproar in Cairo” is a result of the people hearing the company’s new Spring line is now available.  The backlash has already begun in full force, with the creation of a parody Tweet feed called KennethColePR which mocks the original statement.
  • Duane Reade and Walgreen’s watch out.  A new drugstore hybrid concept called Prime Essentials is about to open in NYC with high hopes of becoming a citywide chain.   The store looks to combine traditional drugstore offerings with groceries as well as home goods.  The first location opens in Tribeca next month.
  • According to a Harris Poll, 34% of Americans have no retirement savings and 27% have no personal savings.  Eighteen months ago the same survey produced modestly lower results, with 30% indicating no retirement savings, and 22% with no personal savings.



New York City Council Holds Wal-Mart Hearing - Wal-Mart Stores Inc. declined to attend Thursday’s New York City Council hearing on how its stores affect small businesses and communities, but it dropped off a petition with 30,000 consumers’ signatures in support of opening units in the five boroughs.  The hearing was spearheaded by City Council speaker Christine Quinn, a vocal critic of Wal-Mart, who is bent on preventing the retail giant from entering New York City.  Wal-Mart has yet to identify a site in New York, but has expressed interest in Gateway II, a shopping center near Jamaica Bay in Brooklyn that doesn’t require City Council approval.

Pasted from <WWD>

Hedgeye Retail’s Take:  We wonder if the media is taking this subject to new highs while at the same time WMT is methodically plotting its moves behind the scenes to amicably enter the NYV market.  While the issues at hand are union and job related, the reality of lower prices in one of the most expensive markets in the world may be overlooked by those who have actually never shopped a supercenter.


Low Inventories Hit January Comp-Store Sales - January exhibited the balancing act retailers face for all of 2011: keeping inventories lean, but not so low that they lose sales. Unfortunately, many stores last month cut back too much — and the harsh winter weather didn’t help matters. The International Council of Shopping Centers said retailers logged a 4.8 percent jump in comparable-store sales, which generally bested analysts’ estimates of a 2 to 3 percent rise. But it was clear some stores went into the month light on inventory and came out on the other end light on sales. <WWD>

Hedgeye Retail’s Take:   It would be hard to find a retailer complaining that they ran out of goods by the end of the holiday clearance season, only to come into Spring clean.  More interesting is that this scenario played out after what some viewed as a disappointing December. 


Modern Bride enters JC Penney's - Within the past week, Modern Bride bridal jewelry shops have popped up inside more than 1,000 J.C. Penney stores, recasting the category with a fresher, younger image and extending the retailer’s strategy of partnering with publishers in nontraditional ways. Modern Bride magazine was shut down in fall 2009, but Penney’s licensed the name from Condé Nast believing it still conveys brand authority. Penney’s executives also said the Modern Bride name could be seen in other wedding-related businesses, but didn’t specify. The assortment includes engagement rings and wedding bands for 24- to 30-year-olds

Pasted from <WWD>

Hedgeye Retail’s Take:   With marriage rates mostly consistent from year to year at around 2 million couples, it’s notable to see so much effort being put into the refreshing/reinventing the bridal business.   Recall that JCG, URBN, David’s Bridal, and now JCP are all upping the ante with new merchandising efforts.


BJ’s Surges as Board Decides to Explore Options, Sale - BJ’s Wholesale Club Inc. surged the most in almost three months after saying its board has decided to explore strategic options, including a possible sale.  The Westborough, Massachusetts-based retailer has hired Morgan Stanley as its financial adviser, according to a statement today. The company had a market value of about $2.35 billion as of yesterday’s close. BJ’s hired the investment bank last year after receiving an offer from private-equity firm Leonard Green & Partners LP, three people with knowledge of the matter said at the time. <Bloomberg>

Hedgeye Retail’s Take:  Now the question shifts to deal or no deal?  Clearly Sara Lee must give some pause to those who believe a sale is imminent. 


Gains Expected for Cosmetics- Mass cosmetics are on a roll. On the heels of 4 percent sales increases for 2010, retailers and manufacturers are confident the category is poised for another year of growth, possibly even outpacing last year. They cite expansion into global markets and heightened consumer confidence as the main drivers.  Carmen Bauza, vice president of beauty for Wal-Mart Stores Inc., said, “The customers are feeling enough is enough. We’ve dealt with this [recession] for two years and they’ve been able to manage through this environment. Customers have learned to manage their finances and to manage their priorities.” Bauza speaks from experience. She and other Wal-Mart employees are expected to live on a budget for a period of time so they know how far a dollar actually stretches.< WWD>

Hedgeye Retail’s Take:  While a bottoming in the consumers wallet may be in part the reason behind a mass cosmetics improvement, the quality of the products being sold at Mass may also be a driver as well.  Anyone notice the sales-assisted departments at TGT or CVS lately?

Canada's Aritzia Arrives in New York - As American retail’s migration north continues — Target recently said it will open stores in former Zellers units — Canadian retailer Aritzia is heading in the opposite direction.  A temporary location on the third floor of 524 Broadway and Spring Street will debut Sunday, a precursor to Aritzia’s permanent 10,000-square-foot bi-level unit opening in May.  Aritzia, a vertically integrated multilabel retailer for women ages 18 to 35, produces eight proprietary brands with names such as Wilfred and A Moveable Feast. All are designed in-house and are far from basic. “They’re there to stand on their own as individual brands and to complement the other brands,” said Brian Hill, chief executive officer. <WWD>

Hedgeye Retail’s Take:   A competitor to Scoop and Searle arrives on their home turf. 


Acushnet Sales Process Begins - Morgan Stanley has sent out marketing materials and non-disclosure agreements for the sale of Acushnet, the parent of Titleist or Footjoy, according to a report on CNBC. The number of potential suitors include Nike, Adidas, Callaway, Cleveland/Srixon parent Sumitomo Rubber and Mizuno. Callaway would likely have to partner with a PE firm to make an acquisition, the article stated. The first round of bidding will complete in late February. If bidding is less than desirable, an IPO-based spinoff of Acushnet could be the end result. <SportsOneSource>

Hedgeye Retail’s Take:  The interesting scenario surrounding this sales process lies within the fact that the potential buyers are amongst a very small group.  With very little growth in the industry overall, it will be interesting to see which strategic buyer views scale as a key driver of success despite that fact that owning multiple brands is likely cannibalistic.


The web grows almost six times faster than stores for Abercrombie - Sales were up across the board for specialty apparel retailer Abercrombie & Fitch Co. last year, but the Internet grew nearly six times faster than stores. For the fiscal year 2010 ended Jan. 29, Abercrombie, No. 65 in the Internet Retailer Top 500, reported:E-commerce revenue grew year over year 41.3% to $352.5 million from $249.4 million in fiscal 2009 and total sales increased year over year 18.5%. <InternetRetailer>

Hedgeye Retail’s Take:  E-com sales now top out at 10.2% of total, which puts the company in line with the historical averages for retailers with direct businesses. 


TODAY, FEB. 4, 2011 10AM EST


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Join Hedgeye's CEO Keith McCullough and Managing Director Daryl G. Jones, who will be joined by Yale Professor Charles Hill for a discussion of recent events in the Middle East and an analysis of the major risks associated therein. The topics being covered will include: 

  • What are the sources of the Jasmine Revolution? How important is inflation?
  • Is the Jasmine Revolution going global? If so, where should we look next for popular upheaval?
  • How will a change in Egyptian leadership (shift in power to the Muslim Brotherhood) shape U.S. influence in the region?
  • What is the future of the Arab and Israeli relationship?
  • Are their implications as it relates to Iran and nuclear proliferation?
  • As these events unfold, how will they impact global markets?  

Please contact if you have any questions. 



The Hedgeye Macro Team

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