• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here


    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.


March 16, 2011






  • Williams Sonoma noted that West Elm achieved record sales and profits during 4Q, marking a full year of upside relative to plan.  As a result., the company is gaining confidence towards an acceleration in store openings for the brand.  Unfortunately, the step up in square footage is likely to begin in 2012 with a chance for a handful of incremental stores to be added to the pipeline in 2011.
  • Despite rising costs on the magnitude of 10-15% of the back half of 2011 for Pacific Sunwear, management continues to highlight occupancy costs as the company’s single biggest challenge.  With these costs approaching 20% of sales, management has been meeting with landlords to work on some mutual concessions in order to alleviate such cost pressure.  While the meetings with all landlords are now complete, the company does not expect to know what the outcome of rent concession discussions will be for at least 30-45 days. 
  • In yet another example that the promotional activity in footwear remains benign, the management of BWS noted they expect zero BOGO days in Q1 compared to 5-weeks during the same period last year.
  • One of the more notable callouts from DSW was the increase in units per transaction the company realized in Q4 for the first time in over three years. With an average of 1.5 UPT prior to 2008, management highlighted an increase over the last few months to roughly 1.3. This may be as much an indication of consumer mindset as the company’s growing accessories business, which will also help drive this metric.



Japan Tragedy and its Impact on the Global Economy - Japan is just starting the long process of digging out from last week’s massive earthquake, but economists say the country’s plight is likely to have only a small impact on the global economic recovery. Using as guideposts other natural disasters, such as the 1995 Kobe earthquake and Hurricane Katrina in 2005, experts are predicting the disaster will slow Japan’s economy for a quarter or two until the rebuilding process stimulates activity in building and other sectors. Even though the earthquake and tsunami are estimated to have claimed more than 10,000 lives, the country’s economic slowdown is expected to trim only 0.1 to 0.2 percentage points off global economic growth this year. This assumes officials racing to shut down several damaged nuclear power generators are able to prevent widespread fallout — the fear of which has prolonged the initial phase of the disaster, rattled global markets and prompted some people to leave Tokyo. <WWD>

Hedgeye Retail’s Take: From a market perspective, the reality is that the magnitude of this devastating events impact is still a moving target near-term – from a retail perspective, the psychological recovery will remain the key factor.


Gap Aims to Expand 1969 Line - Gap’s 1969 brand is embracing denim diversity. From her perch at loft offices in an industrial area here where the premium denim movement took root, 1969’s creative director Rosella Giuliani is orchestrating Gap’s premium collection’s efforts to stay in stride or ahead of the denim fashion curve by broadening its range of colors, fabrics and lengths. Her challenge is to keep the retailer’s denim relevant and continue the momentum of 1969, which started two years ago after a major rethinking of Gap jeans’ fit and positioning. The collection is considered a bright spot in Marka Hansen’s spotty tenure at the helm of Gap North America, which ended with Art Peck taking the reins last month. <WWD>

Hedgeye Retail’s Take: While the definition of premium denim may vary, at $59-$89 this line falls squarely into the substantial white space of sub $100 denim and will offer consumers something to consider come spring. Effectively marketing the line will be the company’s next challenge in rebuilding Gap's image as a denim destination once again.


Lucky Brand Founders Launch Civilianaire - Gene Montesano and Barry Perlman are going back to basics. The Lucky Brand founders have shed the managerial red tape, complicated global supply chain, ambitious retail rollouts and unrelenting pressure to improve the bottom line that typified their previous corporate existence at Liz Claiborne Inc. to build Civilianaire from the ground up. The new brand is based and made here, where Montesano and Perlman are fully in charge both financially and creatively of a staff of about six. The new line reintroduces familiar shirts and jeans from their past to a generation of postrecession consumers rejecting noisy designs in favor of a stripped-down aesthetic intended to transcend trends. <WWD>

Hedgeye Retail’s Take: Keeping the brand message defined and consistent was a challenge for the duo at Lucky, however it appears their new line is much less about fashion and more focused on classic vintage styling.


Adidas Launches New Campaign - On Wednesday the Herzogenaurach, Germany-based athletic brand launched “All Adidas,” its first major branding campaign since 2004’s “Impossible Is Nothing.”  The global TV- and Internet-focused campaign is meant to help the brand raise awareness with the high-school age consumer, a segment targeted under the Route 2015 plan to grow sales, Adidas America President Patrik Nilsson told Footwear News. “We’ve had a tremendous year already, so we’re now coming in and doing the biggest campaign we’ve done in America that tells the story of how diverse the brand is and inviting the consumer into the brand, to participate in what the brand really stands for,” Nilsson said.  The campaign, conceived by Adidas’ lead ad agency, Montreal-based Sid Lee, debuts globally with two TV spots (a 30-second and a 60-second version) and an extended two-minute version available online.<WWD>

Hedgeye Retail’s Take: The latest result of the company’s stepped up marketing efforts appears to be priming the pump for the much anticipated launch of outdoor this fall for which authenticity will play an important role. Given that the company’s roots are far deeper in sport, it will be interesting to see how the marketing message is crafted as we near the launch.


Court Holds SEO Firm responsible for Online Sales of Counterfeit Golf Clubs -  A federal court has ruled that a firm that provided marketing and web hosting services was financially responsible for the sale of counterfeit golf clubs by a client e-retailer. A federal judge in South Carolina entered a judgment against Bright Builders Inc. on counts of contributory trademark infringement and unfair trade practices for allegedly assisting in the construction and hosting of the e-commerce site CopyCatClubs.com. Judge Margaret B. Seymour of the U.S. District Court for South Carolina ordered Bright Builders to pay $770,750 in statutory damages and Christopher Prince, owner of the web site, $28,250, according to lawyers for the plaintiff, Cleveland Golf Company Inc. Bright Builders and Prince did not immediately respond to requests for comment. <InternetRetailer>

Hedgeye Retail’s Take: The cost of business in partnering with a entity named  CopyCatClubs.com – c’mon.


A Bright Future for Daily Deal Sites - Deal-of-the-day sites, often featuring a group buying component, have taken off over the past year, with startups like Groupon getting big fast and major internet properties like Google and Facebook looking for their own ways to get in on the action. Consumer spending on deal-a-day offers is poised to grow more than 35% to reach $3.9 billion in the US by 2015, according to a March 2011 forecast by BIA/Kelsey. Deal sites like Groupon, LivingSocial and others have become popular among users who are getting accustomed to receiving deals packaged conveniently in one daily email, eliminating the need for hunting around on the web.< eMarketer>

Hedgeye Retail’s Take: There’s a point at which consumers are going to limit the amount of deals they’re willing to be subject to on a daily basis, which doesn’t appear to be taken into account in this straight-lined approach.

R3: WSM, PSUN, DSW, BWS - R3 3 16 11