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February 10, 2010





  • After two consecutive years of strong boot sales, JNY management suggests the trend is likely to soften in 2011. While providing confirmation of strong demand for new spring product, perhaps initial BTS interest is prompting the cautionary tone. Keep in mind that despite the changing hemlines in denim (returning to flare) are better suited for booties than boots, DSW had bullish comments on boots, both present and future.
  • If the use of superlatives is an indication, Ralph Lauren management used “extraordinary” to describe their business performance 16 times on yesterday’s call. Among the positive drivers were the company’s new Madison Avenue flagship stores, which registered a 100%+ increase in average ticket sales compared to prior holiday seasons driven in large part by higher priced items like handbags, accessories, and jewelry/watches.
  • Whole Foods efforts to promote health and wellness will be accelerated with the company’s launch of five prototype wellness clubs (within existing stores) this year.  While just a test, management believes the company can be part of the solution for the nation’s healthcare crisis primarily through educating the consumer about changing their unhealthy lifestyles.
  • Is email marketing losing its luster? According to a report from Exact Target/CoTweet, 91% of us email users have subscribed to company’s email and later decided they didn’t want it.  The report also found that 18% of email users never open emails from companies and 77% have become more cautious about giving their email addresses to companies over the past year.


Jones Launches B Brian - The launch of B Brian Atwood, the designer’s contemporary-priced collection with The Jones Group, drew a crowd of socialites and editors to the swanky Lion speakeasy in the West Village last night. Atwood held the spotlight at the crowded party, where friends and press clamored for a few minutes with the glowing designer to hear about his enthusiasm for the new collection. Guests included co-host Byrdie Bell, DJ Alexandra Richards, Ali Wise, Rose McGowen, Olivia Chantecaille, Poppy Delevigne, Nate Berkus, Hilary Rhoda, and the entire executive team of Jones Apparel Group. <WWD>

Hedgeye Retail’s Take: Sounds like a fun fashion week party on the same day the company reported lackluster earnings.  Unfortunately JNY needs several Brian Atwood-type efforts to work if the topline is ever going to meaningfully and sustainably accelerate. 

Wolverine Promotes Two in Outdoor Group - On the heels of a reorganization announced last month, Rockford, Mich.-based Wolverine World Wide, Inc. said Tuesday it had created two new executive positions in its Outdoor Group to give added focus to its Merrell and Chaco brands. Effective immediately, brand veteran Seth Cobb has been appointed VP and GM of Merrell, and Chip Coe, formerly head of accessories for all Outdoor Group brands, has been named VP and GM of Chaco.“These promotions give us a strong set of resources to drive brand-specific strategy and give us an enhanced brand focus,” Jim Zwiers, president of the Outdoor Group, told Footwear News. <WWD>

Hedgeye Retail’s Take: Expect to see more emphasis on brands other than Merrell as Chaco and Cushe begin take on a more meaningful part of the portfolio. 

Men's Wear Leading Recovery- Men’s wear could be the leading indicator of the long-hoped-for consumer revival. The sector was a strong performer over the holidays and has continued its steady climb upward this year. In December, MasterCard Advisors SpendingPulse, a macroeconomic report tracking national retail sales, reported that men’s wear sales rose 9.9 percent that month. In January, sales increased 8.1 percent, according to MasterCard. The improvements have retailers in a buoyant mood as they head to Las Vegas next week for trade shows even as they battle a harsh winter, rising raw material and fuel prices and lingering financial uncertainty. <WWD>

Hedgeye Retail’s Take: While MasterCard has never been a pure proxy for overall retail sales, this data coincides with anecdotal comments coming out of December and January sales.  Clearly a multi-year malaise in menswear is seeing some mean reversion at this time. 

Undergarments Gain Share - The dollar share of the men’s underbottoms market held by the long-legged brief silhouette last year, up from 31.9 percent in 2009. Long briefs vaulted into the dominant position among men’s underwear models, higher than boxers, which fell to a 29.9 percent from 32.6 percent in 2009. Men’s underwear sales overall were up 10.7 percent last year.<WWD>

Hedgeye Retail’s Take: Looks like men are replenishing their undergarments at the same time they’re replenishing their “outergarments”.  For those not familiar with long briefs, these are basically the underwear version of compression shorts.   

No Relief Seen From Record Cotton Prices - Cotton prices are expected to remain at record-high levels this year, due to a tight supply-and-demand situation, which was borne out by a new report released Wednesday by the U.S. Department of Agriculture.  According to the USDA, cotton stock levels among three of the five top producers in the world, including China, the U.S. and Pakistan, are estimated to end the marketing year on July 31 at record-low levels, which will continue to drive high cotton prices globally and increase pressure on the entire supply chain, from yarn spinners all the way to the consumer. India and Brazil showed slight increases. <WWD>

Hedgeye Retail’s Take: In looking at the dynamics driving cotton prices, the offset to increased acreage is stronger demand. Recall that earlier this week, Gildan’s CEO Chamandy projected that cotton prices will return to a range of $0.90-$1.20 next year driven by increased supply.

Fashion Footwear Sales Increased in 2010 - It’s official: 2010 was a good year for the footwear industry, as Americans bought more trendy shoes than they did in 2009.The latest sales figures for the fashion footwear market, released by marketing research company The NPD Group, show that total fashion shoe sales in the U.S. rose 7.2 percent — a strong reversal of the 3.5 percent decline recorded in 2009. “The footwear market was the last to feel the pain of the recession and is the first to feel the gain of the recovery,” Marshal Cohen, chief industry analyst at NPD, said in a written statement. “Women were the first to feel ‘frugal fatigue’ and head back to spending on fashion product, while spending on men’s and children’s products has followed.”  <WWD>

Hedgeye Retail’s Take: With the fashion category resurging as well over the last ~6-months, we continue to favor athletic footwear which continues to benefit from the reinvigoration of new product innovation.

Gap expands e-commerce brands  - If there’s any gap in online apparel retailing in Europe, Gap Inc. intends to fill it. Today, Gap, No. 23 in the Internet Retailer Top 500 Guide announced plans to expand its e-commerce brands for Gap and Banana Republic to eight more European retail markets: Austria, Estonia, Finland, Luxembourg, Malta, Portugal, Slovakia and Slovenia. Gap already sells online in Belgium, Denmark, France, Germany, Ireland, Italy, Netherlands, Spain, Sweden and the United Kingdom. With the latest European rollout, Gap is offering consumers immediate shopping on the English-language versions of Gap.com and BananaRepublic.com and up to three days shipping at a flat rate of 6 British pounds (US$8.21). “Launching in eight additional European countries underscores the loyalty and enthusiasm customers in Europe have shown for our online brands since the sites launched last August,” says Gap Europe and strategic alliances president Stephen Sunnucks. <InternetRetailer>

Hedgeye Retail’s Take: We can’t think of another retailer that’s rolled out e-commerce platforms across so many countries in such short order. With many multinational retailers looking to tepidly expand e-commerce in 2011, they should take note.