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R3: REQUIRED RETAIL READING

March 23, 2011

 

 

 

 

RESEARCH ANECDOTES 

  • In a stunning display of missing the boat, the “original” toning brand MBT is just now deciding to take a more aggressive approach in the U.S. with the launch of its new shop-in-shop within footwear boutique concept The Core in northern California. To top it off, in addition to a more pronounced physical presence the brand is also launching its first ever domestic advertising campaign.   
  • In an effort to improve an underperforming apparel category, DG will be reallocating space towards more children and infant apparel from the laggard women’s category. Additionally, consistent with recent trends at mass/discount retail, management highlighted shoes and accessories as the strongest segment within the apparel category.
  • While exclusive merchandise deals are hardly novel at retail, Hollywood studios are beginning to play a more significant role as a proven traffic driver. With offers that include specialty tracks, new footage, and limited run toy designs, studios are leveraging the exposure to drive sales of their own consumer products as well as traffic at retail in what appears to be a truly mutually beneficial partnership.
  • In an effort to compete on something other than price, grocers are becoming increasingly focused on differentiated experiences by offering events such as wine tastings, live music, and even Zumba classes in the case of Whole Foods. What may sound more like a gimmick is actually gaining traction with the frequency of customer visits increasing to several times a week compared to what has historically been a once a week chore. Based on the success at grocers, we wouldn’t be surprised to see the trend spread through to other areas of retail. Remember the Duane Reade in Brooklyn that added a beer bar back in January?

OUR TAKE ON OVERNIGHT NEWS 

 

Tommy Preps for Takeoff  - On May 19, Tommy Hilfiger will open a traveling pop-up shop in New York in the form of a replica East Hampton beach house that will stock the brand’s new Prep World collection of 60 men’s and women’s Eastern Seaboard staples. The collection offers classic, wardrobe-building pieces sure to be embraced by prepsters from Nantucket to Knokke, Belgium—and the designs fuse European silhouettes with American country-club motifs. Hilfiger has tapped author Lisa Birnbach of The Official Preppy Handbook fame to join him in launching the pop-up shop as it travels around the world, including stops this spring and summer in Los Angeles, Paris, London, Amsterdam, Stockholm, Madrid, Tokyo and, yes, Knokke. Apart from the Prep World collection, the shop—which will be built from the ground up in each city—will sell vintage croquet, badminton and tennis gear. <WWD>

Hedgeye Retail’s Take: Following a particularly harsh winter, the beach house inspired pop-up is likely to resonate. But more importantly, Tommy has been such a poor performing brand in the US (despite the fact that it has been stellar in Europe), and this is an innovative way to change up the perception.   

 

Lacoste Unveils Catherine Malandrino Collection - With the Lacoste + Malandrino line making its debut in stores in mid-April, both the French brand and Catherine Malandrino are gunning for shoppers to look at the label with fresh eyes. The 12-piece spring line — the first in a collaboration that will last four seasons — has white harem pants, slinky knit dresses, wide-leg pants and mini-pleated skirts, a far cry from the standard polo shirt. “My most important role with Lacoste is to open the door to the feminine world,” Malandrino said of her work with Lacoste. “Now I am relaying effortless, chic, everyday clothes that you don’t have to think about. All of the silhouettes can be eye-catching, whether it is a miniskirt or high-waisted pants.” With her designer status, French upbringing, Saint-Tropez hideaway and Lacoste-loving husband, Malandrino was a logical choice to partner with Lacoste. <WWD>

Hedgeye Retail’s Take: the iconic polo shirt has always been Lacoste’s signature item, now it got a shot in the arm – disproportionately in its the women’s business. 

               

Fur Labeling Act Comes Into Law in U.S - A new legislation that requires all fur-trimmed fashions sold in the US to be labeled with the type of animal and the country of origin, regardless of the value of the fur, has recently come into effect, sources reported. The Truth in Fur Labeling Act closes a loophole in federal law that currently allows some animal fur garments to go unlabelled if the value of the fur is $150 or less. Past investigations by the Humane Society of the United States (HSUS) have found jackets trimmed with animal fur—including that from domestic dogs, wolves or raccoon dogs—being sold across the country without labels or falsely advertised as “faux fur”. <FashionNetAsia>

Hedgeye Retail’s Take:  Wow. We didn’t realize this was on the table. We kinda figured that this was either a) in place or b) not necessary. This is coming from a guy that owns four dogs…the thought of walking into a Macy’s and seeing fur labeled as ‘Labradoodle’ is sickening. The good news is that this is something we’ll likely never see, but unfortunately have probably seen in the past without knowing it because of the loophole in question.

 

Danskin to Launch Sports Line - Danskin will launch a line of high-tech sports bras and contemporary daywear, loungewear and sleepwear in July.  This will be the first collection of daywear, loungewear and sleepwear bearing the Danskin name.  Iconix Brands Group Inc., which has owned the Danskin name since 2007, entered into a licensing partnership with Saramax Apparel Group Inc. in late 2010 to produce the sports bras and innerwear lines.  Distribution is aimed at better department stores, sports specialty stores and e-commerce businesses.  Officials declined to give a first-year wholesale sales projection, but sales for the combined lines could exceed $5 million the first full year, according to industry estimates. Eddie Betesh, chief executive officer of Saramax, said the Danskin collections received “strong” reaction during the innerwear market week in February. <WWD>

Hedgeye Retail’s Take: Gotta hand it to these guys. They keep finding ways to grow.

 

JJB Investors Back Lease Changes - JJB Sports, the U.K. sporting goods chain, has persuaded creditors and investors to back a controversial rescue plan. The company said it received the required 75% majority support of unsecured creditors and a majority of its shareholders to undergo a company voluntary arrangement (CVA), its second in two years. Chairman Mike McTighe said: "Following approval of the CVA proposals at the creditors' meetings held this morning, approval by the shareholders this afternoon further demonstrates the solid support for the company's turnaround. "We would like to thank our landlords and creditors who have supported the company. As a result the management and the vast majority of our colleagues now have the opportunity to work alongside all stakeholders as we continue to achieve milestones in our turnaround." <SportsOneSource>

Hedgeye Retail’s Take: No way that anyone would allow this company to go under 16 months before the London Olympics.

  

Brandix buys Comfortwear - Sri Lanka's top apparel exporter Brandix has announced a major addition to its portfolio, following the acquisition of full ownership of Comfortwear (Pvt) Ltd., the Group's former joint venture with Lanka Equities. The new cluster, Brandix Lingerie, formally launched on 1st March 2011, will see the Group emerge as a key player in the manufacture of high end specialty bras and complementary coordinates for global high street labels such as Marks & Spencer, H&M, and Victoria's Secret, the announcement said. The two manufacturing facilities of Comfortwear in the Wathupitiwala Export Processing Zone in Nittambuwa, which have been under Brandix management since December 2008, have been restructured into a focused Bra/Lingerie facility that complements the Group's extensive product offering in categories such as casualwear, intimates, briefs, textiles, knits and accessories, Brandix Group Director AJ Johnpillai said.<Fibre2Fashion>

Hedgeye Retail’s Take: Good example of the bottom end of the supply chain doing what it needs to in order to stay profitable.

 

Leather Footwear Industry to Seize New Opportunities - The leather and footwear industry is now taking the lead in Vietnam’s export earnings from major markets such as Europe, the US, Japan and the Republic of Korea (RoK). 2010 was the most successful year so far for Vietnam’s leather and footwear industry with export turnover reaching more than US$5.2 billion. It is also one of the top five sectors that posted the highest export turnover in the country. With such momentum toward development, the sector has set its export target at US$5.4 billion this year.  The EU removing anti-dumping duties on Vietnam’s leather-capped shoes as of April 1 is also a good sign. This means that trade barriers imposed by the EU for Vietnamese footwear products have been fully abolished. This will offer a huge opportunity for Vietnamese footwear businesses to expand their markets to European countries.  Many Vietnamese footwear businesses have been urgently seeking new outlets and devised development strategies to promote exports to the European market, secure a firm foothold in the domestic market, renovate methods of production, and improve product design. <VovNews>

Hedgeye Retail’s Take: This is interesting, actually. The boost in raw materials in cotton, oil, etc, has disproportionately not taken up leather. As such, Vietnam – which is perhaps the most skilled country from a footwear building standpoint – is likely to shift on the margin to leather. Unlikely to have a big impact in the US, but for companies that sell leather footwear in Europe are probably going to benefit. This will help Ralph Lauren, Timberland, and a host of luxury brands.

 

Jeans Makers Embrace Point-of-Sale - The hot new trend in premium denim isn’t aesthetic, but practical: a strong partnership with retailers. Jeans makers are increasing efforts to work more closely with merchants and boost their marketing and branding presence on the sales floor. While vendors have always tried to cultivate good relationships with buyers, the tenor of their new initiatives has heightened amid weak sales in the challenging economy. Taking a more proactive approach, denim companies want to keep their spots on the competitive sales floor, where stores are kicking out brands that fail to sell. “This is a bull’s-eye economy,” said Gina Bloomingdale, vice president of sales at Los Angeles-based Habitual. “People are dropping lines and closing their doors. Before, if you had a 50 percent sell-through, you were OK. Now, if you’re not getting a 60 percent sell-through, they’re not coming back to see you.” <WWD>

Hedgeye Retail’s Take: This probably leaves out the fact that the premium denim market has tanked. Interesting, though, to see smaller retailers behave so rationally. It’s a shame that department stores don’t have the luxury to boot out a brand that is ‘only’ putting up a 50% sell-through.

 

Dolce & Gabbana Expanding in China - Italian fashion brand Dolce & Gabbana unveiled plans for 15 new stores across China in an effort to boost business in the world's fastest-growing luxury-goods market. The company currently operates 26 stores in China, including Hong Kong. The fashion house, which has become a major global business in the past decade, said the 15 new boutiques will be opened within the next two years.  It also plans to introduce a high-end cosmetics line developed with consumer-goods giant Procter & Gamble Co., according to designers Domenico Dolce and Stefano Gabbana, in an interview on Monday. D&G and P&G several years ago forged a partnership to produce fragrances and cosmetics. <WallstreetJournal>

Hedgeye Retail’s Take: There 's plenty of room for continued expansion in China off a low base; however, the cosmetics line is the real callout here. Given the brand's loyal customer base and successful foray into fragrance, This is a natural extension that could ramp quickly for the company.