R3: WRC, SHOO, M, New Balance


March 1, 2011






  • For those who don’t believe shopping is an American pastime you may want to think again.  A study conducted by OnePoll discovered that the average woman spends 399 hours and 46 minutes shopping per year over 301 trips.  Interestingly apparel shopping edges out food shopping with average time spent at 100 hours on clothing vs. 94 for groceries.
  • Add New Balance to the list of athletic footwear companies looking to focus on new product and innovation in 2011.  The company launches its latest marketing campaign entitled “Let’s Make Excellence Happen” with a presence on TV, print, digital, viral video, and in-store visuals.  The effort focuses on a slew of new product intros and marks the end of the company’s “softer” marketing efforts via its “Made in the USA” campaign.
  • In one of the more optimistic views we’ve heard regarding pricing dynamics, WRC’s management suggested that in addition to expecting higher selling prices to largely offset increased product costs, unit volume is also likely to remain flat over the balance of the year providing a source of comp upside. Compared to the rest of retail that expects unit volume declines as an offset to price, WRC would be a clear standout in the space if they manage to grow both.  



Reliance Brands closes Deal with Steven Madden Ltd. -  India’s Reliance Brands has taken a step closer to its vision of becoming an apparel and lifestyle powerhouse in the Asian country with a new license for accessories and footwear under the Steve Madden brand. The license, with Steven Madden Ltd., brings the Madden collections to all major cities across India through monobrand and premium department stores.  Darshan Mehta, president and chief executive officer of Reliance Brands, said the firm aims “to [translate] the brand’s unique fashion sense into the mind-set of the Indian female consumer.”  Reliance has joint venture partnerships with Paul & Shark, Diesel and Ermenegildo Zegna, as well as distribution agreements with Timberland and Quiksilver. <WWD>

Hedgeye Retail’s Take:  With foreign direct investment still up in the air, western brands are not sitting still.  Clearly sharing the cost of an Indian market entry with a partner like Reliance has its benefits to building a brand with very little, if any awareness at this point.


Sustainable Apparel Coalition Formed - Sustainability is on the road to standardization. After years of largely going it alone and producing a patchwork of overlapping efforts to reduce fashion’s social and environmental footprint, a group of major brands, nonprofit groups and the Environmental Protection Agency have banded together to form the Sustainable Apparel Coalition. Next month, the coalition, which was spearheaded by Patagonia and Wal-Mart Stores Inc., will begin testing the next generation of an index that measures the sustainability of apparel and footwear. That index is expected to evolve into a label or hangtag that would help shoppers understand the ramifications of their apparel or footwear purchases, from carbon emissions and water and chemical usage to conditions in factories. <WWD>

Hedgeye Retail’s Take:   For anyone interested in seeing where these efforts are headed take a look at Patagonia’s blog which actually tracks the entire production of its garments, component by component, factory by factory.  The complexity in coordinating the global supply chain to produce just one piece of outerwear is eyeopening.


Swiss Banker Buys Stake in JJB Sports - A Swiss investment bank acquired warrants convertible to a nearly 6% stake in JJB Sports last week as the insolvent British sporting goods retailer prepared to reorganize under protection from its creditors.  JJB Sports notified investors Feb. 25 that a group led by Adriano Agosti, chairman and  managing director for GoldenPeaks Capital Partners AG, acquired warrants convertible to 7.46 million shares, or 5.76% of the retailer. The retailer also said it had delivered a final draft of its revised business plan to Bank of Scotland detailing how it plans to restructure  under a "corporate voluntary arrangement," or CVA, which is the United Kingdom’s version of a Chapter 11 bankruptcy reorganization.  <SportsOneSource>

Hedgeye Retail’s Take:  Long rumored to be a potential “takeout” candidate, JJB looks to be heading more in the direction of survival mode.  Bonus points for anyone who can remember when sporting goods was actually a decent and money-making business in the UK. 


Macy’s Mobile Commerce - Macy’s is adding a little star power to its mobile channel. The retailer is using text messages and two-dimensional bar code scanning of the Quick Response, or QR, code variety to deliver video content to shoppers from the retailer’s celebrity designers, including Bobbi Brown, Sean “Diddy” Combs, Tommy Hilfiger, Michael Kors, Greg Norman, Rachel Roy, Irina Shabayeva and Martha Stewart. The program, called Macy’s Backstage Pass, was developed with the help of marketing firm JWT New York and lets in-store shoppers use a mobile device to scan a QR code on a product or send a text message to access videos about the designers and brands. <InternetRetailer>

Hedgeye Retail’s Take:  Expect to see even more mobile marketing from Macy’s as the company overall digital budget expands at the expense of traditional media. 


Facebook will Surpass Yahoo! in Display Ad Revenues This Year -  For the first time, the largest share of US display ad revenues will go to Facebook, eMarketer estimates. The social network’s 80.9% growth in display ad revenues, to $2.19 billion this year, will mean Facebook sees 21.6% of all US display ad dollars. That will put it ahead of Yahoo!, where eMarketer estimates display revenues will be up 16%. Yahoo!’s market share will inch up to 16.4%, while display gains at Google push the site’s share of display spending to 12.6%. Meanwhile, AOL will drop from 5.3% of display ad revenues in 2010 to 4.4% this year. <eMarketer>

Hedgeye Retail’s Take:  Definitely good for Facebook but probably not good for the Facebook user.  In other words, Facebook has quickly become the world’s largest billboard.


R3: WRC, SHOO, M, New Balance - r3 3 1 11



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